S&P 500 Investors Looking For Direction

The Juneteenth-holiday shortened trading week marked the effective end of the second quarter of 2024 for forward-looking S&P 500 investors.

 

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Although the calendar quarter itself has another week to run, the expiration of 2024-Q2's dividend futures contracts on Friday, 21 June 2024 is what closed the books on the quarter.

After setting two consecutive new record highs on Monday, 17 June and Tuesday, 18 June 2024, the S&P 500 (SPX) retreated from its new peak of 5,487.03 after the mid-week holiday. The index went on to drop 0.4% from that high to end the week at 5,464.62, which is still about a 0.6% increase over where it closed in the preceding week.

Right now, as best as we can tell, investors are looking forward to the fourth quarter of 2024 in setting current day stock prices. The latest update of the dividend futures-based model's alternative futures chart shows the trajectory of the S&P 500 is tracking within the expected range associated with investors focusing on that distant future quarter.

 

Alternative Futures - S&P 500 - 2024Q2 - Standard Model (m=+1.5 from 9 March 2023) - Snapshot on 21 Jun 2024

 

As 2024-Q3 has effectively begun, it's a natural time for investors to consider what lies ahead for the direction the S&P 500. The big question remains what will the Fed do with short term interest rates and when. The CME Group's FedWatch Tool's forecast anticipates the Fed will continue holding the Federal Funds Rate steady in a target range of 5.25-5.50% until 18 September (2024-Q3). The tool forecasts the Fed will start a series of 0.25% rate cuts on that date, which will take place at six-to-twelve week intervals well into 2025 given how expectations changed in the past week.

Meanwhile, the biggest story in the stock market was the rise of Nvidia (NASDAQ: NVDA) to become the biggest company in both the S&P 500 and the world. Here are the week's marking moving headlines:

 

Monday, 17 June 2024

Tuesday, 18 June 2024

Thursday, 20 June 2024

Friday, 21 June 2024

We'll consider Nvidia's (nvda) newly elevated position within the S&P 500 later this week.

Going beyond the stock market, the Atlanta Fed's GDPNow tool's forecast of annualized real GDP growth rate during 2024-Q2 ticked down a tent of a percent to +3.0%. The GDPNow tool will continue updating its forecast for 2024-Q2's GDP growth until the Bureau of Economic Analysis releases its first estimate of the quarter's GDP at the end of July 2024, after which, it will start providing estimates for 2024-Q3's GDP real growth rate.


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