WEEKLY MARKET RECAP – JULY 26, 2024

The S&P 500 and NASDAQ declined for the second consecutive week amid volatile trading, while the Dow continued its upward trend, marking its fourth straight weekly gain. Modest rallies on Monday and Friday were insufficient for the S&P 500 and NASDAQ to counter a mid-week sell-off on Wednesday.

A shift in performance within the U.S. equity market extended into a third week, with large-cap stocks trailing the previously lagging small-cap segment, and growth stocks underperforming value stocks. Over the past three weeks, a large-cap benchmark fell a cumulative 1.5%, while a small-cap index surged 11.5%. On the style front, a growth index dropped 6.6% over three weeks, whereas its value counterpart rose 4.6%.

The U.S. economy gained momentum in the second quarter despite historically high interest rates and ongoing inflation concerns. GDP grew at an annual rate of 2.8%, exceeding economists’ consensus forecasts and improving from a 1.4% rate in the first quarter.

The U.S. Federal Reserve’s preferred inflation measure remained unchanged from the previous month and modestly above the Fed’s long-term target of around 2.0%. Excluding energy and food prices, the core Personal Consumption Expenditures Index increased at an annual rate of 2.6% in June—the same as May’s figure and the slowest price growth in over three years. On a month-to-month basis, core inflation rose 0.2% in June.

As earnings season progresses, just four U.S. mega-cap technology stocks are projected to contribute significantly to second-quarter earnings growth. Including these four stocks, companies in the S&P 500 were expected to report average earnings growth of 9.8% as of Friday. Excluding these tech giants, the index’s projected growth rate was 5.7%, according to a July 22 report from FactSet.

Amid expectations of weakening global demand, the price of U.S. crude oil dropped nearly 4% for the week to around $77 per barrel, the lowest level in about seven weeks. As recently as July 3, oil was trading near $84 per barrel.

Following a sharp rise the previous week, an index tracking investors’ expectations for short-term U.S. stock market volatility briefly spiked on Thursday to a level 55% higher than its closing level on July 12. However, this surge was short-lived, and the Cboe Volatility Index subsequently retreated, closing slightly below its level from the previous week.

In addition to more quarterly earnings reports, the upcoming week will feature a U.S. Federal Reserve policy meeting concluding on Wednesday and a jobs report on Friday. The Fed is widely expected to keep interest rates unchanged, while the jobs report will reveal how July’s job growth compared with June’s larger-than-expected gain of 206,000 jobs.

Major U.S. Economic Reports

Closing Prices for the Week

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