4:05pm: Recession fears dismissed as markets soar in first half of 2024
Stocks closed slightly down on Friday to end the first half of 2024 on a high note, with broad gains and optimistic signs for the rest of the year.
But Friday's dip didn’t dampen any enthusiasm investors felt for Wall Street's stellar first half.
At the close, the S&P 500 fell by 0.4% but achieved nearly a 15% rise in the first half of 2024. The Nasdaq Composite dropped 0.7%, yet recorded an almost 19% year-to-date gain. The Dow Jones Industrial Average dipped 0.1% and has lagged behind with an overall increase of 4% for the year.
Wall Street dismissed recession fears, with strong earnings and AI excitement driving record-setting performance in the first half of 2024.
12:07pm: ‘Goldilocks’ US economy
US stocks edged higher at midday on positive inflation data which showed the Federal Reserve’s preferred gauge eased to the slowest rate since March 2021.
The Nasdaq and the S&P 500 added 0.2% at 17,888 points and 5,492 points respectively and the Dow Jones was up 0.1% at 39,206 points.
XTB research director Kathleen Brooks said the US economy had hit a “Goldilocks” situation, even if politics is getting in the way.
“While Fed speakers this week have sounded cautious about the outlook for inflation in the US, this report is exactly what they need to see ahead of cutting interest rates,” she said.
“Financial markets and traders are focused on the economic data and when the Fed will cut interest rates. In contrast, the media is focused on last night’s debate between Biden and Trump.”
Meanwhile, chipmaker NVIDIA added 1.2% at about $125, putting it on track to end the week higher.
“This stock has been extremely volatile this week, as we have discussed, so a drop in bond yields could help spur a recovery for the AI darling,” Brooks commented.
9.38am: Wall Street starts flat
US markets have opened mostly flat after key inflation data came in line with estimates, raising hopes for an earlier rate cut this year.
Only the S&P 500 registered a significant rise at the start of trading, with the index jumping by close to 0.2%.
The personal consumption expenditures index (PCE), an important gauge of inflation in the eyes of the Federal Reserve, slowed from 2.7% to 2.6% in May, taking it to the lowest level since February 2021.
Core PCE, which outstrips volatile food and energy prices, also dropped to 2.6% from 2.8%, the lowest point seen since March 2021.
"If we’re right, the Fed should be confident enough by its meeting in September that core PCE inflation is heading sustainably back to 2% that it can start to ease," said Ian Shepherdson at Pantheon Macroeconomics.
8.41am: Wall Street to open higher after presidential debate
Wall Street is on track to open higher today as the market reacts to Trump and Biden's first presidential debate.
"Last night’s Presidential debate was a disaster for the incumbent Joe Biden," said David Morrison at Trade Nation
"All the chatter in Democratic circles is focused on how to go about replacing him, while most other accounts acknowledge that Donald Trump acquitted himself quite well."
Back in the UK, Biden is now odds-on to stand down before the election, with betting firm Willliam Hill pricing his departure before the vote at 10/11.
“It is odds-on for Biden to stand down at 10/11, in order to give his party a last hope to save their chances of keeping Trump out of the Oval Office," a William Hill spokesperson said.
Meanwhile, in company news, Nike is on track to shed close to 15% of its value after it warned that its 2025 full-year revenues would be lower than expected amid a downturn in demand.
As newer brands such as Roger Federer’s On and France’s Hoka look to steal market share, Nike said it expects a mid-single-digit percentage drop in the current financial year.