Market developments
Equities:
The stock market has been rallying recently, with the S&P 500 on track for its fourth straight weekly gain. This has been fueled by hopes of Federal Reserve rate cuts following some positive inflation reports, as well as strong corporate earnings, particularly in the AI sector with Nvidia’s upcoming results in focus. The meme stock frenzy cooled, with GameStop plunging on plans to sell more shares and the rally lost some steam over the past two days as the market consolidated its gains. The S&P 500 hovered near 5,300, while the Dow Jones Industrial Average fluctuated around 39,900 after briefly crossing 40,000 for the first time.
Fixed income:
After the recent inflation reports, housing data, and retail sales figures, the market is trying to assess whether the economy is moving in a direction that would allow the Federal Reserve to cut interest rates. The mixed economic data has created uncertainty about the Fed’s next moves, with some analysts tempering expectations for significant rate cuts in the near term. However, as macroeconomic conditions soften, strategists, like at Bank of America, expect a resurgence in long-duration bonds later in 2024.
Commodities:
Oil rose back around $80 per barrel on Friday for the first time this month, ahead of the June 1 OPEC+ meeting. The rise in crude prices this week reflects anticipation around factors that could boost demand (U.S. driving season, rate cuts) and tighten supply.