Monthly Recap | June 2024

Market Indices

At-A-Glance

• The S&P 500 finished June at 5,460, just 0.48% below its 31st all-time high of the year set on June 18. The S&P 500 is up 37.18% from its October 2023 low and capped its third straight quarterly gain.
  
  
• The Dow Industrials rose 1.23% in June, trimming its second quarter loss to 1.27%. The Dow-30 Index is up 4.79% YTD, having reached a new record high on May 16, closing above 40,000 for the first time.
  
  
• The Nasdaq Composite gained 6.03% in June and 8.47% in the second quarter, capping a YTD gain of 18.57%.
  
  
• Foreign equities widely trailed the U.S. on a YTD basis. Yet in June, Emerging Markets (+5%) outperformed, surpassing S&P 500 performance by 0.72%. Internationally, the MSCI EAFE Index ended negative in June and the second quarter, capping a 7.49% gain for the first half of 2024.
  
  
• The Bloomberg Commodity Index fell 1.54% in June, trimming its second quarter gain to 2.89%. Commodities are up 5.14% YTD.
  
  
• S&P GSCI Gold rose 4.93% in the quarter extending its YTD gain to 12.66%. S&P GSCI Crude Oil gained 1.28%, extending its YTD advance to 19.79%. 

June & Second Quarter 2024

The S&P 500 ended the second quarter with a technology-driven rally that spurred a 15.29% return during the first half of the year, its sixth best two-quarter start to a year since 1990. Moreover, the near 15.3% performance is the second strongest election year start since 1944. Unusually, however, only a handful of Big Tech company stocks have fueled this year’s rally. Despite a sell-off at the end of June, the primary bellwether artificial intelligence (AI) chipmaker dominated the two-quarter tech rally, up nearly 150% year-to-date (YTD). Four other so-called Magnificent Seven stocks also eclipsed the S&P 500’s first half performance. All three major U.S. equity indices advanced in June, posting their seventh positive monthly performance in eight months.

Additional catalysts behind the sustained broad market rally include further easing in consumer inflation. The most current personal-consumption expenditures (PCE) price index was flat in May for the first time in six months and its year-over-year measure came in at 2.6%, down from 2.7% the month prior. The Fed’s preferred inflation gauge, the core PCE price index that excludes food and energy, rose just 0.1% in May while its annualized rate declined from 2.8% to a 38-month low of 2.6%.

In other key data, U.S. real GDP growth slowed to an annual pace of 1.4% in the first quarter, up slightly from 1.3% previously estimated but is considerably lower than 3.4% economic growth in the fourth quarter 2023. San Franciso Fed President Daly said May’s inflation data suggests that the central bank’s monetary policy is working to control inflation and cool the economy. She, however, noted that it remains too soon to determine whether reducing interest rates is appropriate.

Recovering corporate earnings are also helping boost investor sentiment. After earnings on S&P 500 companies increased at a 5.5% year-over-year (YOY) pace in the first quarter to exceed initial estimates for 3.1%, S&P Capital IQ is forecasting second quarter 2024 earnings per share (EPS) to grow by 8.2% YoY. Estimates now also point to 9.2 EPS growth for all of 2024, followed by a 14.6% increase in 2025.

Financials got a boost towards the end of the quarter after all of the 31 largest U.S. banks passed their annual “stress tests”, satisfying federal regulators that the systemically important banks could withstand a jump in the unemployment rate to 10% during a severe hypothetical recession.

As shown in the style box performance boxes below, large cap Growth and large cap Blend led gains in all three time periods. Likewise small and mid cap Value and Blend ended negative or gained the least.

Top & Bottom Performers

Despite late-quarter selling in the bellwether AI chipmaker, Technology was the top sector performer in all three time periods. While Energy was among the worst performing sectors in June and the second quarter, Energy (+10.93%) is third best top performer this year. Real Estate is the sole negative performing sector this year but trimmed its YTD loss to 2.45%. 

The yield on benchmark 10-year Treasury notes rallied during the second quarter, ending June at 4.371%, up 0.17% from 4.201% at the end of March. Treasury prices were weaker across the curve as market expectations for multiple 2024 rate cuts diminished over the quarter.

In fixed-income performance, U.S. Treasurys (as measured by the Bloomberg U.S. Government Bond Index) advanced 1% in June, capping a 0.11% second quarter gain and trimming its YTD loss to 0.83%. Likewise, longer-term U.S. Government bonds jumped 1.65%, cutting its second quarter and YTD losses to 1.80% and 4.99%, respectively.

In other fixed-income assets, investment-grade bonds of all types (as measured by the Bloomberg U.S. Aggregate Bond Index) rose just 0.07% for the quarter. Non-investment-grade High-Yield corporate bonds performed best, climbing 1.09% in the second quarter. Municipal Bonds (+1.53%) led in June, outperforming Treasuries, but declined 0.02% for the quarter.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on X.}