Last week both S&P 500 and NASDAQ reach fresh record highs, closing 1.6% and 3.2% higher, respectively, while other major indices suffered declines, the Dow Jones Industrial Average declined 0.5%, and the Russell 2000 fell 1.0%.
Mega Cap Stocks Crucial Role For Index-Level Gains
Last week, the gains in the mega cap space played a crucial role in the index-level gains for the S&P 500 and NASDAQ. The equal-weighted S&P 500 slid 0.5% this week. The $Vanguard Mega Cap Growth ETF(MGK)$ jumped 3.4%.
Apple (AAPL) was a significant winner, jumping 7.9% and hitting record highs after introducing "Apple Intelligence" at its Worldwide Developers Conference.
Broadcom (AVGO) surged 23.4% following a better-than-expected earnings report, outlook, and a 10-for-1 stock split announcement.
Adobe (ADBE) gained 12.9% this week after delivering pleasing earnings results and guidance.
S&P 500 Information Technology Biggest Winner At 6.4%
Apple, Broadcom and Adobe helped propel the S&P 500 information technology sector to a 6.86% gain. The next best-performing sector was real estate, gaining 1.89%. On the flip side, the energy (-2.53%) and consumer staples (-1.66%) sectors logged the biggest declines.
Note Yield Decline Last Week
The 10-year note yield declined 22 basis points last week, and the 2-year note yield declined 20 basis points to 4.69%. This was in response to this week's bond auctions:
A soft $58 billion 3-year note sale
A strong $39 billion 10-year note sale
A solid $22 billion 30-year bond reopening
Inflation Data
The May Consumer Price Index (CPI) reflected some welcome disinflation:
Total CPI: +3.3% year-over-year (previous stand at +3.4%)
Core CPI: +3.4% year-over-year (previous stand at +3.6%)
The May Producer Price Index (PPI) showed a 0.2% month-over-month decline in total PPI, while core PPI was unchanged from the prior month.
Target Range For Fed Funds Rate Unchanged
The Federal Open Market Committee (FOMC) left the target range for the fed funds rate unchanged at 5.25-5.50%, as expected. The vote was unanimous. The directive reiterated that, "The Committee does not expect it will be appropriate to reduce the target range until it has greater confidence that inflation is moving sustainably toward 2 percent."
The Summary of Economic Projections (SEP) showed a median estimate of only one rate cut this year versus three at the time of the March projections. Fed Chair Powell's press conference featured a non-committal stance on the policy path.
Rate Cut Expectations Increased
Rate cut expectations increased due to these events. The probability for a 25 basis points rate cut at the September FOMC meeting is now priced at 60.5%, this is an increased from 46.6% one week ago, according to the CME FedWatch Tool.
Stocks To Watch
Influential investor Cathie Wood and her Ark Invest fund have made a bold prediction for $Tesla Motors(TSLA)$ forecasting the stock to reach $2,600 per share by 2029. Wood's bullish scenario even suggests a potential high of $3,100 per share. This optimistic outlook implies a massive 1,500% increase from its current trading price of around $182.50.
From the technicals, we could see that Tesla is trying to form a bullish upside movement, though we could still see some fluctuation of prices especially on last Friday (14 June), in the long term, Tesla could be moving higher than $190.
$Apple(AAPL)$ continues to be a focal point in the AI revolution. Steve Eisman of Neuberger Berman has highlighted Apple as a "hidden AI play," suggesting that the company's integration of AI into its devices could drive significant growth. Apple shares have seen a substantial rise, hitting record highs recently.
If we looked at the technicals solely, we would noticed that MACD is still showing a very strong upside movement, and KDJ is currently showing sideways.
Apple could be inside a consolidation phase now, but it would not be long before Apple break out of consolidation and we should be able to see a significant bullish run.
Meta Platforms (META) and Apple (AAPL) are under scrutiny for potential violations of Europe's Digital Markets Act. Meta's ad-free versions of Facebook and Instagram could face charges, adding to the regulatory challenges both companies are facing.
Summary
Last week market was powered by gains in mega cap stocks,, but we might see some consolidation in play this week as traders and investors begin to ponder over the impact and possibility of one rate cut this year.
There might be some earnings this week which is significant, Accenture (ACN) would be something we can looked at, as focus are now on software house relating to AI development.
Appreciate if you could share your thoughts in the comment section whether you think market would experience consolidation in some of the S&P 500 sectors this week?
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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