To The Moon

Recap of Recent Market Events

Asian markets traded broadly higher, mirroring the positive session on Wall Street as investors anticipated Federal Reserve Chairman Jerome Powell’s upcoming testimony to Congress. Japan’s Nikkei reached another intraday record high, building on the momentum set by the $S&P 500(.SPX)$ , which achieved its 35th record high of the year on Monday.

The S&P 500 and Nasdaq Composite continued their record-setting trends, each marking new highs for five consecutive trading days. The S&P 500 rose by 0.1%, closing at its 35th record for the year, while the Nasdaq increased by 0.3%, achieving its 25th record close of 2024. $NVIDIA Corp(NVDA)$ $Tesla Motors(TSLA)$

The $DJIA(.DJI)$ did not share the same fortune, dropping by 31 points, or 0.1%, and is nearly 1.7% below its May 17 peak. Notably, only half of the 30 stocks in the blue-chip index rose on the day.

Market Scenario

The market scenario remains cautiously optimistic but fraught with potential risks. The S&P 500 and Nasdaq’s continued record-setting performance indicates strong investor confidence, driven largely by the impressive gains of a few key stocks. This trend underscores the market's dependence on a limited number of high-performing companies, which could pose a risk if these stocks falter.

Investors are eagerly awaiting Jerome Powell’s testimony to Congress, which is expected to provide insights into the Federal Reserve’s future monetary policy. With recent data suggesting a cooling economy, there is increased speculation that the Fed may consider cutting interest rates to support growth. This anticipation has been reflected in the bond market, with significant drops in the yields of both the 10-year and 2-year Treasury notes.

Rates

However, the high expectations for corporate earnings and potential rate cuts mean that any negative surprises could lead to increased market volatility. The divergence between the broader market and the concentrated gains of a few stocks further complicates the investment landscape, making it essential for investors to remain vigilant and diversified.

Upcoming Catalysts

Several key events in the coming week could significantly influence market sentiment and direction:

• Federal Reserve Chairman Jerome Powell’s Testimony: Powell will deliver his Semiannual Monetary Policy Report to Congress, starting with the Senate Committee on Banking. Investors will closely watch for any signals regarding future rate cuts or monetary policy adjustments.

Powell

• Consumer Price Index (CPI) for June: Scheduled for release on Thursday, the CPI report will provide crucial insights into inflation trends. The consensus estimate is for a 0.1% increase, with core CPI expected to rise by 0.2%.

• Corporate Earnings: The earnings season kicks off with reports from Delta Air Lines and PepsiCo on Thursday, followed by major banks like Bank of New York Mellon, Citigroup, $JPMorgan Chase(JPM)$ Chase, and Wells Fargo on Friday. These earnings reports will be pivotal in confirming or challenging the high growth expectations for the S&P 500.

Conclusion

The markets are currently navigating a complex landscape, characterized by strong performances from key indices and significant contributions from a small group of stocks. While the overall sentiment remains positive, driven by expectations of robust corporate earnings and potential Fed rate cuts, underlying uncertainties could lead to volatility. Investors should stay informed and prepared for potential market shifts, particularly in light of upcoming key events…

This report is for informational purposes only and does not constitute financial advice. Investing in financial markets involves risk, and you should consult with a qualified financial advisor before making any investment decisions. The information contained herein is based on sources believed to be reliable but is not guaranteed for accuracy or completeness.

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