Market Pulse — Week in Review — 2024–06–16

The S&P 500 index closed the week at 5,431.60, down slightly by 0.04% from the previous week’s close. However, the index remains up 14.52% year-to-date and has set 29 new all-time highs so far in 2024. Key market indicators suggest continued bullish resilience, with the Nasdaq managing a 5th straight record closing high and the S&P 500 showing broad market strength.

While some analysts fear a potential correction ahead, the majority of Wall Street forecasters have been struggling to keep up with the stock market’s relentless surge, repeatedly revising their year-end targets higher. Progress is being made on the inflation front, but the Federal Reserve is likely to maintain its hawkish stance until more substantial progress is achieved, delaying any potential rate cuts.

The technology sector was a standout performer, with Nvidia (NVDA) accounting for over a third of the S&P 500’s gains so far this year. However, this concentration of returns in a single stock poses a risk for investors, as any negative headlines could have an outsized impact. Other notable movers included Hasbro (HAS), which gained 6.00%, and Gilead Sciences (GILD), which rose 3.62%. On the downside, Norwegian Cruise Line (NCLH) and Carnival Corporation (CCL) fell 7.49% and 7.09%, respectively, amid ongoing concerns about the travel and leisure industry.

S&P 500 and Stock Market Analysis

The S&P 500 has demonstrated impressive resilience and bullish momentum over the past month, climbing 1.6% from the previous week and reaching new all-time highs on multiple occasions. Key technical indicators point to continued bullish strength, with the index maintaining a “Strong Buy” rating on the daily, weekly, and monthly timeframes.

Fundamental factors such as robust corporate earnings, easing inflation, and a relatively dovish Federal Reserve have fueled the market’s upward trajectory. The S&P 500 closed at 5,431.60 on June 14th, down slightly by 0.04% from the previous trading session but up 1.58% from the prior week. The index has established a new 52-week high of 5,447.25, reflecting the strength of the current uptrend.

Technical indicators paint a bullish picture, with the 50-day and 200-day moving averages continuing to provide solid support. Momentum indicators such as the Relative Strength Index (RSI) and the MACD suggest the upward trend remains intact, though overbought conditions may lead to some near-term consolidation. However, concerns remain over the concentration of returns in a handful of large-cap tech stocks, such as NVIDIA, which account for a significant portion of the S&P 500’s gains.

Commodity Market Analysis

The commodities market has seen mixed performance over the past week, with some key commodities experiencing gains while others declined. Gold prices rose 1.31% over the past week, reaching $2,348.40 per ounce, as investors sought safe-haven assets amidst market volatility. Silver also gained 1.92% to $29.625 per ounce, benefiting from the broader strength in precious metals.

Copper edged up 0.38% to $4.4985 per pound, reflecting resilient industrial demand despite global economic headwinds. Platinum rose 0.88% to $963.00 per ounce, outperforming other precious metals as supply concerns and automotive sector demand provided support. Crude oil prices were mixed, with WTI crude declining 0.17% to $78.49 per barrel, while Brent crude slipped 0.10% to $82.67 per barrel.

The overall sentiment in the commodities market remains cautious as market participants navigate economic uncertainties and geopolitical risks. The Federal Reserve’s ongoing interest rate hikes and the potential for further tightening continue to influence commodity prices and investor sentiment. Geopolitical tensions, such as the Russia-Ukraine conflict, have the potential to disrupt global supply chains and impact commodity prices. Investors should closely monitor the evolving market conditions, economic indicators, and geopolitical developments to identify potential opportunities and manage risks accordingly.

Cryptocurrency Market Analysis

The cryptocurrency market has seen mixed signals, with uncertainty surrounding the sustainability of the robust net inflows into cryptocurrencies so far this year. JPMorgan analyst Nikolaos Panigirtzoglou expressed concerns about the high price of bitcoin relative to the cost to produce it or relative to gold, suggesting that the current pace of crypto inflows may not be sustainable.

However, the crypto industry has received a boost from the U.S. Securities and Exchange Commission’s (SEC) approval of spot bitcoin exchange-traded products in January, and bitcoin’s price surge to a record high of over $73,000 in March has contributed to increased funding activity in the crypto space. Cryptocurrency startups have drawn over $100 billion in total funding since 2014, with $3.54 billion raised up to May this year alone.

Bernstein analyst Gautam Chhugani initiated coverage of MicroStrategy (MSTR), the largest corporate holder of bitcoin, with an Overweight rating. Chhugani upwardly revised his bitcoin price target to $200,000 by 2025, driven by robust demand for the token and constrained supply. This bullish outlook on MicroStrategy diverges from the Seeking Alpha Quant system’s Hold rating and the average Seeking Alpha analyst rating of Sell, but aligns with the average Wall Street analyst rating of Strong Buy.

Conclusion and Recommendations

The overall market environment remains bullish, with the S&P 500 and Nasdaq continuing to demonstrate impressive resilience and strength. However, the concentration of returns in a handful of stocks, particularly Nvidia, poses a risk that investors should be mindful of. While the Federal Reserve’s hawkish stance may lead to some near-term volatility, the underlying fundamentals and technical indicators suggest the potential for the market to continue its upward trajectory in the coming weeks, barring any unexpected shocks.

In the commodities market, investors should closely monitor the evolving market conditions, economic indicators, and geopolitical developments to identify potential opportunities and manage risks accordingly. A diversified approach and a focus on fundamental analysis can help navigate the volatility in the commodities market.

As for the cryptocurrency market, the sustainability of the robust crypto inflows remains a key concern, and investors should exercise caution. However, the approval of spot bitcoin exchange-traded products and the continued funding activity in the crypto space suggest potential opportunities for those willing to navigate the risks. Investors should carefully evaluate the market dynamics and seek professional guidance before making any investment decisions in the cryptocurrency space.