By any standard measure, the second quarter was good for stocks, especially big ones, with plenty of record performances.
there was nvidia (NVDA) The “fashionable” stock rose 10.3% in the month and 149% in the year. But the monthly gain, as good as it was, wasn't the best among S&P 500 stocks.
Or arms (ARM) the chip designer, essential for mobile phones. He went public last fall. It was up 36% in June and is up almost 118% for the year.
How about a Super Micro Computer? (SMCI) ? It was up 4.4% in June, down 18.9% in the second quarter, but up 188.24% for the year. And, oh yeah, the stock was up 255.3% in the first quarter.
Related: Falling Nvidia Stock Keeps Markets Alert to Possible S&P 500 Correction
At the same time, Walgreen Boots Alliance (AMB) was kicked out of the Dow Jones Industrial Average this winter. The drugstore chain announced this week that it was closing thousands of stores. Shares at $12.10 on June 28 fell 25% in June alone. They are off 54% this year.
Troubled aerospace giant Boeing (licensed in letters) ended June up 2.5%. There's not much to cheer about when stocks are down 30% by 2024. It could be worse. Intel (INTC) Once the chip giant, it has fallen 38% this year.
Markets in brief
The reality of the stock market in 2024: It's all about tech and big stocks. They've been winning big, but many have been overbought and are treading water.
The S&P 500 rose a respectable 3.5% in June, with a 3.9% gain in the second quarter. Year-to-date, the index is up 14.5%, after a 10.2% rise in the first quarter.
Two sectors are the biggest drivers of the S&P: technology and communications services, led by Alphabet, Google's parent company. (GOOGL) and the main facebook metaplatforms (GOAL) . Each is up more than 25% this year.
The Nasdaq Composite rose nearly 6% in June and is up 18.1% for the year. In theory, on track to match 2023's 39% increase.
The Dow Jones is also dominated by Intel, Boeing and Nike. (OF) , all are down more than 30% this year. The venerable index finger looks tired. It rose just 1.3% in June, fell 1.6% in the second quarter and will rise just 4% in 2024.
The very strange day of the Nasdaq-100
The Nasdaq-100 index, also known as the Nasdaq on steroids, offers a glimpse of the risks. The index is up 17% year-on-year, 6.2% in June and 7.8% in the quarter.
The components include Microsoft, Apple, amazon, facebook and Alphabet parent companies. In addition to Nvidia and Tesla (TSLA) and Costco Wholesale (COST) .
June 28 was, well, strange for the Nasdaq-100, and the story makes one wonder if the markets are too tense.
The index rose more than 200 points just after the opening on June 28 and crossed the 20,000 level for the first time, reaching a high of 20,018.
And then many investors (or their computers) sold heavily and the index fell by another 351 points.
Options expirations probably had something to do with the declines. However, the selling seemed extreme.
The close was 19,683, down 0.5% and 226 points below its all-time closing high of 19,909 on June 18.
Market highs usually look like this.
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The risks for the rest of 2024
Wall Street is full of optimists raising their year-end targets, for example, on the S&P 500. They believe the index will end the year at 6,000 points, maybe higher. But the stock market has dragged many analysts to those numbers because many assumed there would be a recession this year.
They now say they expect several years of economic growth, job creation and massive increases in stock prices.
They are not concerned about war or even politics.
There are more and more skeptics.
Yes, big stocks are up a lot, and maybe they are too big. Ten stocks now account for nearly 36% of the S&P 500's market cap. Especially tech stocks and stocks like pharmaceutical giant Eli Lilly. (LYLY) which is up 55.3% this year and has a market capitalization of $860.5 billion.
But, frankly, the markets stumbled out of June and may have trouble revitalizing themselves. Mid-cap and small-cap stocks are not rising. Interest rates may remain stagnant if the Federal Reserve does not reduce them.
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A slowing market may reflect economic strains, said David Rosenberg, former chief North American economist at Merrill Lynch, who now runs a Toronto-based consulting firm.
According to Rosenberg, there are currently two economies at work: one good for the rich and a recession, which hits middle-class and low-income workers hardest.
The situation is made worse by the fact that the Fed is so data-dependent that it appears to want absolute confirmation that inflation is actually heading toward its 2% annual target.
Waiting can create its own problems. Many families are barely scraping by and many will find themselves in dire straits if they are out of work for more than three months. The tensions are seen in the usual news about small businesses going under: restaurants, butcher shops, toy manufacturers.
Rosenberg's advice to Jerome Powell: Don't wait to cut interest rates. The economy needs help now. He's skeptical that the Fed will act. “They're too afraid to move rates prematurely.”
What awaits us this week?
I hate to say it, but this week will be slow. Thursday is the Fourth of July holiday. Markets will close early on Wednesday. Canadian markets will be closed on Monday. Many investors will head to the beach.
July's most important economic report will be released on Friday with the U.S. monthly employment report. Bureau of Labor StatisticsThe consensus estimate is that payrolls will increase in June by 180,000 jobs, while the unemployment rate will remain at 4%.
The employment portion of the report will be closely watched because the May report estimated that 272,000 jobs had been created, much more than expected.
There are few earnings reports to move markets. One to keep an eye on is Constellation Brands (STZ) marketer of Corona beers, as well as a large portfolio of wineries and Svedka vodka.
Related: Veteran fund manager picks his favorite stocks for 2024
