US indexes ended the day lower, despite market excitement over the latest PCE data, with both headline and core personal consumption expenditure readings coming in at 2.6% year-to-year. The stock market closed out the first half of 2024 strongly, with the S&P 500 up nearly 15%. However, on Friday, US indexes slid after reaching temporary record highs, as investors analyzed the latest inflation report which showed the PCE price index hitting its lowest reading in three years.
The soft inflation data could potentially pave the way for the Fed to start cutting rates in the coming months, especially if incomes continue to grow. Personal spending increased month-to-month, with real goods spending bouncing back from a weak April. Investors are optimistic about potential interest rate cuts this year, despite the soft inflation reading not being enough to maintain Friday’s gains. The market is also showing signs of a worrying bifurcation, with only a few stocks leading index gains and concerns about a potential AI-led bull run.
The markets closed on Friday with US indexes in the red, despite strong gains in the first half of 2024. While the S&P 500 posted a significant increase, the Dow and Russell lagged behind, prompting questions about potential weaknesses in the market going forward. With interest rates remaining elevated and concerns about the overall market leadership, investors are closely watching for clues about the future direction of the economy and the potential impact on stock performance.