In the first half of 2024, the U.S. stock market, as represented by the S&P 500 index, demonstrated robust performance, culminating in a near-record high by the end of June. Despite modest declines towards the end of the period, the index closed at 5,460.48, just 0.5% below its peak recorded on June 18. This performance marked a significant increase of 14.5% year-to-date, largely driven by the exceptional gains in prominent Big Tech stocks.
Mike Skordeles, head of U.S. economics at Truist, highlighted the ongoing resilience of the U.S. economy, characterizing the current growth as cooling but not weak. He noted that inflationary pressures have started to ease, aligning with expectations and reflecting the Federal Reserve’s efforts to achieve sustainable inflation around its 2% target without precipitating a recession. Recent data from the Bureau of Economic Analysis indicated that the personal-consumption expenditures price index was flat in May, while the year-over-year rate slowed to 2.6%. Core inflation, which excludes volatile food and energy prices, also showed signs of moderation, increasing by 0.1% in the same month but easing to 2.6% annually.
Kevin Gordon, senior investment strategist at Charles Schwab, echoed this sentiment, describing the latest inflation figures as dispelling concerns about a persistent uptick seen earlier in the year. He noted a downward revision in consumer spending as reported in the first-quarter GDP data, suggesting further potential downward pressure on inflation. Despite ongoing challenges, such as inflation affecting lower-income consumers, Gordon emphasized the overall resilience of U.S. consumers, supported by a robust labor market characterized by low unemployment rates.
Looking ahead, Skordeles projected a moderate expansion of around 2% for the U.S. economy in 2024, underscoring a cautious optimism amid evolving economic conditions. Meanwhile, the S&P 500’s notable gains were driven prominently by a select group of Big Tech stocks, with Nvidia Corp. leading the pack with a remarkable 149.5% surge year-to-date. Other major tech giants such as Meta Platforms Inc., Alphabet Inc., Amazon.com Inc., and Microsoft Corp. also contributed significantly to the index’s performance.
Despite the impressive headline numbers, Gordon noted underlying market dynamics, describing 2024 as “a tale of two markets.” While mega-cap stocks buoyed the index with substantial gains, a broader swath of S&P 500 constituents experienced more volatility and weaker performance. Nevertheless, approximately two-thirds of the index’s components consistently traded above their 200-day moving average throughout the year, indicating overall strength despite periodic corrections and sector-specific challenges.
Overall, the first half of 2024 showcased both the resilience of the U.S. stock market and ongoing economic adjustments in response to changing global conditions and policy measures. As investors navigate these dynamics, attention remains focused on maintaining economic stability and sustainable growth in the months ahead.