Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.
The core PCE index in the United States rose by 0.2% on a month-on-month basis in July, which was in line with Wall Street expectations.
Data released by the US Department of Commerce on Friday showed that the core personal consumption expenditure (PCE) price index, a key inflation indicator monitored by the Federal Reserve, rose by 0.2% on a month-on-month basis in July, which was in line with Wall Street expectations and consistent with the increase in June. It increased by 2.6% year-on-year, but was lower than the analyst's expectation of 2.7%. Adjusted for inflation, US consumer spending in July increased by 0.4%, accelerating from the previous month.
This Friday's report supports market expectations that the Federal Reserve is about to ease monetary policy restrictions. Combined with signs of weakness in the labor market and ongoing cooling of inflation, this explains why Fed Chairman Jerome Powell said last week that the central bank's "timing to lower borrowing costs" has arrived and is likely to take action next month.
It is reported that since Powell's speech in Jackson Hole almost confirmed that the Fed will evaluate inflation and stated that "the time for policy adjustment is now", he has expressed his views on inflation data for the first time. Powell also stated that he is "more confident" that inflation will fall back to the Fed's 2% target. Therefore, Friday's report is unlikely to change Powell's assessment of the current economic situation.
Economists generally believe that although the decline in inflation is the main consideration for the Fed's interest rate cut, concerns about the worsening labor market are increasingly the focus. Ryan Sweet, Chief U.S. Economist at Oxford Economics, stated that this has reduced the importance of monthly inflation data.
Svett pointed out on August 23: "This will not be smooth sailing, inflation data will encounter obstacles along the way." But he also mentioned that the inflation indicator favored by the Fed is not far from the Fed's target.
Market analysts also said that if the Jackson Hole meeting basically confirmed that the Fed is prepared to cut interest rates in September, then the inflation data on Friday consolidated the scenario of a 25 basis point cut, not 50 basis points. The data performance is basically in line with expectations, the yield has hardly changed, and the market is still betting on a smaller rate cut next month. Traders still expect a significant rate cut in November or December, but if prices continue to gradually cool down without a larger-than-expected drop, the market may reconsider this expectation.
It is understood that investors generally expect the Fed to cut interest rates in September, but the specific magnitude of the rate cut is still to be discussed. As of the time of publication, according to the FedWatch tool of the Chicago Mercantile Exchange, the market expects a 50 basis point rate cut by the Fed at the end of the September meeting to be about 33%.
After the report was released, the spot price of gold fell slightly in the short term, to $2519.96 per ounce, and then rebounded to around $2522.87 per ounce. This fluctuation reflects a mild reaction from the market to the PCE data, and investors have not made significant adjustments to their positions based on the data.
At the same time, the U.S. dollar index rose by 16 points in the short term, to 104.48, indicating that the strength of the U.S. dollar is still continuing.
The yield of the 10-year U.S. Treasury bond has reversed its previous decline, with a daily increase of 0.54% to 3.882%. The rise in bond yields indicates that the market is still cautious about the Fed's rate cut expectations in the short term. On the other hand, U.S. equity index futures also rose slightly after the PCE data was released, indicating that investors are still optimistic about the economic growth prospects.
Editor / jayden