By any standard measure, the second quarter was good for stocks, especially big stocks, with a ton of record-setting performances.
There was Nvidia (NVDA) , the "it" stock, up 10.3% for the month and 149% on the year. But the monthly gain, nice as it was, wasn't the best among S&P 500 stocks.
Or Arm Holdings (ARM) , the chip designer, critical to cell phones. It went public last fall. It was up 36% in June and is up nearly 118% on the year.
How about Super Micro Computer (SMCI) ? It was up 4.4% in June but DOWN 18.9% for the second quarter but UP 188.24% for the year. And, oh yes, the shares jumped 255.3% in the first quarter.
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At the same time, Walgreen Boots Alliance (WBA) was booted out of the Dow Jones Industrial Average this winter. The pharmacy chain announced this week it was going to shutter thousands of stores. The shares at $12.10 on June 28, were down 25% in June alone. They're off 54% this year.
Troubled aerospace giant Boeing (BA) ended June up 2.5%. Not much to cheer about when the stock is down 30% for 2024. It could be worse. Intel (INTC) , once the chip colossus, has slumped 38% this year.
Markets in brief
The stock market's 2024 reality: It is about tech and big stocks. They've been winning in a big way. But many have become overbought and are starting to treading water.
The S&P 500 was up a respectable 3.5% in June, with a 3.9% gain for the second quarter. For the year, the index is up 14.5% — after 10.2% gain in the first quarter.
Two sectors are the S&P's biggest drivers: technology and communications services, led by Google-parent Alphabet (GOOGL) and Facebook parent Meta Platforms (META) . Each is up more than 25% this year.
The Nasdaq Composite climbed nearly 6% in June and is up 18.1% for the year. On pace, in theory, to match 2023's 39% gain.
The Dow is an also-ran, saddled with Intel, Boeing and Nike (NKE) , all down more than 30% this year. The venerable index looks tired. It was up just 1.3% in June, fell 1.6% in the second quarter and is up just 4% in 2024.
The Nasdaq-100's very strange day
The Nasdaq-100 Index, aka the Nasdaq on steroids, offers a glimpse into the risks. The index is up 17% on the year, 6.2% for June and 7.8% in the quarter.
Components include Microsoft, Apple, Amazon, Facebook-parent Meta Platforms, and Alphabet. Plus Nvidia, Tesla (TSLA) , and Costco Wholesale (COST) .
June 28 was, well, weird for the index and makes one wonder if markets are too stretched.
The index jumped more than 200 points right after the June 28 open. It crossed the 20,000 level for the first time, topping out at 20,018.
But then many investors (or their computers) sold heavily, and the index dropped back more 351 points, closing at 19,683, off 0.5% — and 226 points below its record closing of 19,909 on June 18.
Options expirations probably had something to do with the selling. The selling, though, seemed extreme. Market tops often look like this.
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The risks facing the rest of 2024
Wall Street is full of bulls, boosting their year-end targets on, say, the S&P 500. They see the index ending the year maybe at 6,000, maybe higher. But the stock market has dragged many analysts into those numbers because so many assumed a recession this year.
Now, they're saying they expect multiple years of economic growth, job creation, and massive increases in stock prices.
They aren't worried about war or even politics.
Increasingly, there are skeptics, mostly because they see signs of weakening.
Yes, the big stocks are up big, maybe too high. Ten stocks now represent nearly 36% of market capitalization of the S&P 500. Especially tech stocks and shares like those of pharma giant Eli Lilly (LLY) , up 55.3% this year with a market capitalization of $860.5 billion.
But markets, frankly, stumbled as June ended and may have trouble getting reenergized. Mid-cap and small-cap stocks — especially non-tech related stocks — aren't rising.
Interest rates may be stuck if the Fed doesn't cut rates.
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A stalling market may reflect economic stresses, said David Rosenberg, former chief North American economist at Merrill Lynch and head of a Toronto-based consulting firm.
There are two economies at work now: a good one for the affluent, and a recession, hitting middle class- and lower-income workers hardest, according to Rosenberg.
It's made worse because the Federal Reserve is so data dependent, wanting, seemingly, absolute confirmation that inflation is really headed to its goal of 2% a year from current levels of 2.6% to 3%.
Waiting may create its own problems. Many families enjoyed the Covid checks they received, Rosenberg says. Now, the cash is gone, and they are barely hanging on.
One sees the stresses in regular news stories of small businesses going under: restaurants, butcher shops, toy makers.
Rosenberg's advice to Jerome Powell: Don't wait to cut interest rates. The economy needs help now. But he's skeptical the Fed will move. "They're too scared to move rates prematurely."
What's ahead this week
Hate to say it, but this week will be slow. The July 4 holiday is Thursday. Markets will close early on Wednesday. Canadian markets will be closed on Monday for Canada Day. Many investors will be headed to the beach.
July's biggest economic report will come Friday with the monthly jobs report from the Bureau of Labor Statistics. The consensus estimate is that payrolls will be up in June by 180,000 jobs, with the unemployment rate holding at 4%.
The jobs piece of the report will be closely watched because the May report estimated 272,000 jobs had been created, much more than expected.
There are few earnings reports that will move markets. One to watch is Constellation Brands (STZ) , the marketer of Corona beers plus a big portfolio of wineries and Svedka vodka.
Related: Veteran fund manager picks favorite stocks for 2024
