The S&P 500's Summer Ends with Index Nearing Record High

The S&P 500 (Index: SPX) reached the end of Summer 2024 on the verge of reaching a new record high. The index closed out the final week of August 2024 at 5,648.40, just 18.8 points (0.3%) below its all-time record high close it set on 16 July 2024.

Part of what makes that remarkable is the share of the index’ market capitalization claimed by its top 10 component stocks shrank during the last two months. Our summer snapshot found these stocks represented nearly 35.8% of the entire value of the index. Two months later, their share of the index’ total valuation has fallen to just over 34.0%.

That’s the conveyance effect in action, in which investors taken their gains from top-flying stocks like Nvidia (NASDAQ: NVDA) and are rotating into other stocks within the index, boosting their relative valuations.

With respect to the dividend futures-based model‘s alternative futures chart, that was enough to keep the trajectory of the index close to the top end of the latest redzone forecast range on the chart, as expected. Here’s the latest update of the chart:

Overall, it was a slow news week following the previous week’s major events, which was also to be expected ahead of the long U.S. Labor Day holiday weekend. Here are the market-moving headlines from the week that was:

Monday, 26 August 2024

• Signs and portents for the U.S. economy:

• Oil up 3% on Libya halt, Mideast escalation fears

Surging grocery prices in focus as US tries to stop Kroger deal

Fed minions changing monetary policy too slow, maybe not enough:

• Fed’s shift to job market risks is done; now policy has to catch up
• Fed most likely to cut rates by quarter percentage point next month, Daly says

Bigger trouble developing in China:

• China’s low-altitude economy lacks growth roadmap, says industry group

BOJ minions dealing with self-inflicted credibility problem:

• BOJ shows how action matters more than hawkish signs

Wall Street ends mixed with S&P and Nasdaq lower, while the Dow hits all-time high

Tuesday, 27 August 2024

• Signs and portents for the U.S. economy:

• Oil prices fall 2% on economic worries, technical decline
• US house prices fall on monthly basis in June

BOJ minions wonder if they should include wage trends in their economic analysis:

• BOJ to begin initial research to include wage trends to ‘tankan’

ECB minions say more rate cuts ahead, claim they’re not sure yet about September:

• ECB can gradually cut rates but jury still out on September, Knot says

Nasdaq, S&P eke out slight gains, Dow notches new record close ahead of Nvidia test

Wednesday, 28 August 2024

• Signs and portents for the U.S. economy:

• US 30-year mortgage rate falls to lowest since April 2023
• Oil retreats as demand concerns offset Libya supply risks

Fed minions send confused message:

• Fed’s Bostic: it is ‘time to move’ on rate cuts, but wants to be sure

Bigger stimulus developing in China:

• China accelerates coal mining to ensure winter power supply

BOJ minions claim they’ll raise interest rates if Japan’s economy can afford them:

• BOJ’s Himino reiterates readiness to raise rates if economy on track

Nasdaq falls more than 1% as tech stocks tumble before big test in Nvidia earnings

• NVIDIA in charts: Data Center revenue continues to surge, but growth rate slows
• Nvidia fails to impress growth-hungry investors, shares fall

Thursday, 29 August 2024

• Signs and portents for the U.S. economy:

• US second-quarter economic growth revised higher on consumer spending
• US pending home sales tumble to record low in July
• Oil settles up over 1% on worries over supplies from Libya, Iraq

Bigger trouble, bailouts developing in China:

• China’s factory activity seen extending declines in Aug
• China’s central bank buys government bonds, stirs intervention talk

BOJ minions surprised to have better economic news:

• Japan raises economic assessment for first time in 15 months

ECB minion claims to worry about cutting Eurozone interest rates too quickly:

• ECB’s Nagel warns against cutting rates too quickly

Dow notches new record close; Nasdaq falls as Nvidia loses nearly $200B in market cap

Friday, 30 August 2024

• Signs and portents for the U.S. economy:

• Oil prices face pressure from slow China demand and inventory rise – Reuters poll
• Solid US consumer spending pushes against hopes for hefty Fed rate cut
• U.S. home prices forecast to rise modestly as Fed cuts rates – Reuters poll
• Fed’s preferred inflation gauge rises 2.6% Y/Y in July, slightly less than expected

Fed minions expected to deliver September 2024 rate cut:

• Fed seen on track for September rate cut as inflation cools

Bank of China minions thinking about how to fix Chinese economy:

• China’s interest rate reform will be ‘arduous, long’ process
• China is fixing housing market with a long gaze

BOJ minions get data to support more rate hikes, but probably won’t:

• Core inflation in Japan’s capital perks up, backs case for BOJ hikes

ECB minions get data to support their next rate cut, thinking about even more:

• Lowest euro zone inflation in 3 years sets up ECB for cut
• ECB’s Schnabel keeps door open to further rate cuts

S&P 500 inches up after upbeat economic data

• Wall Street ends wild August on a positive note as Nasdaq, S&P gain +1% each
• Eventful August sees S&P plunge, then go into recovery mode to clock +2% monthly gains

The CME Group’s FedWatch Tool forecast was unchanged. It continues to anticipate the Fed will hold the Federal Funds Rate steady in its current target range of 5.25-5.50% until 18 September (2024-Q3). On that date, the Fed is expected to start a series of 0.25%-0.50% rate cuts that will occur at six-week intervals well into 2025.

The Atlanta Fed’s GDPNow tool‘s projection of the real GDP growth rate for the current quarter of 2024-Q3 rebounded to +2.5% from the previous week’s projection of +2.0% growth.

Image credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon of a Wall Street bull getting excited as the S&P 500 gets close to setting a new record high”.