July market recap: Confidence grows as rates may fall
July market recap: Confidence grows as rates may fall
July market recap: Confidence grows as rates may fall
08.12.2024
July was eventful. For now, investors are primarily focused on the outlook for the economy and interest rates. They are also trying to assess how AI will impact actual profits for the largest technology companies. The US stock market finished up a very normal sounding 2% for the month, but there was plenty of movement under the surface.
Confidence boost
Increasing evidence of pockets of economic softness, coupled with slowing inflation and modest increases in unemployment cemented confidence for at least a 0.5% of rate cuts this year and possibly 0.75% to 1%. Small caps have recently been viewed as the primary beneficiary of lower rates, and they responded robustly. The Russell 2000 small cap index rose 10%. Somewhat ominously, the index had one of its best months relative to the large company skewed S&P 500 since just before the dotcom bubble popped.
All eyes on AI
Nvidia continued its roller coaster. The GPU leader was up nearly 10% early in the month, then shed nearly a quarter of its value before recovering some losses in the final days of July. Investors are now more deeply scrutinizing significant spending on AI development that comes without tangible revenue or earnings benefits. The tech heavy Nasdaq 100 entered correction territory (down more than 10% from a recent high) in early August.
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Market stats and data mentioned in the text are sourced from Empower’s internal YCharts, as of August 2, 2024.
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Craig Birk, CFP®
Contributor
Craig Birk is the Chief Investment Officer for Empower Personal Wealth. A CERTIFIED FINANCIAL PLANNER™ professional, he is responsible for Empower’s retail investment portfolio, providing strategic and executive direction to drive the optimal management of client assets.
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