The final trading day of Q2 marked an extraordinary first half of the year, with the Nasdaq Composite recording a +31.7% increase — the best since 1983. Mega-cap stocks drove the market, securing gains throughout the session.
- Dow climbed +285.18 to 34407.51
- Nasdaq surged +196.59 to 13788.30
- S&P increased +53.94 to 4451.65
Early market movements were influenced by Citigroup’s new coverage of Apple (AAPL 193.97, +4.38, +2.3%), which initiated with a Buy rating and a $240 price target. Apple crossed the $3 trillion market capitalization milestone. Concurrently, NVIDIA (NVDA 423.02, +14.80, +3.6%) was upgraded to Outperform from Neutral by Daiwa Securities.
These significant ratings stimulated the mega-cap stocks, further fueled by the release of May’s Personal Income and Spending Report.
Economic Overview
The report suggested a potential recession evasion by the U.S. economy. Notably, the metrics were neither remarkably strong nor decisively weak:
- Personal income: +0.4%
- Personal spending: +0.1%
- PCE Price Index: +0.1%
- Core-PCE Price Index (excludes food and energy): +0.3%
Crucially, the YoY increase for both the PCE Price Index and the core-PCE Price Index saw a slight moderation. The CME FedWatch Tool indicates an 84.3% likelihood of a 25-basis points rate hike in July, but a significantly lower 20.2% chance for a second hike at the September FOMC meeting.
Post-report, yields dipped briefly before the 2-yr note yield settled at 4.88% and the 10-yr note yield at 3.82%.
Closing Figures
The Dow, Nasdaq, and S&P 500 concluded near session highs. Although trailing Friday’s action, the Russell 2000 still registered a 0.4% gain. All 11 S&P 500 sectors ended higher, with the information technology (+1.8%) and consumer discretionary (+1.4%) sectors performing best.
Vanguard Mega-Cap Growth ETF (MGK) leapt 1.5%, concluding the quarter with a 15.1% gain and a 36.8% increase YoY. Meanwhile, Invesco S&P 500 Equal-Weight ETF (RSP) rose 0.9%, ending the quarter 3.5% higher and a 6.0% increase YoY.
Performance YTD
- Nasdaq Composite: +31.7%
- S&P 500: +15.9%
- S&P Midcap 400: +7.9%
- Russell 2000: +7.2%
- Dow Jones Industrial Average: +3.8%
Key Economic Data
May’s figures showed a slight increase in personal income (+0.4%) and spending (+0.1%), and a small advance in the PCE Price Index (+0.1%). The core-PCE Price Index also increased (+0.3%), indicating some inflationary persistence.
The June University of Michigan Consumer Sentiment Index rose to 64.4, suggesting consumers’ economic outlook has improved as inflation expectations eased.
The June Chicago PMI came in at 41.5, an improvement over May, but still indicating economic contraction.
Looking Ahead
Monday will deliver several key data releases, including:
- June IHS Markit Manufacturing PMI – Final (Prior 48.4)
- May Construction Spending (Briefing.com consensus 0.4%; Prior 1.2%)
- June ISM Manufacturing Index (Briefing.com consensus 47.1; Prior 46.9)
