What Next For S&P 500 After It Gains 26% From 52-Week Lows

Last Friday saw a slight dip in stocks, which concluded an impressive week where the Federal Reserve held off on rate hikes, and inflation data appeared promising. The S&P 500 was down by 0.37%, ending at 4,409.59, while the Dow Jones fell 108.94 points, or 0.32%, to end at 34,299.12. The Nasdaq Composite saw a 0.68% decline to wrap up the session at 13,689.57.

 

In the last week:

• The S&P 500 saw a 2.6% increase, marking its best performance since March and its fifth consecutive positive week, a streak not seen since November 2021. ItU+02019s also up 26% from its bear market low. 

• The Nasdaq Composite experienced about a 3.3% hike this week, its best performance since March. ItU+02019s been on an upward trend for eight weeks straight, the longest winning streak since 2019. The Nasdaq and S&P 500 had six successive days of gains leading to Thursday.

• The Dow Jones saw a weekly increase of nearly 1.3%, making it the third positive week in a row. The S&P 500 and Nasdaq achieved their highest levels since April 2022.

Investors were heartened this week when the Federal Reserve decided to leave rates as they were after ten consecutive increases. Although the Fed indicated two more rate hikes this year, it could soon halt these increases. In other positive news, the May consumer price index was the lowest in two years.

 

Adobe stock gained pace last week 

AdobeU+02019s (NASDAQ: ADBE) shares rose by 0.9% following a positive results announcement and promising future guidance. Tech stocks rallied, with Nvidia (NASDAQ: NVDA) surging 10% and Microsoft (NASDAQ: MSFT) adding 4.7% this week, hitting a record on Thursday. 

The stock market was buoyed by the belief that the growth of AI isnU+02019t slowing down anytime soon. Ed Moya, senior market analyst at Oanda, commented that the current bullish trend might continue if AIU+02019s popularity persists. 

Further good news arrived on Friday, with one-year inflation expectations for consumers falling to 3.3% from 4.2%. The University of MichiganU+02019s Survey of Consumers also presented a higher-than-expected headline reading of 63.9.

Despite these achievements, traders experienced some volatility on Friday due to fluctuating stock options, index futures, and index future option contracts. This marks the end of trading ahead of a long weekend, with MondayU+02019s closure in observance of Juneteenth.

 

Housing market data in focus

The National Association of Home Builders (NAHB) is set to disclose its June Housing Market Index on Monday, offering insight into homebuildersU+02019 sentiments. Projections indicate a score of 48, slightly lower than MayU+02019s 50 - the highest level since July of the previous year. This follows a recovery period this year after the index dropped in 2022 due to soaring mortgage rates deflating housing demand.

On Tuesday, weU+02019ll get a snapshot of MayU+02019s housing starts and building permits from the U.S. Census Bureau, indicative of home construction activity and overall inventory. Expectations suggest a marginal increase in housing starts to 1.405 million units from AprilU+02019s 1.401 million, which contrasts with the two-year low of 1.34 million recorded in January.

PowellU+02019s Congressional Appearance Federal Reserve Chair Jerome Powell is slated to appear before Congress on Wednesday and Thursday for his biannual update on monetary policy. This appearance follows last weekU+02019s Federal Open Market Committee (FOMC) meeting, where Fed officials decided to keep interest rates unchanged after ten successive hikes aimed at tempering inflation.

While inflation has significantly decelerated from the highs seen last summer, the FedU+02019s recent dot plot implies that if inflation remains high, there could be two more hikes this year, taking the benchmark fed funds rate to 5.6%.