The Nasdaq Composite Index rose slightly on Friday, hitting a record high for the fifth straight day, as new data released last week showed continued slowing inflation and Treasury yields fell. This week, the tech-heavy Nasdaq rose 3.2%, the S&P 500 rose 1.6%, and the Dow Jones Industrial Average fell 0.5%. Economic updates helped drive the gains. First, the Consumer Price Index (CPI) for May, released on Wednesday, was lower than expected and flat from April. Economists had been expecting a 0.1% increase. The next day, the Producer Price Index (PPI) fell 0.2%, defying expectations of a 0.1% increase. (The CPI measures the prices of a set of goods and services across the U.S. economy, while the PPI is an indicator of the prices producers get for their goods and services in the market.) Both announcements were welcomed by investors. They indicate that the Federal Reserve’s two-year plan to raise interest rates and keep them high to tame inflation continues to work. As prices fall, the hope is that the central bank will start cutting rates again. Federal Reserve Chairman Jerome Powell addressed the developments following Wednesday’s FOMC decision to keep interest rates unchanged. However, the chairman said more data is needed before any cuts. The chairman suggested that one rate cut by the end of the year would likely be appropriate. The market does not seem to agree. As of Friday, the CME FedWatch tool was calling for the highest probability of two rate cuts this year, with the first in September and the second in December. Among the S&P 500 sectors, information technology was the biggest winner this week, rising nearly 6% on the back of big moves from club names Apple and Broadcom, Oracle and Adobe. It was also boosted by portfolio heavyweight Nvidia, which rose 8.5% after Monday’s 10-for-1 stock split. Meanwhile, the energy sector was the biggest loser, followed by the financial and industrial sectors. Within the club this week, we heard news of Broadcom, which reported strong quarterly earnings and announced a 10-for-1 stock split of its own company. No portfolio companies are reporting earnings in the coming week. Technology was the big winner in Q1, with 89% of companies in the sector reporting better than expected results. This was followed by Healthcare at 88% and Consumer Staples at 84%, according to FactSet. Real estate led the way in terms of earnings, with 74% of companies reporting positive earnings surprises, followed by Technology at 71% and Healthcare at 69%. Given that U.S. markets are closed on Wednesday for Independence Day, here are some things to watch in the coming week: Retail sales. May earnings are released on Tuesday, which will provide some insight into the resilient consumer. Where are people spending their money? What are they cutting back on? Investors are expecting an overall 0.3% increase for the month, according to FactSet. Industrial production and capacity utilization. This gives a glimpse into the strength of manufacturing, mining, and electric and gas businesses. Economists expect industrial production to grow 0.3% month-on-month, and capacity utilization to rise slightly month-on-month to 78.6%, according to FactSet. Housing. May housing starts and existing home sales will be the highlights of the weekend. Housing costs are a big driver of rising inflation, so Wall Street would welcome any signs of easing. Earnings. There are no portfolio company earnings reports, but two are worth watching: Lennar on Monday and Darden Restaurants on Thursday. Lennar is one of the largest homebuilders in the U.S., so it can use the announcement to indirectly get further clues about the future trajectory of inflation. Ideally, we would expect supply to increase, as that will be key to easing price inflation and thus the Fed’s interest rate cuts later this year. Darden Restaurants, which operates Olive Garden, Longhorn Steakhouse, Yard House, and more, will provide another view of consumer spending. Monday, June 17th After the bell: Lennar (LEN), La-Z-Boy (LZB) Tuesday, June 18th 8:30 AM ET: Retail sales 9:15 AM ET: Industrial production and capacity utilization Before the bell: Americas CarMart (CRMT) After the bell: KB Home (KBH) Wednesday, June 19th US stock markets are closed in observance of Juneteenth. Thursday, June 20th at 8:30am ET: Initial unemployment claims 8:30am ET: Housing starts Before the bell: Accenture (ACN), Kroger (KR), Darden Restaurants (DRI), Jabil (JBL) After the bell: Smith & Wesson (SWBI) Friday, June 21st at 10am ET: Existing home sales Before the bell: CarMax (KMX), FactSet (FDS) (For a complete list of Jim Cramer’s charitable trust stocks, click here.) Subscribers to Jim Cramer’s CNBC Investment Club receive trade alerts before Jim makes any trades. 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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA, on January 31, 2024, as a screen shows Federal Reserve Chairman Jerome Powell’s press conference following the Fed interest rate announcement.
Brendan McDiarmid | Reuters
of Nasdaq Composite Index Stocks edged higher on Friday, hitting a record high for a fifth straight day, as new data released last week showed a continued slowdown in inflation and pushed Treasury yields lower.
