Stock Market Reaches New Highs Ahead of Holiday
The stock market closed at a new high as the week shortened with the upcoming holiday on Thursday.
The Nasdaq composite surged by 1%, while the S&P 500 increased by 0.8%. Both indexes extended gains from the previous day’s close and set new intraday records. The Dow rose 344 points, or 0.8%, though it still lagged the record from December 4 by about 0.4%.
The markets wrapped up trading by 1 PM in anticipation of Independence Day celebrations.
Most sectors performed well on Wall Street on Thursday. Traders were optimistic following a stronger-than-expected job report, which fueled interest in both small and large-cap stocks. The Russell 2000 was on track for its first yearly profit since February. Momentum, growth, high beta, and even low volatility stocks saw solid gains.
“So far, the wait times and the approach taken by Chair Powell have been effective,” remarked Dave Donabedian, co-chief investment officer at CIBC Private Wealth. He noted that the economy had been delayed a bit, but inflation seemed to cool down. At the last FOMC presser, Powell commented on expectations regarding the impacts of tariffs, which should show up in the June and July PCE data.
Donabedian anticipates tame reports ahead, potentially setting the stage for the central bank to take actions in September aimed at lowering prices. He believes that the S&P 500 might see modest annual growth, but there’s about a one-third chance of what he describes as a “melt-up.”
“The policy concerns from the first half of the year—tariffs, budget constraints, and Middle East tensions—could lead to much better outcomes than the worst-case scenarios anticipated at the year’s start,” he claimed. Additionally, with adjustments from the Fed and some modest stimulative effects from Trump’s tax policies, there’s room for higher stock market growth. Yet, Donabedian feels traders might not be fully prepared for such a scenario.
He is currently focused on finding consistent dividend-paying companies in sectors that appear promising, like industry, finance, and utilities.
“The US stock market seems fairly balanced around various policy imbalances,” he commented. “The biggest hurdle moving forward is valuation. Revenue estimates are declining, and yet the market hits new heights while the economy shows signs of slowing.”
