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  • Writer's pictureKevin Hurley

Marketbites: S&P 500 Continues Soaring Higher


Portfolio Manager Commentary:

The S&P 500 jumped to its highest level in 13 months yesterday as traders hoped the Federal Reserve will skip hiking rates when the central bank decides on policy Wednesday. The S&P 500 added 0.93%, with gains steadily increasing throughout the trading day. The Nasdaq and technology stocks led the way on Monday again, with Amazon and Tesla each up more than 2%.

Markets have come to expect that the Fed will skip a rate increase at this week’s meeting, with traders pricing in a roughly 72% chance that there will be no hike, according to the CME Group’s FedWatch tool. The Fed has hiked 10 consecutive times since starting this latest policy-tightening cycle in March 2022. However, market expectations are that Fed officials will emphasize a commitment to keep inflation at bay and come back with a final rate increase at July’s meeting before going on hold for the rest of the year.

Today's inflation data could help reinforce the case that inflation is subsiding, as economists expect the consumer price index to show inflation dropping to a 4% annual rate in May. That’s down from 4.9% in the prior month.

Chart of the Day:

At $147.5 billion, cash inflows to ETFs are running at their slowest pace since 2019, when the market was significantly smaller, according to FactSet data through June 6. Flows are down markedly from this point in each of the past two years, and the money that is coming in has favored bonds and defensive equity strategies focused on less-volatile stocks.

Source: WSJ

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