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U.S. stocks have posted an impressive election-year rally so far in 2024. As investors question whether the rally will continue, they’re closely watching inflation and economic-growth data to gauge the Federal Reserve’s potential interest-rate decisions and corporate earnings in the second half of the year. The S&P 500 is on track for its best first-half performance during an election year since 1976 and the second-best performance in an election year in its history, according to Dow Jones Market Data. However, the rally has “left valuations stretched, sentiment optimistic, and the market overbought,” say analysts at Ned Davis Research. Several factors leave the U.S. stock market vulnerable to a correction in the second half of the year, the analysts noted — including corporate earnings estimates, uncertainty around potential Fed rate cuts, the upcoming presidential election, and the limited breadth of the market’s rally. While earnings estimates have been improving since the start of the year — with analysts now expecting earnings growth of 12% to 13% for 2024 — valuations are rising even faster, said Sam Stovall, chief investment strategist at CFRA. This could be concerning, Stovall told MarketWatch. “We have to see whether the rising stock prices and price-to-earnings ratios are actually the result of the market expecting better earnings,” he said. For now, as investors wait for the second-quarter earnings season to kick off, such data is mostly on the back burner, he added. Investors are even more concerned about persistent inflation, which together with growth data will influence the timing and magnitude of any interest-rate cuts by the Fed this year, said William Northey, investment director at U.S. Bank. While the Fed has forecasted only one rate cut for the rest of the year, fed-funds futures traders are currently pricing in two cuts starting in September, according to the CME FedWatch Tool. The most important inflation-related data point to be released next week is the personal-consumption expenditures, or PCE, price index due out Friday. James Ragan, director of wealth-management research at D.A. Davidson, expects the PCE numbers for May to confirm that inflation is slowing, as was reflected in consumer-price index data released earlier this month. Stovall echoed that point, saying he expects both the headline and core PCE inflation figures to be lower than in the previous month, which may bode well for the stock market. Meanwhile, economic-growth data remains another major focus, as the market is expecting U.S. GDP growth to slow but stay positive, Ragan noted. “If we get weaker data, it’s not necessarily bad for the market,” he said, as that could spur the Fed to move quicker on rate cuts. “Bad news is good news — as long as it’s not too bad news.” For the stock market to continue its rally, investors will need to see a broadening of the rally from both a price perspective and an earnings-contribution perspective, said U.S. Bank’s Northey. He observed that so far this year, the stock market’s strength has mostly been driven by megacap tech companies like Nvidia Corp., due to their outsized earnings growth and excitement around artificial intelligence applications. The S&P 500’s 14.6% gain so far this year has mostly been driven by its information-technology sector, which has risen 28.7%, and its communication-services sector, which has advanced 24.8%, according to FactSet data. “If the economy is achieving a soft landing and stays positive, we would expect to see better participation from some of the cyclical sectors such as energy, financials, materials, and industrials,” Ragan said. “We should watch those sectors pretty carefully; if they start to perform better, that’s how we’ll have a more sustainable rally.” U.S. stocks ended this past week higher, with the Dow Jones Industrial Average up 561.17 points, or 1.5%, to 39,150.33, according to Dow Jones Market Data. The S&P 500 finished the week up 33.02 points, or 0.6%, at 5,464.62, while the Nasdaq Composite closed the week up 33.02 points, or 0.6%, at 5,464.62. Next week, investors will also be watching for new consumer-confidence data on Tuesday, new home-sales data on Wednesday, and initial jobless-claims numbers on Thursday. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Here’s what’s closed on Juneteenth this Wednesday, June 19, in observance of the newest federal holiday. As Americans prepare to celebrate Juneteenth, which commemorates the end of slavery in the U.S., they should be aware of the closures associated with the holiday. This includes financial markets taking the day off. June 19 marks the day in 1865 when federal troops arrived in Galveston, Texas, to free enslaved Black people in the state, almost two and a half years after President Lincoln signed the Emancipation Proclamation on January 1, 1863. Not every state ended slavery immediately following the proclamation. Juneteenth has been celebrated in Black communities since the 19th century and became a Texas state holiday in 1980. Other states followed, and in 2021, President Joe Biden signed legislation making Juneteenth the 12th federal holiday. “This is a day of profound weight and profound power, a day in which we remember the moral stain, the terrible toll that slavery took on the country and continues to take,” Biden said at the time. Here are details about what will be closed on Juneteenth: Are financial markets open on June 19? The New York Stock Exchange, Nasdaq, and U.S. bond markets are closed on June 19. Trading will resume on the morning of June 20. Does the post office deliver mail? The U.S. Postal Service will not deliver mail on June 19. However, FedEx and UPS will operate on their normal schedules. Are banks open? Banks are generally closed, but ATMs and banking apps are still available. Are government offices open? Since Juneteenth is a federal holiday, all nonessential federal government offices are closed. This generally applies to state government offices as well. Are schools open? Schools are typically closed on Juneteenth, but it’s best to check with your local school district. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Lower-Income Americans Increasingly Worried About the Economy Despite a steadily growing economy and low unemployment easing some of the pain of high inflation, middle- and low-income Americans are feeling more stress. Recent evidence includes a drop in the consumer sentiment index in June to a seven-month low, primarily due to rising anxiety among middle- and lower-income Americans. This widening gap in economic perception is not surprising. Wealthier households have larger financial cushions and benefit from a surging stock market that boosts their wealth. In contrast, lower-income Americans have largely depleted their pandemic-era savings and must now rely on their job earnings to keep up with rising prices. Persistent high inflation and interest rates are straining their budgets, leading to increased credit card usage and more loan defaults. One positive development is the significant income growth in recent years. A tight labor market has forced businesses to pay more, and job switchers have received substantial raises. A recent Congressional Budget Office (CBO) report found that incomes have slightly outpaced inflation since 2019. As a result, most families spend a smaller portion of their income on essentials. However, these benefits are unevenly distributed. The highest earners spent 6.3% less of their income on goods and services in 2023 than in 2019, while the lowest earners spent only 2% less. This disparity explains why the wealthy are less worried about inflation. Moreover, lower-income households face higher price increases for their typical purchases compared to wealthier people, and their wages have not risen as quickly. What does the growing lack of confidence among many Americans mean for the economy? Nationwide financial market economist Oren Klachin noted that middle- and lower-income people spend most of their earnings on consumer goods and services. If they reduce spending, it could disrupt the economy. “This will be an important dynamic to watch in the second half of this year,” he said. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com