Let the rotation begin
The Dow Jones Industrial Average surged on Friday 12th July 2024 as investors began to diversify beyond the technology sector.
The Dow closed at 40,000.90, after hitting a new all-time high of 40,257.
The S&P 500 added 0.55% to 5,615, and the Nasdaq Composite went up 0.63% to 18,398. However, on Thursday 11th July 2024 the S&P 500 experienced its worst day since late April due to a major market rotation, with Nvidia dropping 5.6%.
Investors rotated from tech to industrial stocks in the Dow on Friday, hoping that slowing inflation might lead to a Federal Reserve rate cut in September.
The Dow gained 1.6% for the week, spurred by a report showing a 0.1% decline in the consumer price index for June. Recent reports suggest that the Federal Reserve might indeed consider a rate cut in September if inflation continues to slow.
While the AI growth has been dominant, other market catalysts, such as potential rate cuts, can also drive different sectors, including utilities.
Good earnings, improving economic news and the promise of a rate cut are combining to become the perfect storm for U.S. stocks.