“Stocks Hit Record Highs Despite Mixed Inflation Report, Meme Stocks Fall. S&P 500, Nasdaq Composite Hit New Highs as Fed’s Monetary Policy Comes Under Scrutiny.”
In a remarkable display of market resilience, market closed at record highs on Tuesday, May 15, 2024, despite a mixed inflation report that sparked optimism and caution among investors. The S&P 500 and Nasdaq Composite Index hit new highs, while the Dow Jones Industrial Average held near its all-time high. However, the enthusiasm was not universal, as meme stocks saw significant declines, highlighting the current market’s disunity.
Inflation Report: A Mixed Picture
The Bureau of Labor Statistics’ consumer price index (CPI) report on Tuesday showed a 0.4 percent increase in April, slightly more than the 0.3 percent forecast. Excluding food and energy, core CPI rose 0.5%, beating expectations. While the headline numbers have raised concerns about inflation, the underlying data points to a more nuanced picture.
Market reaction: All-time highs and reversals
(This video is made by Yahoo Finance) The market reaction was swift and decisive. The S&P 500 rose 1.1% to close at 4,793.38, a new record, while the Nasdaq Composite jumped 1.4% to 13,827.74, also a record close. The Dow Jones Industrial Average rose 0.8 percent to 33,945.95, just short of its all-time high.
The market cycle continued with investors preferring growth stocks over value. The Russell 1000 Growth Index outperformed its peers, rising 1.3 percent versus 0.8 percent. The tech-heavy Nasdaq benefited due to gains from megacap names like Apple, Microsoft and Amazon.
Mammy Stock Declines
| Index | Close | Change |
| S&P 500 | 4,793.38 | 0.011 |
| Nasdaq Composite | 13,827.74 | 0.014 |
| Dow Jones Industrial Average | 33,945.95 | 0.008 |
| Russell 1000 Growth Index | N/A | 0.013 |
| Russell 1000 Value Index | N/A | 0.008 |
However, not all participated in the rally. Mem stocks, which have been the focus of the market in recent months, saw significant declines. Other fell sharply, including AMC Entertainment, GameStop and Bed Bath & Beyond, down more than 10% on some days.
The Federal Reserve and Interest Rates
Inflation reports have a significant impact on the Federal Reserve’s monetary policy. While the data may not justify an immediate rate hike, it does suggest that the Fed’s accommodative stance may be tested in the coming months. Market participants are now estimating a higher chance of a rate hike in June, which could affect stock market momentum.
Earnings Weather and Guidance
As earnings season progresses, corporate forecasts will be closely scrutinized for inflationary pressures and their impact on profits. Companies such as McDonald’s and Coca-Cola have already filed their reports, offering mixed forecasts: some cited concerns about inflation, while others remained optimistic.
Geopolitical Risk and Global Markets Stocks
With ongoing tensions in Eastern Europe and the Middle East, geopolitical risk is a major concern. Global markets reacted accordingly, with the Stoxx Europe 600 index up 0.8% and Japan’s Nikkei 225 up 1.2%.
Result
The market’s ability to absorb inflationary reports and close at record highs is a testament to its resilience. However, the decline in meme stocks is a reminder of the current market’s duality and the risks ahead. As earnings season continues and the Federal Reserve weighs the outlook for inflation, investors should remain vigilant and adapt to the changing market landscape.