What’s in Bloom – First Week of June 2024

By Anna Nehrbas on June 10, 2024

Weekly data-driven insights on the markets and economy

1. Record Week
   The S&P 500 hit a new record on Wednesday, rising 1.18% to close at 5,354.03. It also hit a new intraday all-time high of 5,354.16 during the session. The Nasdaq similarly rose to a new record, climbing 1.96% to 17,187.90. Meanwhile, the Dow Jones trailed slightly by comparison, as the index rose 0.25% to close out the session at 38,807.33.[i]
2. Yield Slip
   U.S. Treasury yields slipped on Tuesday as investors considered the latest economic data and what it could mean for the economy. The 10-year yield was down by 6 bps at 4.33%, and the 2-year yield pulled back 3.5 bps to 4.78%. Yields fell after the ISM manufacturing index came in at 48.7 for the month of May, below the expected 49.6 figure, while employment data fueled investor hope that the labor market is perhaps weak enough to allow the Federal Reserve to cut interest rates.[ii]
3. Slow Growing In May, hiring at U.S. companies grew at the slowest pace since the start of the year. Private payrolls increased 152,000 last month, according to the ADP Research Institute, slightly lower than the estimated 175,000 increase. For workers who changed jobs, wage growth slowed for a second month, to 7.8% year-over-year, and earnings gains for workers who stayed in their jobs held at 5%, the slowest since 2021. Economists anticipate a 185,000 gain in Friday’s nonfarm payrolls report, which includes private- and public-sector jobs. That would be a slight uptick from April, but still well below the early months of the year.[iii]
4. Global Cuts The Bank of Canada cut interest rates Wednesday for the first time since its historic hiking cycle to combat inflation in March 2022, opening the door for further potential cuts in the following months. The central bank set its overnight rate at 4.75%, down 25 basis points from the 5% level that had been in place since July 2023. Markets are now pricing in a further cut in September.[iv] The European Central Bank on Thursday also confirmed a widely anticipated reduction in interest rates at its meeting, despite lingering inflationary pressures in the 20-nation euro zone. This cut takes the central bank’s key rate to 3.75%, down from a record 4% where it has lingered since September 2023.[v]
5. Resetting Priorities
   Elon Musk ordered chipmaker Nvidia to prioritize shipments of processors to X and xAI ahead of Tesla. On Tesla’s first-quarter earnings call in April, Musk said Tesla will increase the number of active H100s – Nvidia’s flagship artificial intelligence chip – from 35,000 to 85,000 by the end of this year. He also posted online that Tesla would spend $10 billion this year “in combined training and inference AI.” By ordering Nvidia to let X jump the line ahead of Tesla, Musk delayed the automaker’s receipt of over $500 million in processors by months.[vi]
6. New Exchange on the Block
   TXSE Group, backed by BlackRock and Citadel Securities, plans to launch the Texas Stock Exchange in Dallas. The exchange, which has raised about $120 million, plans to file registration documents with the U.S. Securities and Exchange Commission to start operating as a national securities exchange later this year. The Texas Stock Exchange aims to attract listings of exchange-traded products and challenge increasing compliance costs at major U.S. indexes.[vii]
7. A Diamond Is (Not?) Forever
   The demand for diamonds has declined as their allure fades due to falling marriage rates and growing popularity for gold and lab-grown gems. Diamond prices have fallen 5.7% so far this year, declining more than 30% from their all-time high in 2022. In the U.S., which is the largest consumer of diamonds, half of engagement ring stones will be lab-grown this year, up from just 2% in 2018. Lab-grown diamonds, which can be up to 85% cheaper than natural diamonds, and sales surged from just 2% of the global diamond jewelry market in 2017 to 18.4% in 2023.[viii]
   
8. Road Trip Summer
   Some 66% of American travelers are planning to take a road trip this summer, up from 56% last year, according to research by Deloitte. Most are traveling by road to save money, the report noted. When asked what downgrades they were making compared to last year, 28% of people said they are driving instead of flying. Most Americans planning a summer road trip expect to drive 399 miles or less and spend less than $1,000 for their travels. With the high cost of owning a vehicle in recent years (the average car payment is now $766 a month), summer road trips help drivers get more value from their costly cars.[ix] Will you road trip this summer?

1. [i] Conlon, Sean, “5 things to know before the stock market opens Thursday,” CNBC, June 6, 2024, https://www.cnbc.com/2024/06/06/5-things-to-know-before-the-stock-market-opens-thursday-june-6.html. Accessed June 6, 2024.
2. [ii] Evans, Brian and Sophie Kinderlin, “10-year Treasury yield continues June slide on signs of weak labor market,” CNBC, June 4, 2024, https://www.cnbc.com/2024/06/04/us-treasurys-as-investors-weigh-state-of-the-economy.html. Accessed June 6, 2024.
3. [iii] Dillard, Jarrell, “US Hiring Slows to Weakest Pace Since Start of Year in ADP Data,” Bloomberg, June 5, 2024, https://www.bloomberg.com/news/articles/2024-06-05/us-companies-add-fewer-jobs-than-forecast-adp-data-show?embedded-checkout=true. Accessed June 6, 2024.
4. [iv] Shecter, Barbara, “Bank of Canada’s Tiff Macklem signals more rate cuts possible after historic shift,” Financial Post, June 5, 2024, https://financialpost.com/news/economy/bank-of-canada-cuts-interest-rate-to-4-75. Accessed June 6, 2024.
5. [v] Reid, Jenni, “European Central Bank cuts interest rates for the first time since 2019,” CNBC, June 6, 2024, https://www.cnbc.com/2024/06/06/european-central-bank-heads-for-first-rate-cut-since-2019-live-updates.html. Accessed June 6, 2024.
6. [vi] Kolodny, Lora, “Elon Musk ordered Nvidia to ship thousands of AI chips reserved for Tesla to X and xAI,” CNBC, June 4, 2024, https://www.cnbc.com/2024/06/04/elon-musk-told-nvidia-to-ship-ai-chips-reserved-for-tesla-to-x-xai.html. Accessed June 6, 2024.
7. [vii] “BlackRock, Citadel Securities-backed TXSE Group to launch Texas Stock Exchange,” Reuters, June 5, 2024, https://www.reuters.com/markets/us/blackrock-citadel-backed-group-start-new-national-stock-exchange-texas-wsj-2024-06-05/. Accessed June 6, 2024.
8. [viii] Ying Shan, Lee, “Diamond industry ‘in trouble’ as lab-grown gemstones tank prices further,” CNBC, June 4, 2024, https://www.cnbc.com/2024/06/05/diamond-industry-in-trouble-as-lab-grown-gemstones-tank-prices-further.html. Accessed June 6, 2024.
9. [ix] Wong, Vanessa, “Want a vacation for under $1,000? Road trips are the answer for more Americans this summer,” Morningstar, June 5, 2024, https://www.morningstar.com/news/marketwatch/20240605333/want-a-vacation-for-under-1000-road-trips-are-the-answer-for-more-americans-this-summer. Accessed June 6, 2024.