June 2024 Market Recap

We are excited to share insights from Goldman Sachs Wealth Management Investment Strategy Group (ISG).

June was eventful with US stocks reaching all-time highs, Treasuries ending the month slightly down, and the Federal Reserve keeping interest rates unchanged while noting “modest” further progress on disinflation.

Here’s a recap on what happened in the market and economy.

The markets: US equities strong, bonds underperform

In the US, the S&P 500 hit an all-time high and returned 3.6% on the month. Stocks outside of the US were mixed: Emerging market equities returned 4.0%, while international stocks declined by 1.6%, primarily due to uncertainty around the elections in France.

Bonds rallied in the first half of June but reversed in the final weeks, leading US Treasuries to finish down by 0.10%.

The economy: mixed

The US economy continued to show signs of easing in June with a further moderation in consumer spending. The labor market, however, remained mixed. Nonfarm payrolls rose 206,000 in June, softer than expected. May’s job report was revised down to 218,000 from 272,000. June’s unemployment rate nudged 10 basis points higher to 4.1%. Despite the mixed message, ISG believes job growth is still strong, driven by higher labor supply, which should support ongoing disinflation.

June core CPI inflation surprised significantly to the downside, growing just 0.06% on the month. On a 3-month basis, core inflation has now decelerated to 2.1% annualized, broadly consistent with the Fed’s 2% annual inflation target rate. Going forward, ISG expects additional muted inflation numbers over the summer which should give the Fed greater confidence to begin cutting rates.

At its June meeting, the FOMC kept rates unchanged and acknowledged “modest” further progress on disinflation. Released at the meeting, the dot plot, a chart illustrating Fed officials’ forecasts for future interest rates, surprised markets by shifting to one rate cut in 2024 compared to three previously.

Still, ISG continues to expect the Fed will cut rates twice this year in September and December, provided we see further disinflation over the summer.

What are we watching over the month ahead?

Global elections and central bank meetings are top-of-mind. ISG is watching the impact of the recent elections in the UK and France, as well as developments in the lead-up to the US presidential election. Additionally, the Fed and the European Central Bank will hold policy meetings in which ISG expects no important changes.