31 All-Time Highs in 2024

By Presidio Wealth Partners on June 25, 2024

Private Sector Expansion

The preliminary U.S. composite PMI index for June hit a 26-month high at 54.6. The index acts as a leading indicator for the U.S. economy, tracking business activity across the manufacturing and services sectors. Readings above 50 indicate expansionary activities and point toward future growth. Services posted a preliminary reading of 55.1 and manufacturing showed 51.7, both above consensus estimates and in expansionary territory. These readings indicate what could be a strong end to the second quarter, one in which the Atlanta Fed is projecting 3% annualized GDP growth.[1]

Chart 1: Preliminary June PMI Index Shows Expansion for Services and Manufacturing[2]

Signs of Relief in Housing

30-year fixed mortgage rates fell for the third consecutive week last week, ending at 6.87%, the lowest level since early April.[3] The previous week provided one of the best housing data points we have seen in some time: weekly mortgage applications rose 15.6% w/w as interest rates fell 5 bps. Interest rates are likely to decline over the next 12 months, with the Fed expecting its policy rate to be more than 100 bps lower by the end of 2025. Housing stands to benefit as a result of lower rates.

As we have previously highlighted, the U.S. is 5 million homes short, builders have underproduced for 14 years and over 5 million millennials are looking to become first-time home buyers. D.R. Horton (DHI) reported in its Q2 earnings release that 57% of its sales in the quarter were first-time buyers. Over 50% of homeowners have mortgage rates below 4%, so any further decline in rates will incentivize new buyers to enter the market, and those looking to move will be more likely to do so amid lower rates. Housing remains one of our top themes in 2024.

Chart 2: As Mortgage Rates Decline, Weekly Mortgage Applications Are Trending Higher[4]

Record Tech Inflows

In a week when Nvidia (NVDA) was briefly the largest company in the world at $3.3 trillion, the technology sector saw record inflows. Tech funds recorded a weekly-record inflow of $8.7 billion, global stock funds had its largest weekly inflow since March at $25.6 billion and U.S. equities hit nine consecutive weeks of positive inflows. U.S. growth funds also had a record week, bringing in $11.9 billion.[5] Tech has been the best performing sector year-to-date, up 18.7% – with communication services as the only other sector outperforming the broader market.

Chart 3: Technology and Communication Are the Only Outperforming Sectors Year-to-Date[6]

Fixed Income

Treasury yields rose last week on mixed data. Tuesday had a weaker-than-expected May retail sales print, while Friday came with stronger-than-expected S&P Global PMIs. Yields ended the week 3-5 bps higher across the curve. This week we receive the final 1Q GDP and May PCE deflator readings. High yields outperformed with 8 bps of tightening w/w to 321 bps, back toward early-June levels. Muni yields were unchanged for the week.

The Week Ahead

Earnings – Tuesday: CCL, FDX; Wednesday: GIS, MU, PAYX; Thursday: MKC, NKE, WBA.

Economics – Monday: Dallas Fed Index; Tuesday: FHFA Home Price Index, Consumer Confidence, Richmond Fed Index; Wednesday: Building Permits, New Home Sales; Thursday: Durable Orders, Final Q1 GDP, Pending Home Sales; Friday: Personal Consumption Expenditure, Michigan Sentiment.

Return for Selected Indices^[7]

[1] Source: Atlanta Fed. As of June 21, 2024.

[2] Source: FactSet. As of June 21, 2024.

[3] Source: Bloomberg. As of June 20, 2024.

[4] Source: FactSet. As of June 21, 2024.

[5] Source: Investing.com. As of June 21, 2024.

[6] Source: FactSet. As of June 23, 2024.

[7] Source: Bloomberg. As of June 24, 2024.