Market Analysis the Week of June 17th - what to expect
Anticipate low trading volumes for the week of June 17th, as the U.S. observes a holiday on Wednesday, leading to a shorter trading week. Summer holiday season is evolving, but several significant events remain on the horizon. We share our insights and market analysis.
On Friday, June 14th, trading activity was relatively light as markets appeared to process the news and the significant upward movement from Thursday. Initially, there was some buying that led to a sell-off, dipping into negative territory, but the day ultimately ended with a move back into positive territory.
The S&P 500 increased by 0.123%, while the Nasdaq rose by 0.57%.
Market Watch for the week of June 17th
We observe slight downward pressure on the equity futures market, which is to be expected following the significant gains in the S&P 500 and Nasdaq 100 indices since the beginning of the year.
As the upcoming week of June 17th will be abbreviated due to the U.S. holiday on Wednesday, we anticipate lighter trading volumes on Monday and Tuesday, likely resulting in consolidation trades. Nonetheless, the release of key economic data on Tuesday, June 18th and Thursday, June 20th, may introduce some volatility to the stock market.
The EU CPI data: According to a flash estimate from Eurostat, the statistical office of the European Union, the euro area annual inflation is expected to be?2.6%?in May 2024, up from 2.4% in April.
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The U.S. Retail Sales data: Looking ahead, the National Retail Federation (NRF) projects that?annual retail sales?for 2024 will grow between?2.5% and 3.5%, reaching a range of?$5.23 trillion to $5.28 trillion. Retail sales in May are expected to increase by 0.4% month-over-month, which would be positive for the stock market.
The U.S. Initial Jobless Claims data: the market expects a decline in the initial jobless claims to 235,000 from 242,000. As I mentioned before in previous reports, the good jobs data would be negative for the stock market due to weakening odds of the interest rate cuts in September.
Philadelphia Fed Manufacturing Index and the U.S. Building Permits: the data should be released on Thursday, June 20th. The manufacturing index is expected to increase from 4.5 (previous reading) to 4.8. Building permits are expected to increase from 1.440M to 1.450M.
In our view, release of the positive data could be bullish for the companies like Lennar Corporation (LEN) and KB Home (KBH). The two companies will report during this week.
Overall, while technology stocks are fostering positive sentiment, there exists a cautious optimism driven by economic indicators and potential policy changes. We anticipate that the upcoming week could yield favorable performance for homebuilding stocks such as Lennar. In our assessment, the demand for new homes remains robust, sustaining elevated price levels. Additionally, seasonal trends could positively impact homebuilding stocks as we transition into the next quarter. A rotation into this sector may also be on the horizon.
Companies we watch this week
Lennar Corporation (LEN) to report Q2 2024 on June 17th after market closes. – This could be interesting buying opportunity. Please SUBSCRIBE to our Premium or Professional Service for more details.
KB Home (KBH) to report on June 18th after market closes. Our view on KB Home: Please SUBSCRIBE to our Premium or Professional Service for more details.
Accenture (ACN) to report on June 20th before market opens. Please refer to our view on the company in our previous report.