The S&P 500 and Nasdaq Composite delivered their strongest quarterly gains in six years, with both indices posting impressive returns during the second quarter. According to Investing.com India, the Nasdaq Composite posted an impressive 21.4% gain, which is far below its average annual earnings increase of 26% according to FactSet. The S&P 500 also posted its best quarter in the past six years, with both indices delivering performance that significantly outpaced historical averages. As per MarketWatch, 88% of the DJIA's June gains came from just one stock, with Caterpillar leading the charge by adding 22.3% to its market capitalization over the month. The latest session saw the Nasdaq jump 1.5% to close at 26,213.72, while the S&P 500 surged 0.79% to 7,499.36 and the Dow Jones Industrial Average closed higher by around 136 points to 52,319.20.
Analysts are still revising earnings estimates higher following the strong quarterly performance, with expectations for continued growth driven by artificial intelligence developments. As reported by Investing.com India, I am expecting another blowout earnings announcement season due to record order backlogs for AI and data center-related companies. The third quarter is expected to be the quarter we hit 5% to 6% GDP growth, with analysts attributing much of this growth to AI productivity gains of up to 4%. Additionally, better trade balance due to record energy exports and increased consumer spending are contributing factors to the anticipated growth. The housing market is showing some signs of life, though it remains imperfect, while we need rates to come down for continued economic momentum.
Both the Nasdaq and S&P 500 posted small gains following Monday's trading session, according to reports from Investing.com India. The modest gains helped maintain the current market consolidation phase, with both indices returning above their respective 50-day moving averages. However, buying volume remained subdued for both major indices during the session. The Russell 2000 (IWM) is holding breakout support as it trades near highs, positioning it as the best-positioned major index to potentially reach new all-time highs. As per Investing.com CA, the equal weighted S&P has squeezed itself at all-time highs, presenting a swing trade opportunity for traders willing to trade the break of the narrow range with appropriate risk management.
Nasdaq technicals remain net bearish despite the recent gains, as reported by Investing.com India. In contrast, momentum for the S&P 500 is bouncing off the midline, which analysts identify as an area of support in a cyclical bull market. The Russell 2000 (IWM) is holding breakout support as it trades near highs, positioning it as the best-positioned major index to potentially reach new all-time highs. For swing traders, the equal weighted S&P presents a good opportunity - trade the break of the narrow range (high/low) and place your stop on the flip side, which analysts note is a high-risk:reward trade when you can trail a stop, particularly when a breakeven trade can probably be established quite quickly.
The job market is steadily improving, which is supporting consumer confidence and GDP growth expectations. According to Investing.com India, small, mid and large businesses all created jobs in June according to ADP's report on Wednesday. The Labor Department's June payroll report will be announced on Thursday, and economists are estimating an increase of 115,000. Additionally, employers based in the U.S. announced about 45,000 job cuts in June, down 53% from the 97,000 layoffs in May, as reported by Challenger, Gray & Christmas, a global outplacement firm. This improvement in employment conditions is contributing to the positive economic outlook and supporting the broader market rally.
