Stock markets concluded the first half of the year on a high note, with a surge fueled by indications of easing inflation pressure from the Federal Reserve. On Friday, the S&P 500 climbed 1.2%, while the Dow Jones Industrial Average rallied over 300 points, just shy of a 1% increase. The Nasdaq Composite outperformed, adding 1.5% to its value.
These gains contributed to robust performances for all three major stock benchmarks during both the second quarter and the first half of the year. The Nasdaq has increased by over 30% since the year’s beginning, making it the strongest first half since 1983, according to data from Yahoo Finance and Bespoke Investment. The benchmark S&P 500 has achieved an approximately 16% gain, while the Dow posted a more modest 4% increase.
Positive news emerged from the Federal Reserve’s preferred inflation index, which indicated a cooling trend. In May, prices experienced a year-over-year rise of 3.8%, a decrease from the 4.4% surge observed in April. Furthermore, prices showed only a marginal 0.1% increase from April to May.
This data follows a surprising upward revision to the first-quarter GDP, revealing that the US economy is significantly stronger than initially anticipated. Investor confidence in this resilience has been a driving force behind the stock market rally this year, even though it implies that interest rates will likely remain elevated for a longer period.
As the market enters the second half of the year, investors will closely monitor economic indicators and Federal Reserve decisions to assess their potential impact on stock market performance and inflationary trends.