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Stocks closed higher yesterday with all of the major indexes finishing in the green. And the S&P and Nasdaq, once again, made another new all-time high and close. The markets built upon last week's better-than-expected inflation reports with both the
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Up Yesterday, S&P And Nasdaq Make Another New All-Time High

Stocks closed higher yesterday with all of the major indexes finishing in the green. And the S&P and Nasdaq, once again, made another new all-time high and close.

The markets built upon last week's better-than-expected inflation reports with both the CPI and PPI confirming that inflation was heading back down.

While the Fed last week reduced their rate-cut outlook from 3 rate cuts this year to only 1, the markets cheered the news. After a few months of stalled progress on inflation, some worried the Fed would remove all rate cuts from their outlook, or worse, possibly raise rates. So the 1 rate cut still left on the dot plot came as good news.

But it's not as if the economy or the markets need rate cuts right now. Both are doing just fine without it.

Of course, nobody wants to see the Fed get behind the curve on this. But given the resilience of the economy, a strong labor market, corporate sales and earnings estimates trending up, and household incomes near record highs, there's no urgency for rate cuts at this very moment.

In the meantime, the Fed insists it will remain data dependent. And the next piece of inflation data will come next week on Friday, 6/28, with the Personal Consumption Expenditures (PCE) index (which is the Fed's preferred inflation gauge).

In other news, yesterday's Empire State Manufacturing Index improved to -6.0 vs. last month's -15.6 and views for -10.5.

We also heard from Evercore ISI yesterday after they raised their year-end price target for the S&P 500 to 6,000. With the S&P coming into the day yesterday at 5,431.60, it had already shot well past their previous target of 4,750. But this new target is another 9.62% above yesterday's close of 5,473.23.

According to Evercore's Julian Emanuel, "the backdrop of slowing inflation, a Fed intent on cutting rates, and steady growth, have supported Goldilocks." He also noted the impact of the AI boom by acknowledging "Gen AI's productivity potential in every job and sector." And due to this, he believes "high valuations can remain high for extended periods."

He also put his price target at 7,000 for the end of 2025.

Today we'll get Retail Sales, Industrial Production, and Business Inventories.

We'll also hear from Fed policymakers Thomas Barkin, Susan Collins, Alberto Musalem, Lorie Logan, and Austan Goolsbee, as they speak at various engagements throughout the day.

Note, we have a shortened trading week this week. Tomorrow, Wednesday, June 19, is Juneteenth National Independence Day, and the markets will be closed.

Trading will resume on Thursday as normal.

In the meantime, enjoy the holiday.

See you on Thursday,

Kevin Matras

Executive Vice President, Zacks Investment Research


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