As the second half of 2024 begins, Wall Street is grappling with volatility and mixed performance. Despite a robust first half, technology stocks are experiencing fluctuations, causing a ripple effect across the market.
Market Performance Overview
Stocks seesawed Monday as Wall Street struggled to maintain the strong momentum seen in the first half of 2024. The Dow Jones Industrial Average added 10 points, or 0.02%, while the S&P 500 slipped 0.01%. The Nasdaq Composite inched up 0.2%.
Technology stocks Microsoft and Alphabet traded marginally higher. Artificial intelligence favorite Nvidia slipped roughly 3% and led the broader field of chip stocks including Broadcom, Qualcomm, and AMD lower. Treasury yields soared, with the benchmark 10-year climbing more than 13 basis points to 4.477%.
Tech Stocks Under Pressure
Those moves follow continued excitement surrounding artificial intelligence that helped prop up stocks such as Nvidia, which led the S&P 500 to a 14.5% first-half gain. The Nasdaq Composite rallied 18.1% in the first half, while the Dow Jones Industrial Average underperformed due to a pullback in the second quarter, adding 3.8%.
For the second quarter, the S&P and Nasdaq added 3.9% and 8.3%, respectively, while the Dow lost 1.7%. The Nasdaq notched its third positive quarter in a row for the first time since a five-quarter streak ending in 2021.
Concerns Over Market Breadth
Investors are still ever cognizant of a lack of market breadth that continues to plague the market and could influence moves into the second half of the year, according to Calamos Investments senior vice president and portfolio specialist Joseph Cusick. He noted that only ten stocks make up roughly 33% of the S&P 500′s overall weight, which is a level of disproportion he says has only occurred three times in the past.
Future Outlook
“The public and advisors are seeing and feeling this pressure of heightened risks,” Cusick told CNBC. “The excuse in this cycle is that the nature of market dominance is not looking to be ebbing, but with markets right off all-time highs, advisors and clients should not abandon proactive portfolio management and strategy diversification.”
Still, some expect this technology-driven momentum to persist at least through the summer, despite some fears that multiples have hit heightened levels.
“While Artificial Intelligence may seem like just another temporary fad, I believe it is much more,” said Kevin Philip, partner at Bel Air Investment Advisor. “It has the ability to re-ignite increased productivity for companies, advance technologies in faster and more efficient ways, and create entire new industries with discoveries resulting from the collision of AI and even more powerful computer processing.”
Conclusion
Monday kicks off a holiday-shortened trading week, with the market closed Thursday for the Fourth of July. Investors will get a big clue into the state of the labor market Friday with the June jobs report.
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