Weekly Wrap-Up: S&P 500 Rallies Amid Rate Cut Hopes and Market Shifts

The S&P 500 index recently wrapped up two weeks of wins, marking its growth through most of the weeks since late April. This rally got a big push from Federal Reserve Chair Jerome Powell’s hints at possible interest rate cuts during his testimony on Capitol Hill. A June consumer price report that was milder than expected also played a key role in this week’s uptick. Market players are now buzzing with optimism, with the odds of a 25-basis-point cut in interest rates in September jumping to nearly 90%.

This shift also saw investors moving their money from the huge tech companies to sectors seen as safer bets or those offering more value, like real estate and utilities. The S&P 500 rose by 0.9% over the week, while the tech-heavy Nasdaq Composite had a slight 0.2% gain. The Dow Jones Industrial Average led the pack with a 1.6% increase.

A Bold Move for Paramount Global

Paramount Global is stepping into a new chapter after merging with Skydance Media, owned by David Ellison. The complex deal starts with Skydance and its partners buying out Paramount’s parent company, National Amusements, for a cool $2.4 billion in cash. The next steps will merge Skydance and Paramount into a powerhouse valued at $4.5 billion. This deal offers Class A voting shareholders $23 in cash or stock and $15 to non-voting Class B shareholders, plus an extra $1.5 billion to shore up Paramount’s finances. Paramount now has 45 days to look for other offers, but wrapping up this deal, which needs regulatory approval, will take months.

Interest Rate Cut on the Horizon?

The Federal Reserve is inching closer to lowering interest rates, according to Chair Jay Powell in his latest Congress address. While there’s progress in tackling inflation, the Fed seeks more signs that inflation is on a steady decline towards their 2% goal before making any cuts. Though unlikely this month, the cooler Consumer Price Index in June hints that rate cuts could be on the table soon.

Boeing Faces Legal Hurdles

Boeing is set to plead guilty to criminal conspiracy charges for misleading the U.S. government, following a Justice Department probe into the two devastating 737 MAX crashes in 2018 and 2019. The airplane maker is hit with a maximum fine of $487.2 million and is required to spend $455 million on improving its safety and compliance practices. While this plea deal keeps Boeing out of court, the decision has sparked debates on whether it truly holds the company accountable, especially considering Boeing’s significant role in the defense industry.

Costco Adjusts to Inflation

Facing ongoing economic pressures, Costco is upping its membership fees for the first time in seven years, affecting nearly 52 million members. Starting September 1, the basic membership will cost $65, up from $60, and the executive membership will go up to $130 from $120. Despite this news initially being well-received and a reported 7.4% rise in June sales, Costco’s shares dropped by 4.3% on Thursday. Even with high inflation prompting shoppers to tighten their belts, Costco’s low prices continue to draw in customers, helping it maintain strong sales and gain market share.

NATO’s Stand with Ukraine

At its 75th-anniversary meeting in Washington, NATO members pledged their unwavering support for Ukraine amidst its ongoing strife. The alliance has committed to bolstering Ukraine’s air defenses, promising equipment for five Patriot systems and several tactical air defense systems, with thanks to contributions from Raytheon and Lockheed Martin. President Biden added to this support by promising more interceptors in the next year. As the summit wrapped up, Biden also sent a stern warning to Beijing against supporting Russia, pointing out that European investments in China could decrease, underscoring the complex geopolitical landscape that NATO and its allies navigate.