Vikki Zhao

PUBLISHED July 02, 2024, 10:30 AM EST. 5 min read.


On Monday, U.S. stocks closed higher with technology stocks leading on the gains, and the Nasdaq Composite reached a new record high at the close, gained 146.70 points, or 0.83%. At the close, the Dow Jones Industrial Average rose 50.66 points, or 0.13%, to 39,169.52 points, while the S&P 500 Index increased by 14.61 points, or 0.27%, to 5,475.09 points.

Lately, while the S&P 500 has been experiencing an upward trajectory, the market dynamics beneath this rise have been less uniform. Over the past few weeks, the market was heavily biased towards Tech mega-caps, which surged due to renewed interest in AI following strong semiconductor earnings in May.

Recently, there was a significant peak in the prices of leading AI and momentum stocks. These stocks have slightly recovered over the last few days, but they are likely to stabilize or “base” in the near term, influenced significantly by the upcoming earnings season.

This raises a crucial question: if these leading stocks pause, will the overall market decline, or will a rotation into underperforming sectors help maintain a stable index? AimStar believes the latter is more likely.

If there is a consolidation among the leading stocks while underperforming sectors begin to improve, it doesn’t indicate a loss of appeal in the Tech and AI sectors. Instead, AimStar Analyst see it as a part of a normal market cycle allowing prices to stabilize after significant gains, considering the sectors as a promising multi-year opportunity.

Semiconductors and other momentum-driven Tech sectors remain crucial for the S&P 500’s performance and are currently showing strong fundamental and technical trends. However, they are significantly above the 200-day moving average, a condition that historically precedes consolidation or pullbacks.

The recent peak in prices suggests that the March breakout level should be monitored for a potential pullback, which could present an investment opportunity.

Given the current market seasonality and recent trends, equal-Weighted S&P 500, Small Caps, and Large Cap Value might see some consolidation. Market rotation could benefit these sectors, which are attractive in terms of valuation for long-term returns.


However, valuations are often not reliable for timing the market. For these sectors to perform sustainably well, earnings trends will need to show improvement, especially with the second quarter’s earnings season just around the corner. This upcoming earnings period will be crucial in shaping these trends.



Canada’s Economy Grows 0.3% in April, Further Gains Expected


Canada’s GDP increased by 0.3% in April, driven by growth in wholesale trade, mining, and manufacturing sectors, according to Statistics Canada. Preliminary estimates suggest a 0.1% rise in May. This positions the economy to exceed the Bank of Canada’s second-quarter growth forecast of 1.5%. Growth was seen in 15 out of 20 sectors, with retail trade rebounding after two months of decline. Following the GDP data, money markets adjusted their rate cut expectations to around 42%. The Bank of Canada’s next rate announcement is on July 24.

Affordability in Canada May Improve by Late 2024: Desjardins

Desjardins economists predict that while rate cuts could ease home buying in Canada’s four largest provinces, housing affordability won’t return to pre-pandemic levels before 2027. There could be opportunities to buy homes in late 2024 or early 2025, but affordability will still be challenged by rising home prices. The Desjardins Affordability Index (DAI) considers factors like household income, mortgage rates, and home prices. Among the four largest provinces, Alberta shows mixed affordability due to population gains pushing home values higher. Overall, the DAI suggests a slow return to better affordability conditions.

Half of Canadians Plan to Buy EV or Hybrid Next, Survey Finds



A recent survey by Abacus Data for Electric Mobility Canada reveals that 51% of Canadians planning to buy a new car are considering electric, plug-in hybrid, or hybrid vehicles. Of these, 21% prefer EVs, 20% PHEVs, and 10% non-plug-in hybrids. However, 35% still plan to buy gas vehicles, and 14% are undecided. The survey highlights cost as a significant barrier, with 64% of respondents budgeting $40,000 or less for their next vehicle. This budget constraint is a “key limiting factor” for many potential EV buyers, according to BMO Capital Markets economist Erik Johnson.



US Inflation Unchanged in May, Raising Hopes for Fed Rate Cut



U.S. inflation remained steady in May, with no monthly increase, as rising service costs were balanced by the largest drop in goods prices in six months. The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 0.1 % in May from the prior month, in line with Wall Street’s expectations and slower than the 0.3% increase seen in April. Core PCE was up 2.6% over the prior year in May, in line with estimates. This could lead the Federal Reserve to cut interest rates later this year. The Commerce Department’s report showed minimal consumer spending growth and the slowest rise in underlying prices in six months, suggesting the Fed might achieve a “soft landing” for the economy, reducing inflation without triggering a recession or high unemployment. This spurred traders to bet on a Fed rate cut in September.


India Set for More Global Attention as Bond Inclusion Begins

India is poised to attract significant foreign investment as JPMorgan Chase & Co. adds the nation’s government bonds to its emerging markets index. This move opens a $1.3 trillion market to a broader range of investors, with global funds already pouring close to $11 billion into index-eligible bonds since the announcement in September. JPMorgan expects an additional $20 billion to $25 billion in inflows over the next ten months, increasing foreign ownership of Indian bonds to 4.4% from the current 2.5%. Indian bonds offer global investors access to a high-growth, high-yield market. The nation’s sovereign debt has outperformed its index counterparts over the past decade. India will start with a 1% weightage on the key emerging markets bond index, increasing by a percentage point each month over ten months.


Shein and Temu Ordered to Comply with EU Tech Rules by July 12

Chinese fast-fashion e-commerce retailers Shein and Temu have been directed by EU tech regulators to provide detailed information on their compliance with EU online content rules by July 12. This follows complaints from consumer bodies. The European Commission has requested information on how these companies handle illegal products, manage online interfaces to prevent user deception, protect minors, ensure transparency in recommendation systems, trace traders, and comply by design. Both companies are subject to tougher requirements under the Digital Services Act due to their large user base. Failure to comply with these regulations can result in fines of up to 6% of a company’s global turnover. Both companies have stated they are cooperating with the Commission and committed to adhering to applicable laws and regulations.


Biden-Trump debate sparks Democratic Party concerns


The first presidential debate between President Joe Biden and former President Donald Trump has sparked controversy. Many viewers expressed disappointment with Biden’s performance, raising concerns about his age and ability to continue in office. Yahoo Finance Senior Columnist Rick Newman discussed the possibility of Biden stepping down and potential replacements like Michigan Governor Gretchen Whitmer or Pennsylvania Governor Josh Shapiro, who are relatively unknown to most Americans. This uncertainty could lead to significant changes before the election.

AimStar Capital Group Inc. is an independent full-service investment dealer with the Investment Industry Regulatory Organization of Canada (IIROC), specializing in providing Investment advisory and tailored wealth management services to individual investors, family trusts, and institutional investors. If you have any inquiries regarding personal financial services, investment portfolio adjustments, or private wealth management, please email us at We are committed to assisting you and ensuring the security of your privacy. Additionally, the AimStar expert team is available to provide one-on-one financial advisory services. We look forward to navigating your financial future together.

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