Market Quote: Meme Stocks are Back, S&P 500 Index Hits New High
Author: The editor's desk
May 15, 2024
A mid-week analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.
Meme Me Up
Meme stocks – which are defined by Investopedia as being shares of companies with a cult-like following on social media – are back in the news following a tweet from the individual who was at the heart of the frenzy in 2021. Keith Gill, known as “Roaring Kitty,” reappeared online for the first time in three years earlier this week, sending shares in several companies soaring and day-to-day volatility within these names to elevated heights.
The broader market, meanwhile, continues to climb higher with the S&P 500 Index reaching another new all-time high on Wednesday. Yet, this latest milestone has little to do with the resurgence in meme stocks and more to do with U.S. economic data that was weaker than many investors anticipated. April’s U.S. inflation rate dropped slightly from the previous month, while the country’s retail sales was flat month-over-month, suggesting the U.S. Federal Reserve may be done with the rate-hiking cycle once and for all.
Moreover, these new signs of a slowing U.S. economy have rekindled market expectations for some degree of central bank easing later this year. Indeed, the idea of at least one rate cut in 2024 seems back on the table after being effectively “priced out” and the primary cause of weakness in global equity markets last month.
Stock and Trade
The last thing the world needs is a trade war between the U.S. and China, but whether Biden wins or Trump wins, it appears that very rocky trade relations with China will persist, with rising tariffs that will run the risk of higher inflation and retaliation from both countries. We believe this tense climate is likely to persist at least through the Nov. 5 U.S. election.
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