Economic growth and inflation could remain strong

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Dow breaks the 43,000 mark
On Monday, the S&P 500 advanced by 0.77% and the Dow Jones Industrial Average rose 0.47%. Both indexes closed at new highs, with the Dow closing above 43,000 points for the first time. The Nasdaq Composite rose 0.87%. Europe regionally Stoxx 600 index 0.53% added. The European Central Bank meets on Thursday and is expected to cut interest rates for the third time this year.

Nvidia’s numbers are not a hallucination
Nvidia Shares rose 2.4% to close at $138.07, a new record for the stock. The artificial intelligence chip maker’s previous high was $135.58 on June 18. The stock has risen around 180% since the beginning of the year. What’s even more impressive is that Nvidia shares are up more than 800% if we compare the price from the beginning of 2023 to today.

Be careful
The Federal Reserve could slow the pace and scope of interest rate cuts at its upcoming meetings, Fed Governor Christopher Waller suggested Monday. Data on employment, inflation and economic growth suggest that the “economy may not be slowing as much as desired,” Waller said.

Fasten your seatbelts
The Boeing workers’ strike is now in its second month. It has already cost Boeing S&P Global estimates the deal is worth more than $1 billion and negotiations are still at an impasse. On Friday afternoon, CEO Kelly Ortberg announced that Boeing will cut 17,000 jobs and will not deliver its 777X widebody aircraft until 2026 – six years behind schedule.

[PRO] Small cap strategy
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Unlike beleaguered Boeing, which is struggling to get production of its 777X aircraft up and running, it looks like the U.S. economy could be taking to the skies for longer than expected.

After the wealth of data on employment, income growth and inflation, there is talk that the U.S. economy, thought to be on track for a soft landing, may not land at all.

A soft landing is the scenario in which inflation falls to the Fed’s 2 percent target while economic growth and employment remain healthy. A “no landing,” on the other hand, occurs when the economy continues to grow while inflation remains high.

Regarding the revisions to gross domestic income and the savings rate in the second quarter, Fed Governor Waller noted: “These revisions suggest that the economy is much stronger than previously thought, and there is little evidence of a major slowdown in economic activity.”

Echoing this feeling, Deutsche Bank Macro strategist Henry Allen believes inflation risks are still high due to rising commodity prices, a growing money supply and looser-than-expected monetary policies from major central banks, among other things.

After the consumer price index report, markets will be watching Thursday’s U.S. retail sales report for signs that the economy and inflation are still high.

“The ‘no landing’ narrative could be further strengthened if we deliver blowout retail sales this week,” said Ohsung Kwon, equity and quant strategist at Bank of America Securities wrote in a note on Monday.

But even if the plane continues to run on cruise control, don’t panic.

“Whatever happens in the near future, my base case still calls for a gradual reduction in the key interest rate over the next year,” Waller said.

And BofA believes that in our view, the “no landing” scenario is actually “optimistic for stocks as long as inflation doesn’t rise,” according to Kwon.

For now, investors can buckle up and enjoy the ride. It’s better to stay miles above the ground than to be stuck miserable in a stuffy cabin and unable to take off.

— CNBC’s Jeff Cox, Sarah Min, Lisa Kailai Han and Yun Li contributed to this story.