The Federal Reserve is considering a potential interest rate cut in 2024, but for now, higher US borrowing costs are expected to remain. Recent economic data showing softer-than-expected inflation in May has encouraged investors, leading to record highs in the stock market. The Fed has held rates steady for the seventh consecutive time and projected just one cut this year, down from the three previously projected in December. Traders are anticipating the central bank to maintain rates for the time being, with interest rates staying at their current 23-year high until at least September.
In a higher-for-longer rate environment, the stock market is expected to remain resilient, with the US economy adjusting to a more normal rate environment. Sectors like real estate, particularly commercial real estate, and consumer durables like cars may face challenges due to more expensive financing. Smaller-cap stocks, regardless of the sector, may also struggle. On the other hand, semiconductors, Big Tech companies, energy, and materials traditionally perform well in higher-rate environments. Utilities are also expected to rally as demand for electricity increases with the rise of electric vehicles and artificial intelligence.
Low employee engagement in the workplace can have negative implications for both workers and the global economy. Gallup’s “State of the Global Workplace” report estimates that low employee engagement costs the global economy $8.9 trillion, or 9% of global GDP. The report found that roughly 20% of workers globally feel lonely, angry, or sad daily, with 41% reporting stress. Engagement levels at work can impact well-being, with engaged employees experiencing high levels of daily enjoyment and low levels of negative emotions. Disengaged employees, on the other hand, can have high levels of stress and worry, which can be equivalent to or worse than being unemployed.
Apple surpassed Microsoft to become the most valuable public company in the US following announcements at its annual Worldwide Developers Conference, which included generative AI features for iPhones. Apple’s market cap closed at roughly $3.29 trillion, above Microsoft’s $3.28 trillion, with Apple shares rising 0.6% on Thursday and 8.8% so far for the week. This shift in rankings comes just a week after Nvidia surpassed Apple to become the second-largest public US company, with Nvidia now ranking third behind Microsoft. The stock market continues to respond positively to updates and innovations from major tech companies like Apple.
