The Pulse on the Economy and Capital Markets: June 2024

June 24, 2024

To Summarize: Large technology firms and emerging markets outperform in a mixed market environment for stocks and bonds. Companies are aggressively exploring how to use AI, which has created a slowdown in enterprise software spending. While consumers have shifted their spending to lower-ticket items, the affordable luxury segments, such as beauty, have been resilient. We unpack this and more in the June edition of The Pulse. 

In the Markets: While the stock and bond markets have been mixed for the month of June, overall, they remain mostly positive with large technology-driven companies and emerging markets continuing to outperform. The decline on the benchmark 10-year Treasury bond yields has been a key driver of positive returns. 

AI Spending Disrupts Enterprise Software: As more companies explore how to use AI, spending in other parts of technology, most notably enterprise software, has slowed down. Enterprise software leaders have noted recent macro pressures and distractions tied to AI — more scrutiny and lengthening of deal time closings.  

Affordable Luxury Beauty Reigns Supreme: While the economy is reflecting weaker-than-expected retail sales as consumers shift spending towards lower-ticket items, the beauty industry remains healthy. Executives from large beauty manufacturers and retailers, such as Estee Lauder and Ulta, have commented on the continued strength of the industry stating that consumers will purchase items to make them feel good.  

Top Headlines: We’re reading about Apple’s personalized AI capabilities in a private cloud, how Abercrombie & Fitch pulled off the biggest comeback in retail, companies are addressing office fit-out costs to drive employees back to the office, and California restaurants have lost traffic since minimum wage increase.

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