Executive Mosaic’s GovCon Index had gains in three of five trading days to notch a second straight winning week. The index, which tracks the stock performances of 30 major government contractors, ended 0.48% higher Friday at $5,293.78 for a 0.71% week-on-week gain.
The U.S. Federal Reserve marked the start of its rate-cutting cycle with Chairman Jerome Powell announcing a 0.50% cut on mid-week. It was a record-setting week for Wall Street, evidenced by the 1.5% and 1.4% weekly gains of the Nasdaq Composite and S&P 500, respectively. The Dow Jones Industrial Average (+1.6%) capped the week with a new record high.
Like the previous week, the GovCon Index started positive, then posted back-to-back losses and gains in the subsequent four sessions. More than half, or 19 GCI constituents, registered weekly gains. Carlyle Group (Nasdaq: CG) and V2X (NYSE: VVX) climbed 9.06% and 7.67% during the week, while Mercury Systems (Nasdaq: MRCY) topped 11 losers, dropping 5.58% in five days. On a year-to-date basis, the index is up 13.39%.
On Wednesday, Harvey Schwartz, CEO of private equity firm Carlyle, said, “The Federal Reserve has done an amazing job in complex circumstances.” He expects the central bank to lower interest rates three times before the end of 2024, then pause to assess the impact.
The Feds’ initial policy rate cut, the first in four years, was larger-than-expected. Some market analysts believe the proactive approach could lead to a soft landing, not a recession. Furthermore, more rate cuts would eventually lower borrowing costs and help reaccelerate economic growth in 2025.
