Economic Update 6-03-2024
- For the short holiday week, economic data included U.S. GDP growth being downgraded a few tenths, continued improvement in lower PCE inflation, higher home prices, and improved consumer sentiment.
- Equities were mixed globally, with developed markets down a bit on net, while emerging markets fell further. Bonds were little changed domestically, while foreign markets saw mixed results. Commodities fell back across a variety of sectors.
U.S. stocks fell on the shortened week, but ended May with solid gains to offset weakness from the prior month. By sector, energy and utilities led the way with gains upward of 2%, while technology fell back by over -2% (as a positive week for some stocks was offset by weakness in Salesforce, Adobe, and Microsoft). Real estate also gained, with Friday’s ‘less bad’ inflation news providing a boost.
Foreign stocks were mixed, with gains in Japan offsetting declines in Europe similar to those in the U.S., with inflation coming in stronger than expected, which threatened the consensus view that the ECB will cut rates by a quarter-percent next week. The base case is that a rate cut will still occur, but doubt remains about the path forward through the summer and fall, with this stickier inflation. In Japan, inflation ticked up but remained below the central bank target. Emerging markets declined to a further degree for the week. Chinese PMI manufacturing data fell back again below 50 into contraction, which raised some concerns (again) about the durability of the recovery.
Bonds were little changed on the investment-grade side, with yields ticking up slightly higher across the U.S. Treasury curve. Subdued demand for 5- and 7-year Treasury notes mid-week could have been hampered by recent further Fed comments that rate hikes aren’t completely ‘off the table,’ although that was offset by better inflation readings later in the week. Foreign bonds were mixed, with little net change in the U.S. dollar index.
Commodities lost ground across the board last week, with agriculture and industrial metals down around -2%. Crude oil fell just under -1% on the week to $77/barrel, despite an expectation that OPEC+ members will choose to keep current production cuts in place. Natural gas also fell back -7%, with a lack of weather extremes to affect usage or shortages.
|
Period ending 5/31/2024 |
1 Week % |
YTD % |
|
DJIA |
-0.88 |
3.52 |
|
S&P 500 |
-0.49 |
11.30 |
|
NASDAQ |
-1.09 |
11.82 |
|
Russell 2000 |
0.04 |
2.68 |
|
MSCI-EAFE |
-0.05 |
7.07 |
|
MSCI-EM |
-3.10 |
3.41 |
|
Bloomberg U.S. Aggregate |
0.04 |
-1.64 |
|
|
|
|
|
U.S. Treasury Yields |
3 Mo. |
2 Yr. |
5 Yr. |
10 Yr. |
30 Yr. |
|
12/31/2023 |
5.40 |
4.23 |
3.84 |
3.88 |
4.03 |
|
5/24/2024 |
5.46 |
4.93 |
4.53 |
4.46 |
4.57 |
|
5/31/2024 |
5.46 |
4.89 |
4.52 |
4.51 |
4.65 |
Sources: LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.