Stocks Dip on Downbeat Economic Indicators:
In the final week of May, stocks dipped as new reports on economic growth and inflation failed to inspire investors. Despite a strong rally on Friday, markets closed slightly lower for the holiday-shortened week.
Stocks Slide
Markets shrugged off news that the Q1 Gross Domestic Product was revised lower to 1.3 percent from the initial estimated 1.6 percent. Despite concerns that the economy was cooling faster than expected, investors didn’t believe the update was enough to influence the Fed’s decision about adjusting short-term rates.1
On Friday, investors were on edge waiting for the update on inflation. The Fed’s preferred inflation indicator, the Personal Consumption Expenditures Index (PCE), rose 0.2 percent in April, which was in line with forecasts.2
Stocks rose slightly in pre-market trading on the news but were under pressure throughout the day as investors digested the inflation update. But in the last hour of trading, stock staged a powerful rally led by the Dow, which had its best day of the year.2
Source: Charles Schwab & Co., Inc
Is Bad News Good News?
On the economic front, last week’s news was generally disappointing. The update on Q1 GDP was a bit discouraging, and several Fed officials gave seemingly more hawkish updates. Also, the Fed’s “Beige Book” revealed modest economic growth nationwide.
Yet despite the drumbeat of bad news, stocks were resilient and closed only slightly lower for the holiday-shortened week.3
Source: Charles Schwab & Co., Inc
This Week: Key Economic Data
Source: Bloomberg Finance L.P.
This Week: Companies Reporting Earnings
Source: EarningsWhispers
At Concord Asset Management, we design portfolios for the long run, with the ability to navigate various market cycles. However, you can have confidence that we are monitoring these market-moving events, and we will make reasonable, tactical adjustments as necessary.
Author
Gary Aiken
Chief Investment Officer
Concord Asset Management
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Footnotes and Sources
1CNBC.com, May 30, 2024
2CNBC.com, May 31, 2024
3Investors Business Daily, May 30, 2024
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