Market Recap: May 2024
Market commentary
- The U.S. economy grew at a slower pace of 1.3% annualized rate from January through March, revised down from an initial estimate of 1.6%.
- Despite this slowdown, and after three straight months of decline, U.S. consumer confidence increased in May.
- Indicating a tightening labor market, the U.S. economy added only 175,000 jobs in April, representing the lowest total since October 2023.
- Following April’s unexpected spike, CPI retreated slightly, although inflation remained above levels seen earlier this year.
Select economic and market data
Statistic (monthly unless noted) |
Current |
Previous |
---|---|---|
U.S. GDP (quarterly) | 1.3% | 3.4% |
Consumer Confidence | 102 | 97.5 |
Consumer Price Index Y/Y | 3.4% | 3.5% |
Core PCE (x food & energy) | 2.8% | 2.8% |
ISM Manufacturing Index | 48.7 | 49.2 |
Unemployment Rate | 3.9% | 3.8% |
2-Year Treasury Yield | 4.87% | 5.04% |
10-Year Treasury Yield | 4.50% | 4.68% |
Equities
- U.S. stocks broadly got a boost from easing Treasury yields after the latest reading on inflation came in roughly as expected.
- Historically the second worst month for stocks, May delivered strong returns, especially in technology and interest-rate sensitive stocks.
- Both the S&P 500 and Nasdaq Composite recorded five consecutive weeks of gains.
Fixed income
- Lower rates led to strong returns across the spectrum of fixed income investments.
- An expected $340 billion net increase in U.S. government bonds for June should test investors’ appetite for debt and could provide some upward pressure on yields.
Strategic outlook
- Some caution warranted on equities in the near-term, particularly in high-growth large-cap stocks after recent rally; currently favoring small-cap and mid-cap domestic stocks longer-term.
- Above-average volatility is likely given central bank involvement and geopolitical uncertainty.
- Near-average expected returns projected for fixed income after period of rising rates and bond market sell‐off.
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