Market Perspective for May 26, 2024

The Fed took what many considered to be a hawkish tone according to the meeting minutes that were released on Wednesday afternoon. It was revealed that Jerome Powell is also concerned that inflation may be persistent, which would make it harder to justify rate cuts in the near future.

However, other members of the Fed have come out and said that other information shows that inflation may be slowly creeping back toward 2 percent. Specifically, Rapheal Bostic said that this might be the case, and he also said that the economy that emerged after 2020 may not be as sensitive to rate hikes.

Of course, the Fed minutes were not the only major piece of news to come out this week. On Thursday, Flash Manufacturing PMI and Flash Services PMI numbers were made public. The Flash Manufacturing PMI came in at 50.9 percent, which was higher than the projected 50.0. The Flash Services PMI came in at 54.8, which was well above the projected 51.2 and higher than last month’s figure of 51.3.

Thursday also saw the reveal of unemployment claim numbers from the previous week. Over the past seven days, there were 215,000 requests for benefits, which was less than the projected 220,000 requests and less than the 223,000 that were made the week before.

On Friday, two more important pieces of news were released, and they had to do with durable goods orders as well as reports issued by the University of Michigan. Durable goods orders were up .7 percent on a monthly basis compared to an estimated drop of .9 percent. Core durable orders were up .4 percent compared to an estimated increase of .1 percent on a monthly basis.

The University of Michigan’s revised inflation expectation figures showed that Americans thought that the inflation rate would be 3.3 percent a year from now. This was revised downward from 3.5 percent earlier in the month. Consumer sentiment was revised upward to 69.1 percent compared to an expected 67.8 percent.

The S&P 500 closed the week at 5,304, which was a drop of .09 percent during the last five trading days. It would make a high of 5,332 on Thursday morning and a low of 5,263 on Thursday afternoon. Otherwise, the index spent the rest of the week in a tight trading range as it sits near yearly and all-time highs.

The Nasdaq would finish the week at 16,920, which was an increase of 1.09 percent over the past five trading days. It would make a weekly high of 16,945 on Thursday afternoon and a low of 16,694 just before closing that same day. Like the S&P, the Nasdaq otherwise spent the rest of the week meandering in a close range.

Finally, the Dow would finish the week at 39,069, which was a 2.34 percent drop in the past five trading days. The Dow opened at 40,068 on Monday morning and spent the rest of the week in a freefall. It would close near its low of the week, which was 39,058 set late on Friday afternoon.

In international news, Great Britain announced Friday morning that retail sales had dropped 2.3 percent on a monthly basis. On Tuesday, Canada announced that its inflation rate had fallen to 2.6 percent. Also on Tuesday, New Zealand announced that it would hold its key interest rate steady at 5.5 percent.

This upcoming week will feature several news announcements in the United States. On Tuesday, the CB Consumer Confidence Index will be released while GDP and home sales figures will be made public on Thursday. The monthly Core Price Index comes out on Friday, and the Fed will likely be eyeing that number carefully as it tends to be their preferred gauge on inflation. It’s projected that prices went up by .2 percent over the past 30 days.

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