Presented by The PensionmarkMeridien Team, May 29, 2024
Major U.S. stock market indexes traded in a notably mixed fashion last week, with tech providing leadership as industrials lagged.
Tallying last week, the S&P 500 was nearly flat, higher by 0.03%1, the NASDAQ 100 rose by 1.41%2, and the Dow Jones Industrial Average saw an uptick of 2.33%3.
HIGHER FOR LONGER—STILL?
Midway through last week, we got the Fed minutes from the most recent policy meeting that concluded on May 1st. The minutes showed4 that “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”
With inflation still sticky, the Fed has telegraphed that further policy tightening could be appropriate should inflation risks materialize. “Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2% objective,” the summary stated.
DEFLATING SENTIMENT
Given the recent stubborn and mixed inflation metrics from several data points, it is no surprise that consumer sentiment has shifted to the downside. Labor and inflation worries contributed to consumer sentiment dropping 10.5% in May, its lowest reading in almost five months, according to the data5 released last Friday.
Consumer Sentiment Survey Director Joanne Hsu said, “Consumers expressed particular concern over labor markets; they expect unemployment rates to rise and income growth to slow,” Hsu wrote. “These deteriorating expectations suggest that multiple factors pose downside risk for consumer spending.”
Persistently elevated interest rates are also a factor for credit-hungry Americans absorbing “high” prices for many goods and services.
OIL SLIDES
Crude oil dropped about 2%6 last week, posting its biggest weekly drop in a month courtesy of interest rate woes. That sounds like good news heading into the summer driving season, historically known to kick off around Memorial Day.
The average price of regular unleaded gasoline was $3.5927 as of 05/27/24, according to AAA, showing some relief at the pump in many parts of the country but not everywhere.
On Monday, in quiet early week holiday trade, oil prices rose over 1%8, trading near $78.51 at the last check on Memorial Day. Oil has been quiet recently since tensions and fears in the Middle East have somewhat faded.
This week’s inflation data in the form of Core PCE should be watched heavily for future price direction by oil traders and investors.
INFLATION & GDP DATA INCOMING
It’s a holiday-shortened yet data-heavy week, with the biggie being Core Personal Consumption Expenditures (PCE) on Friday. Last month, the Fed’s preferred inflation gauge showed an increase of 0.3%9 month-over-month, and expectations are for a tick lower to a 0.2% month-over-month increase this time around.
Core PCE is an important metric right now, as the markets are looking for directional assurance on interest rates given the Fed’s recent hawkish tone.
There are a few others, too: consumer confidence on Tuesday to get things kicked off, weekly unemployment claims (last week’s was light, and markets liked it), then preliminary GDP and pending home sales on Thursday.
THE TAKEAWAY
Mixed messaging was the theme last week, as investors wonder if the Fed is doing a 180 on tone. The Fed’s intentions have been well-telegraphed, and Friday’s Core PCE will be what the market at large will look towards this week. After that, the next piece of data, and the next. Of course, most assets and investors want rate cuts, and as of last week’s market close, it looks like September is where the current probabilities are, with a 49.4% chance of a rate cut versus 10.2% in July, according to the CME FedWatch Tool10.
That said, if inflation and elevated interest rates were to dictate the mindset of collective long-term investors, they would have missed out on some serious capital appreciation over the last two years — just look at the major stock market averages.
As always, if there is anything on your mind regarding your investment portfolio, give us a call or email us at the email or phone number below.
In the meantime, have a great week.
The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com
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Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).
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This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Citations:
1. Trading View, May 26, 2024,
2. Trading View, May 26, 2024
3. Trading View, May 26, 2024
4. CNBC, May 22, 2024
5. Surveys of Consumers university of Michigan, May 3, 2024
6. Irish Examiner, May 27, 2024
7. AAA Gas Prices, May 2024
8. Yahoo Finance, May 27, 2024
9. CNBC, April 26, 2024
10. CME Group, May 28, 2024
Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).