The Buzz on Business for May 31st 2024
While we didn’t come right out and say it, we implied and indeed believed, that if yesterday’s Core PCE came in, even one tick, below expectations, markets would rally. This was the case two weeks ago when the Producer Price Index beat its number. Surely the Fed’s preferred measure of inflation would have a similar result, we assumed.
We were wrong!
Maybe we should get one of them juicy partner jobs at JP Morgan and make predictions, ya know, full-time!
Stock Market Report
An unusual day on Wall Street yesterday. The three major indexes all finished with significant losses, but the small caps were up and advancing stocks trounced decliners on decent volume. Salesforce, which actually exceeded expectations for first quarter profits, lost over 20% of its value on lowered guidance for the balance of the year. If the Salesforce results were taken out of the indexes all would have posted gains.
- The Dow Jones Industrial Average was off 330 points. That's nine-tenths of 1% and it closed at 38,111.
- The S&P 500 was down six-tenths. That's 31 points on the S&P and they start the day today at 5,235.
- Likewise, the NASDAQ Composite, it was off 1.1%, and closed at 16,737, off 184 points.
- But the small caps bucked the trend. The Russell 2000 was up a stout one percent, one-percent on a down day. That's a 20 a point, and it closed at 2,057.
Bond Market Report
Rates were down across the board on Thursday.
- The yield on the 2-year treasury was off six basis points and it closed at 4.927%.
- The 20-year was off 7 ticks and it now yields 4.764%.
Oil, Gold, and Bitcoin
- Oil was down sharply. It closed at $77.81 a barrel, off $1.43.
- Gold was up $26.40, and a troy ounce will now set you back $2,362.60.
- And Bitcoin was up $1,447.99 and at 4:00 PM Eastern Time stood at $67,192.19.
Mixed Economic Data: Moderating Economy
As we said, the economic data was mixed. It appears to us that the economy is clearly slowing from the strong pace it was running at in last year’s fourth quarter, but it does not appear to be falling off a cliff as we feared it might, based upon the numbers over the last six weeks or so.
- Continuing Jobless Claims came in below expectations but
- Initial claims were just a tick above expectations.
- We thought that this number might be the catalyst for a rally in stocks.
- Pending home sales missed its number by a fairly wide margin as higher for longer continues to take its toll on the housing market.
- Gross domestic Product for the first quarter likewise disappointed. The Street was expecting that the economy grew at a paltry 1.60% annual rate instead of the 1.30% rate we got.
- But the inflation news was good—or at least better than expected, anyway. Core inflation, as calculated by the PCE Index, came in at a 3.6% annual rate in the first quarter versus a 3.7% expectation.
It seemed to us that, taken together, yesterday’s data, makes the case for rate cuts and a continuation of the rally. Obviously, it did not.
The balance of the PCE Complex rolls out later this morning. Perhaps today’s release will prove Thursday’s market wrong. Or show us that, maybe, it knew something we didn’t.
