Stocks Sag on Downbeat Economic Indicators – Weekly Update

June 3, 2024 | By Steven DiGregorio

Stocks edged lower in the final week of May as fresh news on economic growth and inflation failed to inspire investors.

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, called the personal consumption and expenditures (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.

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

This Week: Key Economic Data

Monday: ISM Manufacturing Index. Construction Spending.
Tuesday: Motor Vehicle Sales. Factory Orders.
Wednesday: ADP Employment Report. EIA Petroleum Status Report.
Thursday: Jobless Claims. International Trade in Goods & Services. Productivity and Costs.
Friday: Employment Situation. Fed Official Lisa Cook speaks.

Source: Investors Business Daily – Econoday economic calendar;  May 31, 2024
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: CrowdStrike (CRWD), Hewlett Packard Enterprise Company (HPE)
Wednesday: lululemon athletica Inc. (LULU), DollarTree, Inc. (DLTR)

Source: Zacks, May 31, 2024
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Box upload

Source: YCharts.com, June 1, 2024. Weekly performance is measured from Friday, May 24, to Friday, May 31.
TR = total return for the index, which includes any dividends as well as any other cash distributions during the period.
Treasury note yield is expressed in basis points.

Footnotes and Sources

1. CNBC.com, May 30, 2024
2. CNBC.com, May 31, 2024
3. Investors Business Daily, May 30, 2024


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Tags: DJIA, Fed, GDP, Inflation, NASDAQ, PCE Index, S&P 500

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STEVEN M DIGREGORIO is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
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