Disinflation Trend Continues

Disinflation Trend Continues

Disinflation Trend Continues


  • Disinflation Trend Continues: Headline and core inflation measures came in as expected for both the CPI and PCE Price Index.
  • Equity Markets Advanced in May: The S&P 500 was higher by 4.8% in May and is higher by 9% so far this year.
  • Robust Earnings Performance: For the full year, given the better-than-anticipated results thus far, operating earnings for the S&P 500 are still expected to grow 13%
  • Fixed Income Market Volatility: The month of May continued the pattern we saw in April with a more volatile interest rate market. 
  • Data Driven Fed Leads to Data Driven Markets: Markets are reacting to each data point, trying to interpret how it will impact the Fed’s decision-making process.
  • Outlook Largely Intact: Although data has been mixed so far in 2024, our outlook on the key themes driving equity and fixed-income markets remain intact.

Equity Markets

In May, the S&P 500 exhibited a strong start, surging by 5.6% to reach a record high of 5,321 by May 21st. However, the index struggled to stay above the 5,300 mark, ultimately slipping by -0.8% for the remainder of the month, but still closing with a respectable overall gain of 4.8%. Among sectors, Information Technology saw the most significant gains, climbing by 10%, followed by Utilities with a solid return of 7%. Conversely, Energy was the sole sector to experience a decline, dropping by -2.8% due to decreased oil and natural gas prices. Looking at the broader picture, the index has seen a year-to-date increase of 11%, with Communication Services, Technology, and Utilities leading the charge, all boasting returns surpassing 13%. The gain in Utilities is interesting, as investors are looking for the “next AI” trade, boosting the stock prices of power generation and distribution companies. 

This year has witnessed a significant contrast among major indices, highlighted by the Dow Jones Industrial Average and the S&P 500 Equal Weighted Index showing only modest gains of 2% and 4%, respectively. In stark contrast, both the S&P 500 and the technology-focused Nasdaq have surged by more than 9%- propelled largely by the remarkable ascent of AI-related stocks. These technological advancements have displayed extraordinary resilience and persistent upward momentum, contributing substantially to the impressive performance of these indices. 

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