Stocks Gain Modestly Despite Weak Economic Data; Bonds Down Slightly

Good morning, and welcome to the last week of the first half of 2024.

In a holiday-shortened week, the Dow (+1.5%), NASDAQ (+0.0%), and the S&P 500 (+0.6%) exhibited modest gains.  Meanwhile, taxable bonds were down about 0.2% and tax-free municipal bonds were virtually unchanged.  The 10-year Treasure bond yield rose 0.04% to end the week at 4.25%.

The past week was choppy, and technology stocks gave back their gains from earlier in the week.  These came amid weak economic data, as monthly retail sales and Leading Economic Indicators (LEIs) came in below expectations.  Retail sales rose 0.1% in May, and April’s readings were revised downward to a 0.2% decline.  Retail sales numbers exclude inflation, so the values effectively dropped two months in a row.  LEIs fell again in May, and have remained negative for 23 consecutive months, the most ever without a recession.  Historically, LEIs have been a great predictor of an impending recession, but we haven’t experienced that yet.

Weekly jobless claims were mostly in line and remain at historical lows.  However, they have been showing signs of trending higher for several months, as shown by the chart below.  Thus, economists conclude that the job market is still healthy, but softening, as would be expected following the multiple Fed interest rate hikes.  The Fed-favored inflation gauge, Personal Consumption Expenditures (PCE), will be reported at the end of this week.

Have a great day and terrific week!

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}