U.S. stocks outpaced the rest of the world last week as global traders sought relief from the turmoil caused by European elections. Tech stocks carried the market as traders digested a pair of cooling inflation reports. The Nasdaq closed at record highs every day last week, and the S&P 500 also posted a solid gain, while the Russell 2000, the Dow, and the Global Dow all lost ground. The benchmark 10-year Treasury yield saw its largest weekly decline of the year. Crude oil prices surged, gold prices rose, and the dollar advanced for the fourth week in a row.
Last Week’s Economic News
- The Federal Reserve announced that the target range for the federal funds rate would remain at 5.25%-5.50%, a decision that was widely expected. Based on projections for interest rates by the end of next year, it now appears that Fed officials anticipate making just one rate cut of 0.25% later this year, followed by four more cuts in 2025.
- The Consumer Price Index was unchanged in May, after increasing slightly in April. The CPI advanced 3.3% for the 12 months ended in May, a slower pace than for the 12 months ended in April.
- The Producer Price Index, which measures prices producers receive for goods and services, decreased in May after increasing in April. For the year ended in May, the PPI rose 2.2%, edging down from a 2.3% rise in April.
- Prices for U.S. imports decreased in May following an increase the previous month. This was the first 1-month decline since December 2023. Export prices fell in May after rising in April.
- The federal deficit for May was $347.1 billion, well above the May 2023 deficit of $240.3 billion.
- The national average retail price for regular gasoline was $3.429 per gallon on June 10.
- For the week ended June 8, there were 242,000 new claims for unemployment insurance, an increase of 13,000 from the previous week’s unrevised level.
Eye on the Week Ahead
Several areas of the economy are highlighted this week, starting with the May retail sales report. Inflationary pressures at the retail level were somewhat muted in April. The Federal Reserve report on industrial production for May is also coming out. Industrial production was unchanged in April, although manufacturing output slowed. Lastly, the Census Bureau report on housing starts for May and data on existing home sales will be released. The number of issued building permits declined in April, while housing starts advanced. Sales of existing homes declined in April, although the median price for existing homes rose to over $400,000.
Have a nice week!
Sincerely,
Robert G. Carpenter