Market Recap: May 2024

Market commentary

• The U.S. economy grew at a slower pace of 1.3% annualized rate from January through March, revised down from an initial estimate of 1.6%.
• Despite this slowdown, and after three straight months of decline, U.S. consumer confidence increased in May.
• Indicating a tightening labor market, the U.S. economy added only 175,000 jobs in April, representing the lowest total since October 2023.
• Following April’s unexpected spike, CPI retreated slightly, although inflation remained above levels seen earlier this year.

Select economic and market data

Equities

• U.S. stocks broadly got a boost from easing Treasury yields after the latest reading on inflation came in roughly as expected.
• Historically the second worst month for stocks, May delivered strong returns, especially in technology and interest-rate sensitive stocks.
• Both the S&P 500 and Nasdaq Composite recorded five consecutive weeks of gains.

Fixed income

• Lower rates led to strong returns across the spectrum of fixed income investments.
• An expected $340 billion net increase in U.S. government bonds for June should test investors’ appetite for debt and could provide some upward pressure on yields.

   

Strategic outlook

• Some caution warranted on equities in the near-term, particularly in high-growth large-cap stocks after recent rally; currently favoring small-cap and mid-cap domestic stocks longer-term.
• Above-average volatility is likely given central bank involvement and geopolitical uncertainty.
• Near-average expected returns projected for fixed income after period of rising rates and bond market sell‐off.