Economic Beat: Good news on inflation

Hello, this is Josh Waynick, Investment Strategist at Fifth Third Bank

Major US equity indices were higher this past week and gave investors the 4^th week in a row of positive returns in the S&P 500.  This Past week also gave investors new all-time highs for the S&P 500, with the S&P climbing over 5,300 on Wednesday, May 15^th before retreating slightly in the back half of the week.

Specifically, the S&P 500 rose 1.6%, the Nasdaq Composite gained 2.2% and the Dow Jones Industrial Average returned 1.4% over this past week.  Looking at debt markets, the US Treasury Yield Curve moved lower across all term points but saw longer maturities see larger drops in yields than shorter maturities. Focusing the current 2-year/10-year inversion, the US Treasury 10-year yield fell to 4.42% with the US Treasury 2-year yield falling to 4.82%.  As a result, the 2-year/10-year inversion expanded slightly during the week and ended the week at 40 basis points inverted.  The dollar index, which measures the US Dollar against a basket of global currencies, moved lower during the week and ended the week down 0.8%.  Gold rose by 2.3% over the week and ended the week at $2,415 per ounce.  Oil rose for the second week in a row and at the end of Friday, West Texas Intermediate crude oil sat at $79.97 per barrel.

From an economic perspective, this past week gave investors good news on the inflation front.  This past Wednesday the Consumer Price Index came in below market expectations and detailed year over year CPI at 3.4%, down from the prior months 3.5%.

This positive inflation news helped push the S&P 500 higher, breaking all-time highs on Wednesday after the release of the CPI Report.

The most recent earnings season is beginning to wrap up.  As of this past Friday, around 93% companies in the S&P 500 have detailed their financial results.  The S&P 500 is on pace for its third quarter in a row of actual earnings growth.  As of this past Friday, Bloomberg has detailed actual earnings growth of 5.3% as compared to last year’s Q1 quarterly results. 

In the week ahead 17 of the remaining 34 stocks will detail their financial results, including Nvidia.  So far this year, Nvidia is on track to repeat its stellar 2023 performance.  In 2024 investors have seen a price return of around 90% for Nvidia, the 3^rd best performing stock in the S&P 500 this year.

In addition to several individual company results, market participants will take in a number of economic reports in the week ahead.  On May 22^nd investors will dissect the most recent FOMC minutes from the meeting earlier this month.  On May 23^rd S&P Global will publish their new Manufacturing and Service PMI’s.  And finally, on May24^th, investors will take in the most recent University of Michigan Sentiment Index.

That concludes this week’s Economic Beat.  As always, we will be watching and reporting back to you next week.