Asset Management Weekly Market Commentary

Market updates for the week ending
May 17, 2024

Key observations

• Stocks and bonds marked time leading up to the release of the April Consumer Price Index (CPI) on Wednesday, but relative calm quickly gave way to a buying frenzy with most equity and fixed income indices moving higher over the balance of the week as Treasury yields fell.
• U.S. large cap stocks made a new all-time high mid-week before trading sideways into the weekend, digesting gains and building up energy for the next advance. Smaller capitalization stocks outperformed as in-line inflation data put downward pressure on Treasury yields, and investors looking for relative value and areas to play catch-up could look to this cohort in the coming weeks/months.
• Emerging markets were the big winner on the week as the U.S. dollar weakened and China’s government stepped up support for the housing sector. Hopes for additional stimulus down the road in China, combined with the prospect of U.S. dollar weakness persisting, are reasons to remain constructive on both stocks and bonds tied to emerging markets.

What we're watching

• Nvidia, the 3rd largest constituent within the S&P 500 and one of the drivers and beneficiaries of the rise of Artificial Intelligence, will report earnings after market close on Wednesday. The information technology sector and related areas could key off this earnings release, and a continuation of the S&P 500’s upward trend/momentum could hinge on strong Nvidia guidance.
• U.K. Consumer Price Index (CPI) for April is released Wednesday and is expected to rise at a 3.7% annualized rate, which would be a deceleration from 4.2% year over year in March. The Bank of England is expected to ease policy in June and this reading could play into that decision.
• Minutes from the Federal Open Market Committee’s May meeting are released Wednesday.
• U.S. Purchasing Managers Index (PMI) for May is released Thursday with a Composite reading of 51.6 expected, a modest improvement from 51.3 in April. Manufacturing PMI is expected to rise to 50.3 from 50.0 in April, while Services PMI is expected to make a similarly sized move to 51.5 from 51.3 the prior month. A reading above 50 indicates expansion/growth, while a reading below 50 indicates contraction.