Weekly Market Commentary June 24th to June 28th 2024

U.S. GDP for the first quarter of 2024 was revised up from 1.3% to 1.4%. Among the changes was a reduction in consumer spending, with durable, nondurable, and services spending all weaker than originally reported. This weakness was offset by upward revisions to business-fixed and residential investment. GDP has been decelerating the past two quarters on the back of weaker consumer spending.

New Home Sales slumped in May as elevated prices and mortgage rates continued to challenge the housing market. New single-family home sales decreased 11.3% to a 619,000 annual pace, the slowest since November. However, this pace remains in the 600,000 to 700,000 range that we’ve been seeing for over a year. Slowing demand and rising inventories brought down the median sale price of a new home by 1% from last year.

Personal Consumption Expenditures (PCE) for May was flat month-over-month and 2.6% year-over-year, an improvement from the prior reading. As the Fed’s preferred inflation gauge, markets took this as favorable, especially since all other inflation readings during the month were also cooler than expected. Furthermore, real personal income rose the most since January 2023, adding more credence to a consumer looking to slow spending and build savings.

The equity markets ended the week on a somber note, giving back all the gains made earlier in the week. The S&P 500 finished flat at 5,460, the Dow Jones finished flat at 39,119, and the Nasdaq finished 0.24% higher at 17,733. U.S. Treasury yields increased during the week with the 10-Year closing up 13bps to 4.38%, and the 2-Year closing up 1bp to 4.75%.

Next week we will get manufacturing and services data, along with unemployment, nonfarm payrolls, and average hourly earnings.