By: Gerry Sparrow
Stocks edged lower in the final week of May as fresh news on economic growth and inflation failed to inspire investors.
Stocks Slide
Markets shrugged off news that the Q1 Gross Domestic Product was revised lower to 1.3 percent from the initial estimated 1.6 percent. Despite concerns that the economy was cooling faster than expected, investors didn’t believe the update was enough to influence the Fed’s decision about adjusting short-term rates.1
On Friday, investors were on edge waiting for the update on inflation. The Fed’s preferred inflation indicator, called the personal consumption and expenditures (PCE), rose 0.2 percent in April, which was in line with forecasts.2
Stocks rose slightly in pre-market trading on the news but were under pressure throughout the day as investors digested the inflation update. But in the last hour of trading, stock staged a powerful rally led by the Dow, which had its best day of the year.
Is Bad News Good News?
On the economic front, last week’s news was generally disappointing. The update on Q1 GDP was a bit discouraging, and several Fed officials gave seemingly more hawkish updates. Also, the Fed’s “Beige Book” revealed modest economic growth nationwide.
Yet despite the drumbeat of bad news, stocks were resilient and closed only slightly lower for the holiday-shortened week.3
Footnotes and Sources
1. CNBC.com, May 30, 2024
2. CNBC.com, May 31, 2024
3. Investors Business Daily, May 30, 2024
PHOTO CREDIT: https://www.shutterstock.com/g/myronstandret
Via SHUTTERSTOCK
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