A relatively dull news week culminated in the publication of the highly anticipated PCE Price Index on Friday, courtesy of the US Bureau of Economic Analysis. A sense of unease preceded the data release, with market participants fearing yet another sign of uncooperative inflation figures. In the end, the fears were unfounded, the Core PCE revealed a month-on-month increase of just 0.2%, shy of expectations of 0.3% and the year-on-year figure fell right on target at 2.8%.
The collective sigh of relief translated to a sharp rebound in the Dow Jones, which closed Friday’s session 1.51% higher. The S&P 500 also ended the week on a high note, closing up 0.8% by the closing bell. The optimism was not enough to counter the dismal earnings reports of a couple of large tech stocks however, the Nasdaq Composite managing no more than to close flat on the day. Dell Technologies (DELL) suffered an 18% drop following a shaky earnings forecast; MongoDB (MDB) lost 24% for similar reasons; Amazon (AMZN) also weighed heavily on the tech index after falling 1.61%.
Despite a difficult week for stocks, the fact remains that all three major US indices established new record highs in May, with the Dow, S&P and Nasdaq closing the month 2.3%, 4.8% and 6.9% higher respectively. Nvidia, largely responsible for the wider rise in the tech sector, was up a staggering 27% last month.
Looking ahead, the economic calendar offers us a deluge of PMI data to start the week, with China’s Caixin Manufacturing PMI already revealing 51.7 versus last month’s 51.4 figure. On Thursday, we will hear from the European Central Bank, which is widely expected to be the first major central bank to lower its benchmark interest rate, despite inflationary fears within the Eurozone. The following day is the first Friday of the month, meaning Non-Farm Payrolls.
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