Market Recap – May 31, 2024


  • Weekly Returns (Friday Open – Thursday Close) & YTD Returns*: [1]

Markets generally declined this week despite strong earnings, primarily due to rising interest rates. The NASDAQ remained flat as NVIDIA continued its upward ascent following blowout earnings from the previous week. Small-cap stocks were positive as the Q1 GDP revision was less negative than expected. [1]

  • PCE Indicator: The Fed’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) index came in at expectations at 0.3% increase month-over-month and 2.7% increase year-over-year. This is still 35% higher than the Fed’s 2% inflation target. [2]
  • Costco Earnings: Costco Corporation reported stellar earnings on Thursday with net sales of $58.52 billion ($57.98 billion expected) and adjusted earnings of $3.78 per share ($3.70 expected).  This earnings announcement comes at a time when there is increasing concern over the strength of consumer spending.  [3]
  • Fed Beige Book: The Federal Reserve’s latest Beige Book, covering April to mid-May, shows modest economic expansion across most Districts. Key insights include:
    • Retail spending was flat to slightly up, and auto sales remained stable with incentives.
    • The travel sector strengthened, while manufacturing and services saw slight demand increases.
    • Tight credit standards and high interest rates constrained lending growth, affecting commercial real estate, though the housing market showed modest demand increases despite high rates.
    • Employment rose slightly, with some labor shortages persisting, while wage growth normalized to pre-pandemic levels.
    • Prices increased modestly, with consumer resistance limiting further hikes. [4]

Chart of the Week:

Fed’s Preferred measure of inflation:  PCE – Real PCE

Source: FRED, Author’s Calculation

Economic Outlook:


Recent economic indicators, including labor markets, retail sales, and sentiment, have underperformed expectations. Despite this, prospects for strong growth in the next quarter remain optimistic.  They are supported by increased government spending, advanced purchasing manager indices, inventory restocking, improved banking liquidity, and robust earnings. The Atlanta Fed’s GDPNow estimate for Q2 2024 is currently 2.7%. [5]

  • Unemployment: We assign a greater than 80% probability of the unemployment rate ending 2024 at over the Fed’s 4.0% target due to an increase in layoffs as heavily indebted firms struggle to refinance their debt at higher interest rates. [6]
  • Inflation: We expect inflation to remain above the Fed’s target in 2024, barring an unforeseen recession. Consumer demand is still growing, albeit at a slower pace. Supply-side shocks, including freight rates, commodity prices, and food prices, are rebounding. [7]
  • Short-Term Interest Rates: We put the odds of any rate cut before September of 2024 at less than 10%. Supply side inflation should reaccelerate as rent inflation moderates, which puts rate cuts in the second half of 2024 in question.

*Dow Jones is price return

*SP500 is price return

*NASDAQ is price return

*US Small Cap Stocks is Russell 2000

* US Bond Market is Bloomberg Aggregate

*International Stocks is MSCI ACWI ex-US Index

*Weekly Returns is May 23rd, 2024-May 30th, 2024

*YTD is Jan 2nd, 2024-May 30th, 2024

By: Nick Colletta, CFA, CAIA


  2. Personal Consumption Expenditures (PCE) | FRED | St. Louis Fed (
  3. Costco posts Q3 earnings beat, US same-store sales jump 6% (
  4. Fed Beige Book Shows Modest Economic Expansion Ahead Of Key GDP, Inflation Data Release (
  5. GDPNow – Federal Reserve Bank of Atlanta (
  6. Businesses continue to struggle with high prices and interest rates | Federal Reserve Bank of Minneapolis (
  7. Drewry – Service Expertise – World Container Index – 23 May

Bridge Advisory LLC Disclosures

Bridge Advisory, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Investment Advisory Services offered through Bridge Advisory, LLC. Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type. Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Information herein has been obtained from sources believed to be reliable, but Bridge Advisory, LLC. does not warrant its completeness or accuracy; opinions and estimates constitute our judgment as of this date and are subject to change without notice. This newsletter expresses the views of the authors as of the date indicated and such views are subject to change without notice.

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