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Equities Continue to Hit New Highs Despite Mixed Economic Data
Equity markets continued to reach new highs last week despite mixed economic data releases. Global equities (represented by the MSCI All Country World Index) were up 0.52%, and domestic stocks (represented by the S&P 500 Index) were up 0.63%.
US Retail Sales
US Retail Sales missed expectations in May, only rising 0.1% for the month compared to an estimated 0.3%. This reading follows April’s downwardly revised figure of a 0.2% decline. Discretionary spending seemed to slow for the month as sales at bars and restaurants fell 0.4%.
Mortgage Rates
Higher mortgage rates seem to be taking a toll on the US housing market as existing home sales fell for the third consecutive month. The National Association of Realtors reported a 0.7% drop in existing home sales for May, while the median sale price also reached an all-time high.
Manufacturing Statistics
While data around the consumer and the housing market seemed to slow, manufacturing statistics released last week pointed upward. US Industrial Production, released by the Federal Reserve, rose 0.90% in May, the fastest pace since last July. S&P Global reported 26-month high readings of their Composite Output and Services Business Activity Indices. The services sector helped propel the reading with inflows for new work and rising payrolls. The manufacturing sector remained in expansionary territory with new orders and employment also providing a positive impact to the PMI.
Looking Forward
This week a report of the US Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, is scheduled for Friday. Core PCE (excluding food and energy) has moderated significantly from levels of around 5.6% back in February 2022, however, progress towards the Fed’s 2% long-term inflation target has stalled over the past 3 months with readings around 2.8%.
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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