Weekend Update, May 28th, 2024

Index, Sector & Asset Performance

Equity markets were mostly flat last week. The S&P 500 was flat while our friends to the north in Canada dropped – 0.6% due to those markets’ reliance on energy and commodity stocks.

Post the Memorial Day weekend, equities are mostly sitting near record highs in North America as well as many global markets. Expectations of Federal Reserve rate cuts are getting scaled back, longer-term Treasury yields are trending higher, while European Central banks are signaling earlier interest rate cuts. Historically, the last week in May is one of the worst weeks for stock returns.

Performance through lunch time last Friday, May 24th:

Economic Indicators and Earnings Commentary

With almost 470 of the S&P 500 having reported 1Q2024 results, about 78% have topped earnings expectations according to Refinitiv. The average earnings surprise was about 8%. These results are a little higher than normal 1st quarter earnings-season norms. Technology and health had the most surprises, with those sectors beating at just under a 90% rate. S&P 500 earnings growth is tracking at +8% y/y, compared to expectations of +5% y/y growth in early April.

There continue to be signs U.S. growth is slowing. Stock market bulls might argue that the -10% correction in the S&P 500 in 3Q23 already priced a slowdown in, and the current rally reflects a re-acceleration in late 2024. ISM new orders have stabilized and turned positive, barely, while jobs data has cooled.

Global Market Trends/Commodities/Currencies

Oil prices are up 1.5% after trending lower the last 2 months in their normal seasonal manner. Stocks in Asia ended flat to modestly lower today, with China underperforming and most markets flat.

The weakening in the dollar through 2023 is helping support growth in the 1H24. However, the dollar’s decline has now slowed as the Fed’s easing gets pushed further out into 2h24. Other central banks are already easing, and many others are about to join them. Eventual Fed easing should put downward pressure on the U.S. dollar through 2025. There is marginal risk that China does a major devaluation of the Yuan in the next 6 months.

OHFG Exclusive Data & Charts

Oak Harvest Weekly Stock Talk: Delayed due to May 16th storms

Index Performance Summaries