Mid-Week Market Minute 06.29.22

Stocks in the U.S. slipped in early trading this week as the consumer confidence index posted another sharp decline in May. This follows an impressive week of performance in U.S. stocks, where the S&P 500 gained nearly 6.5%. Overseas, positive news out of China helped bolster emerging market sentiment. On Tuesday, the world’s second-largest economy announced the easing of its strict COVID-19 quarantine rules for international visitors, helping alleviate worries about slowing global growth. In commodities, energy prices resumed their rally this week as West Texas Intermediate crude oil (WTI) climbed above $113 a barrel, on pace for a fourth consecutive day of gains. Gas prices, however, have retreated from record highs of $5.01 per gallon to around $4.87 per gallon mid-week.

Revised data for first quarter GDP was reported on Wednesday morning, indicating the U.S. economy contracted at a 1.6% annual rate for the quarter. Weakness was primarily led by volatile trade and inventory data. Excluding the impacts of the trade imbalance due to a strong dollar, the GDP would have been positive by about 1.6% for the quarter. In addition, the Fed released May data on the M2 money supply this week. The amount of M2 money in circulation rose just 0.1% in May (after falling in April). As a result, the 12-month change fell to 6.6%, the slowest growth rate since the pre-pandemic days of 2019. Looking ahead to Thursday, we will get data on the PCE price index, the Fed’s preferred measure of inflation. Markets are expecting Core PCE to increase by 4.8% year-over-year, and any deviation from consensus likely will add to volatility the remainder of the week.

Source: GSAM, CNBC, JPMorgan