Economy
An important gauge of inflation hit its highest level since October 2023. The personal consumption expenditures (PCE) index measures the increase in prices that people pay for goods and services. To better understand underlying trends, the Fed keeps a close eye on core PCE, which removes food and energy items from the mix. Core PCE for the month of May clocked in at 3.41%, well above the Fed's target of 2% and marks the third straight month of increases. Readings like this could influence the Fed to raise interest rates this year to curb inflation. Neel Kashkari, one of the more vocal members of the Federal Open Market Committee (FOMC), said this week that he expects to see a rate hike before the end of the year.
Markets
The S&P 500 fell by 1.95% this week, dragged down by technology stocks that continue to take it on the chin. The tech-heavy Nasdaq 100 index fell by more than 4% as investors pulled money out of these stocks and rotated into other areas of the market. This doesn't have the feel of a "risk off" environment just yet. Value stocks (companies that tend to trade at cheaper multiples and focus less on growth and more on dividends) finished the week in positive territory. Utilities and health care stocks saw gains this week led higher by names like Eli Lilly, Johnson & Johnson, and NextEra Energy. The S&P 500 is a cap-weighted index, which means its index components receive a heavier weighting based on the size of the company. The equal-weight S&P 500 outperformed the cap-weighted index by more than 2%.
What We're Reading
- How To Survive the Wrong Turns in Life and Markets - Safal Niveshak
- See How Owning a Home is Getting More Expensive in Every Way - WSJ
Have a great weekend.
Dogwood Wealth Management