April PCE data sends stocks higher 📈

PCE inflation was in line with analyst estimates for the month of April.

Author

Adam Garcia
May 31, 2024

Good Afternoon! 

Hey, everyone. It's Adam from Elite Trade Club. 

I hope you had a great weekend.

Here’s what moved the market today.

Markets 📈

The market rallied back on Friday after the April PCE report showed inflation consistent with analysts’ expectations. The Dow led thanks to a rebound rally in its component stock, Salesforce [CRM +7.5%], which sold off for 19% on Thursday.

  • DJIA [+1.5%]

  • S&P 500 [+0.8%]

  • Nasdaq [<0.1%]

  • Russell 2K [+0.3%]

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Market-Moving News 🔎 

PCE Inflation remained above the Fed’s 2.0% target in April, but showed signs of potential improvements.

PCE Inflation Rises 0.2% in April 📈

The personal consumption expenditures (PCE) price index, excluding food and energy costs, increased by 0.2% for the period, matching the Dow Jones estimate, according to the Commerce Department.

Annual Core PCE 📊
On an annual basis, core PCE rose by 2.8%, slightly above the expected 2.7%. Including the volatile food and energy categories, PCE inflation was 2.7% annually and 0.3% monthly, both in line with forecasts.

PCE is favored by the Federal Reserve over the consumer price index (CPI) because it considers changes in consumer behavior and has a broader scope.

Key Drivers ⚡
A 1.2% rise in energy prices contributed to the headline increase, while food prices declined by 0.2%. Goods prices rose by 0.2%, and services saw a 0.3% increase, indicating a normalization in an economy driven by services and consumption.

Income & Spending 💵
Personal income increased by 0.3% in April, aligning with expectations, but spending rose just 0.2%, below the forecasted 0.4% and down from March’s revised 0.7%. When adjusted for inflation, spending showed a 0.1% decline, primarily due to a 0.4% decrease in spending on goods and a modest 0.1% rise in services expenditures.

Market Reactions 📉
Following the data release, futures tied to major stock averages rose, while Treasury yields fell. Despite recent hotter-than-expected inflation data, central bank officials have advocated for a cautious approach, reducing the likelihood of imminent rate cuts.

New York Fed President John Williams expressed confidence that inflation will continue to decrease but emphasized that prices remain too high. Current market expectations suggest that the first rate reduction may not occur until November, after the presidential election.

Top Winners and Losers 🔥

Brand Engagement [BNAI] $5.44 (+110%)
continued to rally after announcing a $4.95 million securities purchase agreement with investors earlier this week.

Novo Integrated Sci. [NVOS] $1.06 (+135%)
received a Standby Letter of Credit from HSBC confirming its approval for a $78 million line of credit.

Gap [GPS] $28.96 (+28.6%)
posted stronger than expected results on its fiscal Q1 2024 earnings report, prompting several upgrades from analysts .

Logistic Properties [LGA] $130.00 (49.7%)
pulled back after a massive 684% rally in Thursday’s trading session. There was no company-specific news to predicate either move.

Smart for Life [SMFL] $3.45 (42.2%)
pulled back after rallying on Thursday after announcing a deal to exercise existing warrants for a reduced price.

Smartkem [SMTK] $8.63 (30.9%)
fell in its first day of trading on the Nasdaq. The company announced its decision to uplist just a day earlier.

That's it for today! Please, write us back, and let us know what you think of the Closing Bell Roundup. We're always eager to hear feedback from our members!

Thanks for reading. I'll see you at the next open! 

Best Regards,
— Adam G.
Elite Trade Club

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