Market Perspective for May 30, 2021

Stocks were up broadly on Friday following positive economic data, with the three major indexes closing in the positive. The S&P 500 rose 0.1 percent, the Nasdaq 0.1 percent and Dow 0.2 percent. The Russell 2000 Index lost 0.18 percent over the day. For the week, the Dow gained 0.9 percent, the S&P 500 1.2 percent and the Nasdaq 2.1 percent.

Although the S&P 500 and Dow posted overall gains for May, the Nasdaq fell 1.5 percent, which was its first negative month over the past seven. This was the eighth consecutive month of gains for the small-cap Russell 2000 Index as investors flocked to cyclical stocks.

Salesforce (CRM) was a frontrunner for the Dow on Friday with an increase of 5.43 percent. With the company’s latest earnings report of 37.5 percent far exceeding the consensus expectations for last quarter, Salesforce demonstrated the resiliency of consumer demand for software products.

SPDR Technology (XLK) increased 0.36 percent on Friday. While Microsoft Corporation (MSFT) and Alphabet Inc. (GOOG) shares gained 0.15 percent and 0.38 percent, respectively. Facebook (FB) shares decreased 1.21 percent, Amazon (AMZN) 0.22 percent and Netflix (NFLX) 0.21 percent.

The Federal Reserve’s standard benchmark for inflation tracking, the core personal consumption expenditures index, posted an elevated reading of 3.1 percent for year-over-year price increases. This marked the highest level in nearly three decades.

The U.S. Dollar Index inched higher on Friday by 0.1 percent over the day to 90.03.

The 10-year Treasury note yield closed down on Friday at 1.592 percent.

On Friday, gold futures (GC=F) rose 0.41 percent to $1,906.30 an ounce. Silver futures (SI=F) were also up 0.45 percent to $28.07 an ounce.

WTI crude oil prices decreased by $0.53 to close at $66.32 a barrel. SPDR Energy (XLE) increased 0.19 percent on the day.

Friday’s report from the Commerce Department revealed that consumer spending rose by 0.5 percent in April. Consumer spending continues to drive the economic recovery while also contributing to recent inflation increases even after the initial boost from March’s direct stimulus payments.

The slight dip in University of Michigan’s consumer sentiment index from 88.3 in April to May’s 82.9 reading reflects the impact of inflation concerns on consumer outlook.  However, the impact was blunted by widespread consumer optimism from mass vaccination progress and sustained spending activity.

At this point, approximately 97 percent of the S&P 500 reporting companies have announced their first-quarter earnings, which are up by 50 percent on the year, the fastest pace in the last 11 years. Positive earnings reports have improved analysts’ forecasts for the year’s earnings growth from 22 percent to 34 percent.

Markets will be closed on Monday in observance of Memorial Day. Manufacturing and services sector activity levels are due this week. On Friday morning, Fed Chairman Jerome Powell is set to speak on central bank policy. Later that day, the May payroll data will be out after last month’s unexpectedly low number of new jobs added.

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