Highlights:
The S&P 500 had a small gain of 0.2% in May, bringing its total gain for the year to 8.9%.
The Nasdaq composite index had a significant gain of 5.8% in May and is up by 23.6% for the year. The more tech-heavy Nasdaq 100 is up by 30.3% for the year.
The Russell 2000, representing small and mid-cap companies, is down 0.7% for the year.
Gold is up 7.9% for the year, while oil was down 11% in May, its worst month, and 15% for the year.
Two-year treasury closed at 4.40%, up 0.04%. The 10-year treasury closed at 3.64%.
Apple, Microsoft, Nvidia, Google and Meta accounted for 82% of the total gain of the S&P 500 this year.
Core personal consumption expenditures inflation is increasing, while producer price indexes are slowing. Inflation expectations for the next year are decreasing but increasing for the next five to 10 years.
Core services, such as labor demand in construction, hospitality and healthcare, continue to push the employment cost index higher. Rental costs and owners’ equivalent rent are expected to decrease.
Q2 corporate profits are expected to drop 6.3% year-on-year, followed by a 1% and 8% rise in Q3 and Q4, respectively. Full-year profit growth is estimated to be only 1% compared to 4.1% last year.
Alternatives, such as private equity, private real estate and structured credit, are emphasized due to the expectation of a mild recession.
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