Mixed Signals from Retail Sales and Manufacturing, Markets React Positively 

In May 2024, US retail sales experienced a slight uptick of 0.1% month-over-month, coming from a revised 0.2% decline in April, and fell short of the anticipated 0.2% growth. Such movement signals a dip in consumer sentiment.  

Conversely, manufacturing output saw significant growth, rising 0.9% in the same month and outperforming the expected 0.3% increase. The uplift was spearheaded by a 0.6% increase in durable goods manufacturing, a 1.1% surge in nondurable goods production, and a modest 0.2% uplift in publishing and logging. In the realm of durable goods, sectors like wood products advanced by 2.6%, machinery by 2.3%, and computer and electronic products by 0.8%. However, furniture and related product output witnessed a 2.6% reduction. Among nondurables, aside from a 1.5% decline in printing and support, all other categories exhibited growth. May also recorded a manufacturing capacity utilization rate of 77.1%, which is 1.1 percentage points beneath the long-term average. 

Financial markets reacted positively, with the S&P 500 securing a 0.25% rise, marking its second consecutive record close, largely driven by a 3.51% increase in Nvidia shares, propelling it past Microsoft and Apple in market valuation. The Nasdaq extended its record-closing streak to seven sessions, with the Dow increasing by 56 points. Notable advancements were also recorded in semiconductor stocks like Qualcomm, Taiwan Semiconductor, and Micron Technology, which rose by 2.2%, 1.4%, and 3.8% respectively. 

Financial markets also paid keen attention to crucial economic indicators and remarks from Federal Reserve officials. Lackluster performance in May’s retail sales pointed towards a slump in consumer spending, although figures for industrial production surpassed forecasts. New York Fed President Williams acknowledged the economy’s positive momentum but did not provide specifics on the timing of potential rate decreases. Meanwhile, Fed Governor Kugler expected a rate cut to occur later in the year. Notably, US markets observed a pause on Wednesday in honor of the Juneteenth holiday. 

(S&P 500 Index Yearly Chart) 

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