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Weekly Market Recap: April 29, 2024

Weekly Market Recap: April 29, 2024

Posted April 29, 2024 at 10:15 am
J.P. Morgan Asset Management

The week in review

  • Flash Mfg./Services PMI: 49.9/50.9
  • Initial claims edged lower to 207K
  • New home sales increased to 693K saar

The week ahead

  • JOLTS job openings
  • Nonfarm payrolls
  • FOMC meeting

Thought of the Week

Last week's initial estimates of 1Q24 GDP revealed a complex picture. At the start of the year, expectations were set for gradual declines in growth and inflation. However, the data showed a sharp deceleration in headline growth while inflation, as measured by the personal consumption expenditures price index (PCE), accelerated on a quarter-to-quarter basis. This has raised concerns about potential stagflation and its implications on interest rates and markets.

Looking at the details, first-quarter real GDP grew at an annualized rate of 1.6%, roughly half the pace of the previous quarter and below the Fed’s forecasts for 2024 and the longer term. However, volatile components like trade and inventories, which often swing up and down in consecutive quarters, significantly impacted this slowdown. As the chart of the week highlights, excluding those components, the economy grew at a healthy 3.1% rate — slightly above last year's average. This growth was supported by a strong labor market, evident from fewer jobless claims, which in turn bolstered consumer spending — rising by 2.5%, nearly aligning with its 20-year trend. This suggests that concerns over economic stagnation may be exaggerated, as the headline figure masked the underlying strength.

However, while recent reports remain consistent with falling inflation, it has turned into a very slow decline, tempering market expectations for rate cuts this year. Next week's FOMC statement will be pivotal in revealing whether the Fed is also leaning toward reducing its rate cut projections. Such a shift could pressure the multiple expansion, which fueled much of the equity market gains in the first quarter.

Excluding volatile components reveals still-strong growth

Chart of the Week: Source: BEA, FactSet, J.P. Morgan Asset
Management.

Thought of the week: Source: BEA, FactSet, J.P. Morgan Asset
Management.

Originally Posted April 29, 2024 – Weekly Market Recap

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Disclosure: J.P. Morgan Asset Management

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

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