The Market Update

The Markets - May 20, 2024


The Dow Jones Industrial Average, S&P 500 Index, and Nasdaq Composite climbed to record highs during the week, with the Dow crossing the 40,000 threshold for the first time. As inflation and interest rate worries appeared to dissipate, growth stocks outperformed, perhaps due in part to the lower implied discount placed on future earnings.

The major factor supporting sentiment appeared to be Wednesday’s release of the Labor Department’s April consumer price index (CPI), which came in at or modestly below expectations, in contrast to hotter-than-expected prints over the preceding three months. Headline prices rose 0.3% in April, a tick below expectations, while core (less food and energy) prices rose 0.3%, as expected. Inflation remained concentrated in services prices, especially transportation services costs, which rose 0.9% over the month and 11.2% over the past year.

Thursday’s retail sales figure also appeared to impress investors—if through the lens of bad news for the economy being treated as good news for stocks and inflation. The Commerce Department reported that retail sales were flat in April versus consensus estimates of a 0.4% gain, while downwardly revising its estimate of March sales lower, from +0.7% to +0.6%. The data included some evidence that consumers were pulling back on discretionary spending, with sales at non-store (mostly online) retailers falling 1.2%, while sales at restaurants and bars continued to moderate—and even fell slightly when taking account of higher prices (retail sales data are not adjusted for inflation).


Nasdaq took the lead on gains this week in the below indexes with over 2% growth, with the small-cap Russell 2000 following closely behind. 


The Dow has continues to enjoy further gains, this week boasting a new all-time record high. At market-close this week, the DJIA, gained 1.24%, ending the week of May 17 at 40,003.59 vs the prior week of 39,512.84.

The tech-driven Nasdaq was a leader in index performance this week with a lift of 2.11%. The index closed this week at 16,685.97 vs. the prior week of 16,340.87.


  • Large-Cap: Another good week for the large-cap S&P 500 with a week’s growth of 1.54% growth this week to end at 5,303.37 vs last week’s close of 5,222.68 and now above the10% growth YTD mark (11.19).
  • Mid-Cap: The S&P 400 mid-cap slowed a little this week in its upward momentum but still gained a modest 0.74%. The index closed at 3,016.25 vs last week’s 2,993.96 and is now chasing down 10% YTD returns.
  • Small-Cap: The Russel 2000 wasn’t far behind the 2% growth mark for the week, with gains of 1.74% and closing at 2,095.72 vs last week’s close of 2,059.78 and YTD growth now at 3.39%.


It was a huge week for Commodities, with massive gains for Silver and Copper earning almost 12% and 10% respectively. All Commodity indexes below enjoyed a week of gains.


VIX closed at 11.99 this week, a 4.46% decrease over last week’s close of 12.55.




The downside inflation and growth surprises helped drive the yield on the benchmark 10-year U.S. Treasury note to its lowest level in over a month at midweek. (Bond prices and yields move in opposite directions.) The tax-exempt municipal bond market absorbed another heavy week of new issuance, with the new deals generally seeing strong demand. According to traders, this busy primary calendar, coupled with uncertainty ahead of midweek inflation data releases, appeared to limit activity in the secondary market.

According to Traders, spreads initially widened in the investment-grade bond market before tightening in the latter half of the week. Issuance was front-end heavy with few issues oversubscribed. High yield bonds also benefited from the rate moves, and traders noted that trade volumes picked up following the encouraging inflation data. Below investment-grade funds reported positive flows.

Traders reported that the leveraged loan market was mostly unchanged as the market digested the slightly softer-than-anticipated CPI print and weaker-than-expected retail sales report. They noted that most primary market deals were refinancing- or repricing-based transactions.



In local currency terms, the pan-European STOXX Europe 600 Index rose 0.42% but slipped from the record high hit during the week. Cautious comments from European Central Bank (ECB) members appeared to cool optimism about the extent to which monetary policy might ease this year. Major stock indexes were mixed. Germany’s DAX fell 0.36%, while France’s CAC 40 Index declined 0.63%. Italy’s FTSE MIB advanced 2.14%. In the UK, the FTSE 100 Index finished modestly lower.


The annual rate of pay growth, excluding bonuses, was unchanged at 6% in the three months through March, which was slightly higher than forecast. In the private sector, regular pay growth came in at 5.9%, slightly less than expected by the Bank of England, which monitors the measure. The labor market, however, appeared to slacken. The main unemployment rate rose to 4.3%, while job openings declined for a 22nd consecutive month.

T. Rowe Price European Economist Tomasz Wieladek believes that, overall, the data tentatively support a reduction in interest rates in June, as a transition to a looser labor market appears now to be underway. However, he cautions that policymakers will need to digest a few more data releases before deciding whether to ease rates.


ECB policymakers Francois Villeroy de Galhau, Madis Muller, and Martins Kazaks indicated that a rate cut is likely in June but that the path thereafter is uncertain. Executive Board member Isabel Schnabel told the Nikkei newspaper that the current data did not justify another reduction in July, in part because the disinflation process appears to have slowed significantly. Belgian central bank Governor Pierre Wunsch told the Handelsblatt newspaper “the first half a percentage point of interest rate cuts is close to a no brainer” but slower policy easing by the Federal Reserve could delay further moves. He stressed that he was not backing a second rate cut in July.


Eurozone industrial production rose for a second month running in March, increasing 0.6% sequentially. However, the stronger-than-expected reading was driven by a jump in Ireland’s output, a data point that historically has been quite volatile.


Japanese equities finished the week higher, with the Nikkei 225 Index gaining 1.5% and the broader TOPIX Index up 0.6%. This was despite a backdrop of economic weakness and a range-bound yen on expectations of U.S. interest rate cuts in contrast to tentative hawkishness on the part of the Bank of Japan (BoJ), the latter also sending Japanese government bond (JGB) yields modestly higher.


Investors appeared to shrug off weakness in Japan’s economy, as signaled by a weaker-than-expected first-quarter gross domestic product print—a 2.0% annualized contraction on the previous three-month period—which was driven in part by the negative impact on growth of the earthquake that hit the Noto peninsula in January, as well as the suspension of some auto production activity. Other areas of weakness included capital expenditure and external demand, while, conversely, strength in public demand and private inventories lent support.


The yen finished the week broadly unchanged in the high-JPY 155 range against the USD. This was within the context of expectations that the U.S. Federal Reserve could cut interest rates twice this year, while the BoJ is widely anticipated to embark on further monetary policy normalization—thereby leading to a reduced interest rate differential between the two economies. Such an eventuality could lend support to the yen, which continues to languish at historic lows despite investors converging around the view that Japanese authorities recently intervened twice in the foreign exchange markets to prop up the currency.


The yield on the 10-year JGB rose to 0.94%, from 0.91% at the end of the previous week. Upward pressure on yields was at least temporarily exerted by hawkish signals from the BoJ, as it reduced the amount of JGBs it offered to buy in a regular purchase operation. However, a reduction in purchases had been widely anticipated, which meant that the rise in yields was only modest.


Chinese equities were little changed after the central government unveiled on Friday a historic rescue package to stabilize the country’s ailing property sector. The Shanghai Composite Index was broadly flat, while the blue chip CSI 300 added 0.32%. In Hong Kong, the benchmark Hang Seng Index gained 3.11%, according to FactSet.

The People’s Bank of China (PBOC) lowered the minimum down payment ratio by 5% to 15% for first-time buyers and to 25% for second home purchases in an attempt to ignite demand. The PBOC also said that it would scrap the nationwide floor level of mortgage rates and allow cities to make their own decisions on what mortgage rates to charge. Under a so-called re-lending program, the central bank said it would extend RMB 300 billion in low-cost funds to a select group of state-owned banks to lend to local state-owned entities for the purchase of unsold homes.

The unprecedented support package came as data showed no sign of turnaround in China’s yearslong housing crisis. New home prices in China fell by 0.6% month on month in April, according to the statistics bureau, marking the 10th straight monthly decline and the steepest drop since November 2014. Real estate investment fell a higher-than-expected 9.8% in the January-to-April period from a year earlier, following a 9.5% drop in the first quarter.

Inflation data showed that deflationary pressure continued to weigh on China’s economy. China’s consumer price index rose 0.3% in April from a year ago, accelerating from March’s 0.1% increase and marking the third consecutive positive reading. However, the producer price index fell 2.5% from a year ago compared with a 2.8% drop in March.

Other data also showed an uneven recovery for China’s economy. Industrial production rose an above-forecast 6.7% in April from a year earlier, accelerating from March’s 4.5% increase. However, fixed-asset investment and retail sales both increased less than expected, underscoring anemic domestic demand. The urban unemployment rate fell to 5.0% from 5.2% in March.


Top 6 Economies by Share of Global GDP (1980-2024)

Over time, the distribution of global GDP among the world’s largest economies has shifted dynamically, reflecting changes in economic policies, technological advancements, and demographic trends. To see how this has played out in recent decades, we visualized the world’s top six economies by their share of global GDP from 1980 to 2024. All figures were sourced from the IMF’s World Economic Outlook (April 2024 edition) and are based on using current price.

Data and Highlights
The data we used to create this graphic can be found in the table.

U.S. Resilience
Starting with the U.S., we can see that America’s share of global GDP has fluctuated quite significantly over time. After bottoming out at 21.1% in 2011, the U.S. economy grew its relative size by several percentage points, and is estimated by the IMF to make up 26.3% of global GDP in 2024. This chart also suggests that the U.S. has managed a stronger recovery from the COVID-19 pandemic, evidenced by its rising share of global GDP since 2020. China, the EU, and Japan have seen relative declines over the same period.

China’s Incredible Rise
This chart also provides perspective on China’s period of rapid economic growth, which began in the early 2000s. It’s interesting to note that China joined the World Trade Organization (WTO) in 2001, which facilitated China’s integration into the global economy.

Japan Falls From the #2 Spot
Japan was once the second largest country economy after the U.S., accounting for 17.8% of the global economy in 1994 and 1995. Since then, economic stagnation and an aging population have resulted in a relative decline of the country’s economic might.

Best regards,

The PRS Investment Research Committee:

Dan Pinkerton, CFP®, CKA® -- Founder, CEO
Ron Glendening, CPM®, CFP®-- COO
Matt Weed, CPM® -- Chief Investment Strategist
Gary Pinkerton, MBA, AIF®, CFP® -- Institutional Portfolios Director
Paul Steenblik CFA, CFP® -- Active Research Specialist
Nick Helgeson CFP® -- Alternative Investments

Pinkerton Retirement Specialists, LLC
2000 John Loop
Coeur d’Alene, ID  83814
208-667-8998 or 1-800-634-2008

*S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
*Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Consult your financial professional before making any investment decision.
* Stock investing involves risk including loss of principal
* Sources:  All index- and returns-data from Norgate Data and Commodity Systems Incorporated and Wall Street Journal; news from Reuters, Barron’s, Wall St. Journal,,,,,,,, Eurostat, Statistics Canada, Yahoo! Finance,,,,, BBC,,,, FactSet, Morningstar/Ibbotson Associates, Corporate Finance Institute.
*  Commentary from T Rowe Price Global markets weekly update —