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Market Recap – April 29, 2024

Keel Point

April 29, 2024

Expectations of 2.4% first quarter GDP growth didn’t materialize, and the inflation deflator was higher than expected, so markets sold off.  Under the hood, numbers looked better and both stock and bond markets rebounded by week-end. 

  • After initially reacting badly to Q1 GDP growth coming in at 1.6% (annualized rate), the weakest quarterly gain in almost two years, the S&P 500 rebounded and closed the week up 2.67%, and year-to-date up 6.92%.
  • The lower first-quarter GDP growth was largely due to higher net exports and inventory accumulation. The good news is that final sales to private domestic purchasers, a gauge of underlying momentum, expanded at a 3.1% pace, and business investment increased by 2.9%, with gains in IT equipment and software investment.
  • So, while the headline GDP growth disappointed in the first quarter, the favorable underlying stories that are supporting second-quarter consumption growth mean that, even with another drag from net exports, second-quarter GDP growth should reaccelerate to 3.0%.
  • The decline in the inflation rate seems to have stalled in March, with the 12-month core PCE inflation rate unchanged at 2.8% vs an expected drop to 2.7%, mainly because January’s gain was reviewed up to 0.5% from 0.45% and March was a little higher than expected.
  • Despite the temporary surge in inflation in the first quarter, survey-based evidence points to a resumption of the disinflationary trend soon.

Americans saved a smaller share of their incomes in March than in any other month since 2022, even with an uptick of 0.5% in personal income.

  • While saving less, people are still spending, and for the second straight month, personal consumption expenditures rose 0.8% in March, the strongest in more than a year. (Axios)
  • With the saving rate down to a 12-month low of 3.2% in March, growth in consumption likely will slow this year.





Source: U.S. Bureau of Economic Analysis; Chart: Axios Visuals

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SIPC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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