New York Stock Market Mixed Ahead of May PCE Inflation Data... Nvidia Down 2%

May 28 PCE Inflation Data Released
Up 2.6% YoY, Expected to Slow from Previous Month
Final GDP Figures Also Announced on 27th

The three major indices of the U.S. New York stock market showed mixed trends in the early session on the 24th (local time). Investors are adopting a wait-and-see stance as they await the release of the Personal Consumption Expenditures (PCE) price index scheduled for this week.

[Image source=Yonhap News]

As of 9:34 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was up 0.17% from the previous close, standing at 39,218.11. The S&P 500, which is centered on large-cap stocks, was trading down less than 0.1% at 5,464.42, while the tech-heavy Nasdaq index was down 0.07% at 17,676.13.

By individual stocks, Nvidia is down more than 2%. After surpassing Microsoft (MS) on the 19th to become the largest market cap company, fatigue has accumulated, leading to two consecutive days of decline, and the weakness continued on this day as well. Carrier Global is also down more than 2%, despite Citigroup upgrading its investment rating from 'neutral' to 'buy.'

Katie Nixon, Chief Investment Officer (CIO) at Northern Trust Asset Management, analyzed, "Extreme price performance may face some slowdown going forward," adding, "This is less about fundamental issues with the giant artificial intelligence (AI) companies and more about paying closer attention to how far and how fast the stocks have moved."

This week, investors' attention is focused on the May PCE price index to be released on the 28th. With both the Consumer Price Index (CPI) and Producer Price Index (PPI) growth rates easing last month, the PCE inflation is also expected to have slowed. The market expects the May core PCE inflation to rise 0.1% month-over-month and 2.6% year-over-year, both below the previous month's figures (0.2%, 2.8%). If the slowdown in core PCE inflation, the Fed's most closely watched inflation gauge, is confirmed, expectations for interest rate cuts will rise, likely fueling a rally in the New York stock market.

The Fed has reduced its forecast for the number of rate cuts this year from three to one, but the market maintains a forecast of two cuts based on recent inflation easing. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market currently prices a 65.9% chance that the Fed will cut rates by at least 0.25 percentage points at the September Federal Open Market Committee (FOMC) meeting. The probability of a 0.25 percentage point or more cut in November is 78%.

Lee Hardman, strategist at MUFG Bank, said, "We expect to confirm the inflation slowdown, which is progress the Fed should welcome," adding, "If inflation indicators ease further, they may signal a rate cut in September during the summer."

On the 27th, the final figure for U.S. first-quarter Gross Domestic Product (GDP) and last week's initial jobless claims will also be released. The final GDP figure is expected to remain at the preliminary estimate of an annualized 1.3% quarter-over-quarter growth. Initial jobless claims are expected to have slightly increased to 240,000 from the previous week's 238,000.

Fed officials will continue to speak this week, including Fed Board member Lisa Cook, Fed Board member Michelle Bowman, and Thomas Barkin, President of the Richmond Federal Reserve Bank.

This week will also see earnings reports from major companies such as Micron, FedEx, Walgreens Boots Alliance, and Nike.

U.S. Treasury yields are slightly higher. The 2-year U.S. Treasury yield, sensitive to monetary policy, rose 1 basis point (1 bp = 0.01 percentage points) to 4.74%, while the 10-year U.S. Treasury yield, a global bond yield benchmark, also rose 1 bp to around 4.26%.

International oil prices are rising due to strong summer oil demand and geopolitical uncertainties. West Texas Intermediate (WTI) crude oil is trading at $80.92 per barrel, up $0.19 (0.2%) from the previous day, while Brent crude, the global oil price benchmark, is up $0.22 (0.3%) at $85.46 per barrel.