This Weekly Financial Markets Update reviews the top market headlines: Consumer Prices Ease Modestly in May, Federal Reserve Stands Pat, Slight Improvement in Small Business Optimism

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Top Three Market Headlines

Consumer Prices Ease Modestly in May: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) was flat in May versus the prior month, which put the index up 3.3% over the prior year, a slight downshift from 3.4% in April. A key depressant was gasoline prices, which fell 3.6% from the prior month. The "core" CPI, which excludes volatile food and energy items, rose 0.2% on the month, down slightly from April's 0.3% pace, while registering 3.4% on an annual basis compared to 3.6% in the prior month. A key factor driving the core CPI rate remained the shelter index, which increased 0.4% and 5.4% on a monthly and annual basis, respectively.

Federal Reserve Stands Pat: The Federal Reserve voted last week to maintain its interest rate policy benchmark, the federal funds rate, at its current level of 5.25% to 5.50%. The central bank has now kept the target range fixed since July of 2023. Notably, Fed officials' updated projections of future rate policy now point to just one quarter-point rate cut in 2024, down from a March forecast of three rate cuts. While Chairman Jerome Powell acknowledged that "the most recent inflation readings have been more favorable than earlier in the year," he reiterated that policymakers are seeking further proof that inflation is moving sustainably toward 2% before cutting rates.

Slight Improvement in Small Business Optimism: The National Federation of Independent Business (NFIB) reported that its Small Business Optimism index inched higher in May to 90.5 from 89.7 in the prior month. While this was the highest reading of the year, the index has now spent 29 straight months below its historical average of 98. Inflation continues to be a top concern of business owners, with 22% citing it as their single most important problem in operating their business, unchanged from April.

As of June 17, 2024 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 0.42% 2.20% 10.58% 19.35%
S&P 500 1.62% 3.69% 14.63% 26.12%
Russell 2000 -0.95% -5.31% -0.40% 8.69%
MSCI EAFE -2.63% -0.84% 4.89% 9.81%
MSCI Emerging Markets 0.50% 3.92% 6.38% 8.98%
FTSE NAREIT Equity 1.34% -1.41% -1.60% 7.01%
Bloomberg Commodity 0.71% 4.15% 6.43% 6.74%
Barclays U.S. Aggregate 1.31% 0.87% 0.09% 3.70%