Below is our monthly Economic Market Update with Financial Advisor, Brad Allen. In this video, we will cover main topics from the last month and how those headlines influenced the markets and economic outlook. We will also try to give you some insight into what those influences might mean for you as an investor.
Geopolitical headlines continued to affect markets in May as investors tracked a number of scenarios. For example, the back-and-forth over the scheduling of the historic U.S. – North Korea summit affected stock performance as investors tried to determine whether it would happen.
Investors also watched as trade tension between the U.S. and China amplified with each country threatening tariffs on the other. The tension then calmed as the countries released a joint statement saying they would work to “substantially reduce the United States’ trade deficit in goods with China.”
The month ended with more trade-related tension. On May 31, the Trump administration announced that at midnight, U.S. tariffs would start on aluminum and steel from Mexico, Canada, and the European Union. In reaction, the Dow dropped more than 250 points that day.
Despite the backdrop of political fluctuations, all 3 major U.S. indexes ended the month in positive territory. The S&P 500 gained 2.2%, the Dow added 1.1%, and the NASDAQ leapt forward 5.3%.
As the month came to a close, we received a number of reports that indicated the economy continues to grow. In particular, the latest data shows that consumer spending jumped more in April than analysts had expected. Inflation also hit the Federal Reserve’s target level for the 2nd month in a row. Examined together, these two details led economists to increase their forecasts for the economy’s growth in the 2nd quarter.
Speaking of economic growth, we received revised data for 1st-quarter Gross Domestic Product (GDP), which increased slightly less than originally estimated. The change came largely from decreased business inventories. But, rather than being negative, this data creates greater opportunity for increased production in future quarters. In fact, some estimates indicate that 2nd-quarter GDP growth could be 4% or higher.
In other words, if you look beyond the headlines, you will find data indicating that the economy continues to strengthen. Global events are affecting markets, but our economy keeps expanding during any tensions. During June and beyond, we will continue to analyze the data to see what may lie ahead.
Please remember that nothing we talk about here is a recommendation. If you would like to discuss your personal financial situation, please give us a call. We’d be happy to talk to you.
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