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PCE Inflation Unchanged at 2.7% in April, SPX and DJIA Gain
US PCE inflation remained unchanged at 2.7% anually in April, increasing 0.3% on a monthly basis.
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The U.S. Bureau of Economic Analysis (BEA) released its Personal Income and Outlays report for April 2024, providing insights into the nation’s economic health.
The report showed modest increases in personal income, disposable personal income (DPI), and personal consumption expenditures (PCE). The PCE Price Index stayed unchanged at 2.7% annually in April, increasing 0.3% on a monthly basis.
PCE Price Index Unchanged at 2.7% Annually in April
Personal income rose by $65.3 billion (0.3% at a monthly rate) in April, while DPI increased by $40.2 billion (0.2%). PCE also increased by $39.1 billion (0.2%).
The PCE price index, a measure of inflation watched closely by the Federal Reverse, rose by 0.3%, with a 0.2% increase when excluding food and energy. Real DPI and real PCE both decreased by 0.1%. Personal saving stood at $744.5 billion, with a saving rate of 3.6%.
Housing and utilities, health care, and financial services and insurance were the largest contributors to the increase in services spending.
In contrast, the most significant decreases in goods spending were in recreational goods and vehicles and other nondurable goods. Food prices decreased by 0.2%, while energy prices increased by 1.2%. The PCE price index increased by 2.7% from a year ago, and the index excluding food and energy rose by 2.8%.
Market Gains Slightly on April PCE Report
The stock market experienced positive movements on Friday morning, with major indices recording gains as investors reacted to the latest Personal Consumption Expenditures (PCE) inflation data for April.
The Dow Jones Industrial Average (DJIA) increased by 130.2 points (+0.34%) to 38,241.68, while the S&P 500 rose by 13.77 points (+0.26%) to 5,249.25. The NASDAQ also saw an uptick, rising by 23.54 points (+0.14%) to 16,760.62. The Russell 2000 showed the most substantial increase among the major indices, rising by 20.41 points (+1%) to 2,056.6.
Commodity prices, including gold, silver, and oil, also saw gains, suggesting a favorable market outlook and increased demand. Treasury yields remained relatively stable, with slight decreases in the 10-year and 30-year yields, indicating a stable outlook for long-term investments.
The USD saw mixed performance against major currencies, with notable increases in the Euro and the Australian Dollar, and decreases in the Canadian Dollar and Swedish Krona.
Do you expect the Federal Reserve to continue with two rate cuts this year? Let us know in the comments below.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
