May market recap: Stocks and bonds bounce back

May market recap: AI, Inflation & beyond

06.13.2024

Lower than expected inflation data reignited hopes for at least one, and maybe two Fed rate cuts in 2024. Headline CPI came in at 3.4%.1 This helped stocks and bonds bounce back from a poor month in April. A modest increase in unemployment also contributed to the theme of a potential soft landing for the economy.

Nvidia revenue soars

Meanwhile, the most anticipated event of the month was Nvidia’s earnings report. Once again, the chipmaker exceeded lofty expectations. Data center revenue was up over 400% from a year ago to $22.6 billion, nearly ten times gaming revenue. The results propelled the company’s share price, allowing Nvidia to pass Apple as the second most valuable company early in June.2 It has been reported that Microsoft, Alphabet, Meta and Amazon accounted for roughly 40% of sales, raising some questions about how much continued investment will be required to support cloud-based AI functions. The company expects sales to increase again this quarter, but at a slower rate.

Small caps keep pace

Despite general outperformance by the largest stocks, the Russell 2000 Small Cap index was able to keep pace with the overall market as small caps are currently viewed as a significant beneficiary of potential lower interest rates. Utilities stocks also continued to rally as investors look to the massive amounts of power that may be needed to run AI applications.

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1 U.S. Bureau of Labor Statistics, “Consumer Price Index,” June 2024.

2 Empower YCharts as of 6th June 2024.

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Craig Birk, CFP®

Contributor

Craig Birk is the Chief Investment Officer for Empower Personal Wealth. A CERTIFIED FINANCIAL PLANNER™ professional, he is responsible for Empower’s retail investment portfolio, providing strategic and executive direction to drive the optimal management of client assets.

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