Dow finished inched up 4, advancers over decliners about 5-2 & NAZ rose 175.  The MLP index was even in the 273s & the REIT index hardly budged in the 365s.  Junk bond funds fluctuated & Treasuries continued pretty much even.  Oil recovered 1 to the high 77s & gold was essentially even (more on both below).

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A monthly gauge of US consumer sentiment fell in May on expectations of higher inflation.  The 2nd of 2 readings of the consumer-sentiment index was 69.1 in May, a sharp decline from 77.2 in Apr, the University of Michigan said.  The final reading was slightly higher than the initial estimate of 67.4 & was the lowest reading in 6 months.  The forecast called ofr a final May reading of 67.6.  According to the survey, Americans think inflation will average 3.3% in the next year, up from an expectation of 3.2% in the prior month.  The preliminary reading was 3.5%.  A gauge of consumers' views of current conditions fell to 69.6 in May from 79 in the prior month.  The preliminary estimate was 68.8.  The gauge of expectations for the next 6 months fell to 68.8 from 76 in Apr & the early May estimate was 66.5.  The plunge in sentiment in May has been taken by some economists to mean that consumers are worn down by inflation & might pull back on spending.  That could cause the economy to slow markedly.  This view was bolstered by the flat reading in retail sales in Apr.  Other economists dispute this gloomy outlook, saying that consumers remain resilient and some weakness might be the "pause that refreshes."  Federal Reserve officials are hoping that the economy cools so that inflation pressures abate.

U.S. consumer sentiment darkens in May on worries of higher inflation

New orders for key US-manufactured capital goods rebounded more than expected in Apr & shipments of those goods also increased, suggesting a moderate improvement in business spending on equipment early in the 2nd qtr.  Nonetheless, business investment on equipment continues to be hamstrung by higher borrowing costs.  That, together with a strong $ & weak global demand, is keeping manufacturing, which accounts for 10.4% of the economy, on the ropes.  Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.3% last month after an upwardly revised 0.1% dip in Mar, the Census Bureau said.  The forecast called for the capital goods orders would edge up 0.1% after declining by a previously reported 0.2% in Mar.  The gov last week revised the orders, shipments & inventory data from Jan 2012 thru Mar 2024 after an annual review of the seasonal adjustment models, which it uses to strip seasonal fluctuations from the numbers.  The revision did not affect the unadjusted data.  Core capital goods orders jumped 1.2% on a year-on-year basis in Apr.  Shipments increased 0.4% after a 0.3% drop in Mar.  Non-defense capital goods orders fell 1.5% in Apr after advancing 1.3% in the prior month.  Shipments of these goods rose 2.4% after dropping 1.5% in Mar.  These shipments go into the calculation of the business spending on equipment component in the gross domestic product report.  They were partially flattered by higher prices, which could lessen the boost to GDP.

US core capital goods orders rise, inflation expectations improve

Inflation has steadily been rising in recent years.  The Consumer Price Index, a major measure of inflation, rose again in Mar, by 0.4% on all items.  Rising inflation is causing consumers to rely more heavily on credit cards for everyday expenses, a Varo Money survey found.  Almost to 65% of respondents to the survey blame their added credit card usage on inflated prices on essentials like groceries & utilities.  An additional 55% cite the increased cost of living as the reason behind their reliance on credit cards.  Gen Z has increased their credit card usage the most.  About 35% of Gen Zers reported using their credit cards more frequently, compared to 23% of millennials, 17% of Gen X & 21% of baby boomers.  Financial debts & struggles differ along gender lines.  More women (36%) reported being stressed about their financial situation compared to men (23%).  Most respondents want to address their debt & plan to use money they get back as tax refunds to better their financial situation.  42% of survey respondents plan to pay off debts with tax refund money & 34% plan to save for emergencies.

Credit card usage is up as inflation continues to rise

Gold prices rose as the $ slipped, but were headed for their worst week in 5½ months as hopes of interest rate cuts by the central bank tamed.  Spot gold rose 0.2% to $2332 per ounce as the $ index slipped 0.4%, making gold relatively less expensive for other currency holders.  US gold futures settled $1 lower to $2334.  Bullion hit a record high of $2449 on Mon, but has shed more than $100 since then & is on track for a 3% drop this week, its worst weekly dip since early Dec.  Minutes from the Federal Reserve's last meeting showed the central bank's path to 2% inflation could take longer than expected.  Traders' bets signaled growing doubts that the Fed will cut rates more than once in 2024, currently pricing in about a 63% chance of a rate cut by Nov according to the CME FedWatch Tool.  Higher interest rates make non-yielding gold a less appealing investment.  Despite uncertainty around US rate outlook, gold prices managed to gain 13% so far this year, largely on the back of strong Chinese demand & ongoing geopolitical uncertainties.

Gold Loses Momentum on Ebbing Rate Cut Speculation

Oil futures finished higher, but notched losses for the week as traders noted concerns that the Federal Reserve may keep interest rates elevated for longer than previously anticipated, posing a threat to demand if that causes a sharp economic slowdown.  WTI crude for Jul closed up 85¢ to settle at $77.72 per barrel as US oil prices continue going sideways around $80 a barrel.

Dow ended last week barely over 40K for a new record, but had only 2 up days this week & both were not impressive.  Today trading began with a solid gain, but that did not last.  Sellers returned to give it another loss.  For the week, Dow fell 948 from its previous record high.  People do not feel like the economy is doing well because inflation is a nagging problem that will not go away.  Maybe the shorten week next week will bring some relief.

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