To The Moon

Last Week's Recap

The US Market - A winning May

• The stock market wrapped up a strong month after the Federal Reserve’s preferred inflation measure came in largely around expectations.

• The S&P 500 and Nasdaq snapped five-week win streaks with slides of 0.51% and 1.1%, respectively. The blue-chip Dow slipped 0.98%, marking a second straight week of losses.

• Despite the tough week, it was a winning May. The Nasdaq gained 6.88%, notching its best month going back to November. The Dow added 2.3% this month, while the S&P 500 rose 4.8%.

• Core PCE — the Fed’s preferred inflation metric — rose 0.2% in April, matching a Dow Jones consensus estimate. Year over year, the benchmark advanced 2.8%. Economists polled by Dow Jones expected core PCE to have risen 2.7% in April on a year-over-year basis.

• A chunk of May’s strength can be attributed to a surge in stock buybacks. A total of 154 companies announced $201 billion in planned buybacks, marking an all-time high, according to data from Birinyi Associates.

The US Sectors & Stocks - All sectors gained in May

• Technology、healthcare and industrials names in the S&P 500 have lagged in the week. However, all sectors gained in May, as technology was the best-performing sector with a jump of 9.4%.

source: Finviz

• Chip stocks helped technology rise, with the Semiconductor ETF (SMH) was up 12.33% in May. Nvidia (NVDA) and Qualcomm (QCOM) jumped 32% and 24%, respectively. NVDA advanced nearly 190% year-to-date.

• Tech giants registered a winning month, except Tesla (TSLA) and Amazon (AMZN), both of which lost more than 1% in May. Apple (AAPL) surged 13% for the month, while Microsoft (MSFT) and Meta Platform (META) rose 5% and 6%, respectively.

S&P500 components return in May

• Software ETF posted for its worst week since late 2022. The iShares Expanded Tech-Software Sector ETF (IGV) dropped nearly 6% for the week. Salesforce (CRM)、ServiceNow (NOW) and Intuit (INTU) all weighed down the fund with declines of more than 12%.

• Salesforce (CRM) Q1 revenue missed the view for the first time since 2006. A key financial metric, current remaining performance obligations, known as CRPO bookings, also fell short. The Dow giant guided lower on current-quarter revenue. CRM stock crashed nearly 16% last week.

• Dell Technologies (DELL) matched Q1 EPS and revenue estimates on AI-optimized server sales. But Dell guided below estimates for earnings in the current quarter and full year ahead. Dell shares plunged as much as 22% during Friday's session before partially recovering.

• Abercrombie & Fitch (ANF) and American Eagle Outfitters (AEO) both beat earnings estimates for their latest quarters, but only Abercrombie hiked full-year outlook. The youth apparel retailer now sees revenue up 10% for the entire year vs. a prior target of 4%-6%. American Eagle earnings doubled but sales less than expected. ANF soared and AEO stock tumbled.

Hong Kong Market - HSI posted a four-month gain

• Hong Kong stocks halted a three-day decline, as the benchmark gauge posted a fourth straight month of gains, after an official report suggested a patchy economic recovery.

• The Hang Seng Index lost 2.84% to 18,443.78, following the US market. The gauge advanced 1.78% in May, with a four-month gain being the longest since February 2021. The Hang Seng Tech Index was slightly down 0.27% for the month.

• “The change in policy stance in the property sector is one step in the right direction, but its impact on the economy is likely to be gradual,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. “The fiscal policy needs to become more proactive to boost domestic demand. So far this year the fiscal policy has been muted, with bond issuance behind schedule.”

Singapore Market - STI rose 1.33% in May

• The Singapore stock market added 0.6% to 3,336.6 points last week. The benchmark STI logged 1.33% in May, the third consecutive month of gains.

• Singapore aims to increase the amount of power it allocates for data centers by as much as 35%, according to Janil Puthucheary, senior minister of state at the Ministry of Communications and Information.

Australian Market - ASX rallied 0.49% in May

• The ASX 200 gave up 0.34% for the week, as the local inflation still high. However, the benchmark rallied 0.49% in May.

• Australia’s annual consumer inflation rate accelerated to 3.6% in April 2024, its highest level since November of the previous year. The rise in the Consumer Price Index exceeded market expectations of 3.4%, picking up from 3.5% in March. The primary catalyst behind this uptick was a sharper increase in food and non-alcoholic beverage prices, which climbed 3.8% compared to 3.5% a month earlier.

The Week Ahead

Macro Factors - May jobs report

• The latest data on the U.S. labor market and a likely interest-rate cut by the European Central Bank will be this week's highlights.

• The May jobs report is set for release on Friday, and economists expect it to tell a similar story to last month's report with the labor market cooling from its hot start to 2024 but not entering a downright slowdown.

• The report is expected to show that 185,000 nonfarm payroll jobs were added to the US economy last month, with unemployment holding steady at 3.9%, according to data from Bloomberg. In April, the US economy added 175,000 jobs while the unemployment rate ticked up slightly to 3.9%.

• In contrast with an on-hold Federal Reserve, the European Central Bank is widely expected to lower its benchmark interest rate target on Thursday. A quarter-point cut would take it to 3.75%.

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