Daily Stock Market Report: May 31, 2023

Top Stock Market News

1. S&P 500 Slips as Tech Stocks Weigh on Index

   • The S&P 500 index slid 0.6% on Tuesday, dragged down by interest rate-sensitive tech stocks, as investors braced for the upcoming release of the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index.
   • According to Bloomberg, U.S. stock futures edged lower ahead of the PCE report, which is scheduled for release on Wednesday.

2. Dow Finishes Lower, Treasury Yields Slide

   • The Dow Jones Industrial Average closed down 135 points on Tuesday, though off its daily lows, as investors awaited a House vote on raising the U.S. debt ceiling.
   • Treasury yields slid, with the yield on the 10-year Treasury note dipping to 3.68%.

3. Personal Income and Consumer Spending Data

   • The Bureau of Economic Analysis reported that personal income in the United States increased by $89.3 billion, or 0.4%, in April, slower than the 0.5% growth in March.
   • Consumer spending, a key driver of economic growth, grew at a modest pace in April, according to the report.

4. Pimco's Bond Chief Warns of Potential Hard Landing

   • Dan Ivascyn, the chief investment officer at Pimco, one of the world's largest bond managers, cautioned investors to prepare for a potential hard landing in the U.S. economy.
   • Ivascyn cited the Federal Reserve's aggressive interest rate hikes and the risk of a recession as factors contributing to his outlook.

5. Eli Lilly's Mounjaro Outperforms Ozempic in Weight Loss Study

   • A real-world study found that Eli Lilly's diabetes drug Mounjaro was three times more effective than Novo Nordisk's Ozempic for weight loss.
   • The findings could bolster Mounjaro's prospects as a weight-loss treatment, pending regulatory approval.

Top Stocks to Watch

1. Hasbro, Inc. (HAS)

   • Hasbro, the play and entertainment company, carries a Zacks Rank #1 (Strong Buy) and is expected to benefit from robust demand for its products.

2. Adagio Therapeutics, Inc. (ATGE)

   • Adagio Therapeutics, a biopharmaceutical company, also holds a Zacks Rank #1 and is worth keeping an eye on for potential growth opportunities.

3. Trump Media & Technology Group (TMTG)

   • Trump Media's special purpose acquisition company (SPAC) deal has faced scrutiny from regulators, making it a stock to watch for developments.

4. Dell Technologies Inc. (DELL)

   • Dell is expected to report its latest quarterly results, providing insights into the company's performance and future outlook.

5. Gap Inc. (GPS)

   • Gap, the apparel retailer, is scheduled to release its earnings, which could move the stock depending on the company's performance and guidance.

Stock Market Expected Movement

Based on the economic data and market news, analysts expect the stock market to experience volatility in the near term. The release of the PCE inflation report on Wednesday could significantly impact market sentiment and drive trading activity.

If the inflation data comes in higher than expected, it could reignite concerns about the Federal Reserve's monetary policy stance, potentially leading to a sell-off in equities, particularly in the technology sector.

Conversely, if the inflation numbers show signs of moderation, it could fuel optimism about the Fed's ability to achieve a soft landing for the economy, potentially boosting stock prices.

Additionally, the ongoing debt ceiling negotiations in Congress may contribute to market uncertainty, with investors closely monitoring developments for any potential impact on the U.S. economy and financial markets.

Overall, traders and investors should brace for heightened volatility and remain vigilant in monitoring market conditions and adjusting their positions accordingly.