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April showers brought May flowers


Close-up of a pink flower with raindrops on its petals

Key points

Economic impact

Interest rates are unlikely to rise much further or fall quickly.


Investors may want to consider rotating from cash to Treasuries and/or corporate bonds.

Chief Investment Strategist
Steve Lowe, CFA,Chief Investment Strategist

Thrivent Asset Management contributors to this report: John Groton, Jr., CFA, director of administration and materials & energy research; Matthew Finn, CFA, head of equity mutual funds; and Jared Hagen, senior investment product specialist

Key points

Strong earnings

First-quarter earnings were very strong, helping to fuel record index settings in May.

Inflation still a concern

Inflation data was mixed, providing some relief while also delaying the potential for rate cuts.

Looking ahead

There is potential for additional market volatility happening during these turning points in the economy.

Chart summarizing the performance of select market indexes, 10-year T bonds, and oil.


April’s soggier markets fertilized a rebound in May, with the S&P 500® Index setting a new all-time high and the Dow Jones Industrial Average hitting 40,000 for the first time. Both were fueled by strong earnings. The first-quarter earnings season is nearly finished, and almost 80% of companies that reported have reported better-than-expected earnings. The S&P 500 Index’s information technology (IT) sector resumed its leadership role, rising just over 10% during the month, helped by chipmaker Nvidia’s earnings once again significantly exceeding expectations while providing encouraging guidance for its future earnings.

Meanwhile, economic growth remains durable, supported by investments and low unemployment. However, the latest revision to first quarter gross domestic product (GDP) downgraded the growth rate from 1.6% to 1.3%, suggesting the economy is cooling.

Inflation data was mixed over the month, with the April Consumer Price Index (CPI) rising 3.4% over the past year, broadly in line with expectations, while the Core CPI (which excludes the more volatile food and energy components) rose just 3.6%. As this was the lowest increase since April 2021, it provided some relief while still remaining high enough to further delay interest rate cuts from the U.S. Federal Reserve (Fed). Fed Chairman Jerome Powell remarked on May 14, just a day before the CPI figures were released, that because 2024’s inflation reports had been higher than expected the Fed would likely need to keep interest rates “at the current rate for longer than had been thought.” April’s Personal Consumption Expenditures (PCE) Price Index inflation—the Fed’s preferred measure—rose 2.7% relative to April 2023. While the figure was in line with expectations and a welcomed improvement over March’s more distressing report, it remains above the Fed’s long-term average target of 2%.

Treasury yields fell in May, largely due to more stable inflation data improving the outlook for eventual interest rate cuts. However, concerns about the volume of Treasury bond issuance has reemerged as a concern, weighing on the markets in May. The Bloomberg U.S. Aggregate Bond Index rebounded, rising 1.70% in May, improving its year-to-date loss to -1.64%.

Outlook: While economic signals have recently been more mixed, we continue to expect the economy will achieve a soft landing and inflation will fall sufficiently to allow the Fed to loosen monetary policy, although the risk of softer than expected growth has increased. As we have often stated, inflation’s decline will not be linear or swift, and we maintain our view that the Fed will be conservative, preferring to hold rates as high and as long as it can to ensure inflation doesn’t reignite.

Recent earnings provided a boost to equity markets, and we expect earnings will remain broadly supportive through the rest of the year. Furthermore, when interest rates eventually fall, the riskier segments of the market—such as small-cap stocks, companies with relatively lower quality and more value-oriented stocks—should see renewed interest, broadening the strength within equity indices. While the recent strength in the utilities sector is one example of this broadening, we encourage investors to be patient as turning points in the economy often result in more volatility in the economic data, and thus more volatility in financial markets.

Over much of the past year, growth stocks and higher-quality companies with strong earnings, good cash flow and strong balance sheets have excelled, and we expect it will take time for sustained outperformance to pivot to riskier segments of the market. Investors will likely need to see a few rate cuts and begin debating when enduring growth will return, which is a considerably higher burden of proof than believing a soft landing is likely.

Nevertheless, we continue to see value in bonds as we expect the Fed will lower interest rates later this year, pushing bond yields lower across the yield curve. While we and the market maintain some concern about supply putting upward pressure on longer-dated Treasury bonds, we believe these concerns are likely to ebb and flow, potentially creating attractive entry points. Meanwhile, current yields on longer-dated bonds still offer a compelling opportunity to lock in significant yields for the length of the bond.

Drilling down

U.S. stocks rebound

The S&P 500 Index rose 4.80% in May, setting a new all-time high, from 5,035.69 at the April close to 5,277.51 at the end of May. The total return of the S&P 500 Index (including dividends) for the month was 4.96%, bringing the year-to-date return to 11.30%.

The NASDAQ Composite Index® also rebounded in May, rising 6.88% from 15,657.82 at the end of April to 16,735.02 at the May close.


Chart depicting the value of the S&P 500 Index from June 2023 to May 2024


Retail sales weaker

April retail sales were flat from March 2024 at 0.0%, but grew 3.0% from April 2023. The prior two months also were revised down. Auto sales were weaker in the month along with non-store retailers, while gasoline stations, food, electronics and clothing sales were all higher (gas prices rose in April, before falling back in May). The year-on-year rise was led by non-store retailers (primarily online sales) rising 7.5% relative to last April. Miscellaneous store retailers also rose significantly, increasing 6.8% relative to April 2023. The largest detractor for year-on-year sales was the furniture and home furnishing category, which remained subdued given slower home sales as a result of higher home prices and higher mortgage rates.

Job growth surges

The U.S. economy added 272,000 new jobs in May, according to the Department of Labor’s June 7 report, a significant rise from April’s total of 165,000 new jobs. The unemployment rate rose slightly from 3.9% in April to 4.0% in May, while average hourly earnings rose 0.4% on the month and 4.1% from a year ago. With consensus expectations for new jobs closer to 180,000 in May, and wage growth remaining higher than inflation, the U.S. jobs market remains strong despite expectations that softening economic growth would weigh more heavily on both new jobs and wage growth.


An early look at the November election

Stocks generally rise in election years, despite traditional uncertainty about future social, economic and foreign policies.


Short-term bond investing

An inverted yield curve may make shorter-term bonds more attractive than longer-term bonds.

All sectors but energy rise

The May rebound in U.S. equities was broad-based, with the energy sector the sole detractor, down 0.39% on the back of lower oil prices. The IT sector once again led the market, rising 10.08% in May, supported by Nvidia’s impressive earnings and ongoing investor enthusiasm for artificial intelligence (AI).  But, for the second month in a row, utilities generated strong performance, rising 8.97% over the month. While the utilities sector is typically seen as a more defensive sector, the combination of sustained economic growth, relatively attractive valuations and the potential for increased electricity demand resulting from the need to power AI data centers, have all added some spark to utility companies.

The chart below shows the past month and year-to-date performance results of the 11 sectors:

Chart depicting the May 2024 and year-to-date returns of 11 S&P 500 sectors.

Treasury yields retreat

The yield on the benchmark 10-year U.S. Treasury retreated in May, falling from 4.68% at the end of April to 4.49% at the May close, largely due to renewed optimism for lower interest rates after more tepid inflation data was reported over the period.

The Bloomberg U.S. Aggregate Bond Index rose 1.70% in May, improving its year-to-date loss to -1.64%.


Chart depicting U.S. Treasury 10-year bond yields from June 2023 to May 2024

Oil prices fall

Oil prices fell in May, largely due to expectations for weaker economic growth amid persistently high interest rates. A barrel of West Texas Intermediate, a grade of crude oil used as a benchmark in oil pricing, fell 6.03% over the month, from $81.93 at the end of April to $76.99 at the May close. Gasoline prices at the pump also fell in May, down 2.45%, with the average price per gallon dropping from $3.79 at the end of April to $3.70 at the end of May.


Chart depicting the price per barrel of West Texas Intermediate crude oil from June 2022 to May 2024.

International equities rise

International equities rose in May but generally underperformed their U.S. counterparts as the outlook for economic growth remains less encouraging outside the U.S. The MSCI EAFE Index, which tracks developed-economy stocks in Europe, Australasia and the Far East, rose 3.29% over the month, from 2,280.53 at the end of April to 2,355.67 at the May close.

Chart depicting the value of the MSCI EAFE Index from June 2023 to May 2024

Media contact: Callie Briese, 612-844-7340;

All information and representations herein are as of 06/07/2024, unless otherwise noted.

The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Thrivent Asset Management, LLC associates. Actual investment decisions made by Thrivent Asset Management, LLC will not necessarily reflect the views expressed. This information should not be considered investment advice or a recommendation of any particular security, strategy or product. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance.

This article refers to specific securities which Thrivent Mutual Funds may own. A complete listing of the holdings for each of the Thrivent Mutual Funds is available on

The S&P 500® Index is a market-cap weighted index that represents the average performance of a group of 500 large-capitalization stocks.

The Dow Jones Industrial Average is a stock market index of 30 prominent companies listed on stock exchanges in the U.S.

NASDAQ – National Association of Securities Dealers Automated Quotations – is an electronic stock exchange with more than 3,300 company listings.

The Bloomberg U.S. Aggregate Bond Index is an unmanaged index considered representative of the U.S. investment-grade, fixed-rate bond market.

Any indexes shown are unmanaged and do not reflect the typical costs of investing. Investors cannot invest directly in an index.

Past performance is not necessarily indicative of future results.

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