Week of 05/27-05/31 Stock Market Pushes Higher, NVDA Price Action Cools Off

Stock market indexes fell earlier this week, but quickly turned around on Friday to mark the sixth consecutive positive month of gains. Nvidia stock regained the market spotlight last week after a stellar earnings report and continued to trade higher upwards of $1,1150 per share. The stock experienced a selloff on Friday due to the changing market conditions and tech stocks falling in general. NVDA is still scheduled for its 10-to-1 stock split on June 7th. The market also reacted to the Personal Consumption Expenditures (PCE) Price Index economic report which came in-line with economists and analysts' forecasts. The Core PCE, which is closely watched by the FED, indicated minimal slower growth for inflation which means economic conditions are basically unchanged. This will most likely not change the FED's decision to keep interest rates higher for longer.

Why is the Core PCE important to the FED?

The core Personal Consumption Expenditures (PCE) index is the preferred measure of inflation used by the Fed because it is regarded as a more comprehensive measure of overall household spending than other measures such as the Consumer Price Index (CPI). The Core PCE index excludes volatile food and energy prices, which tend to fluctuate more dramatically and mask longer-term inflation trends. The Fed's objective is to keep inflation at a stable level, and the Core PCE index allows them to more accurately assess inflation trends over long-term periods. The Fed has specifically identified a 2% target inflation rate for long-term price stability, and the Core PCE index is used to evaluate whether inflation is moving towards or away from that target. In summary, the Fed prefers the Core PCE index as it offers a broader and more accurate measure of inflation trends relative to household spending patterns, which is their main objective.