Markets Repriced After PCE and Q1 GDP

Stock index board on trading floor as markets reprice after PCE and Q1 GDP data, impact on SNOW and software stocks

Key Points

01BEA revised Q1 GDP lower and April PCE showed persistent core inflation, prompting markets to reprice toward a higher-for-longer Fed path and move Treasury yields.
02Personal income was flat while spending rose and the personal saving rate fell, which reinforced the higher-for-longer repricing and softened equity futures at the open.
03Snowflake's fiscal Q1 beat, upgraded guidance and a multiyear $6 billion AWS commitment sparked a sharp SNOW rally and lifted software peers.
04US equities closed higher while European markets lagged on the growth-inflation mix; healthcare and tech ETFs led gains, utilities and real estate lagged.

Global Market Summary

US benchmarks finished higher as investors digested April PCE and the BEA's Q1 revision: the S&P 500 (SPX) rose 0.58%, the Nasdaq Composite (^IXIC) gained 0.91% and the Dow Jones Industrial Average (DJIA) ticked up 0.05%. European markets lagged on the growth-inflation mix, with the FTSE (UKX) down 0.75%, the DAX (DAX) down 0.34% and the CAC (FRA40) down 0.23%. China's Shanghai Composite (000001.SS) was unchanged (0.00%).

Top Movers

Healthcare led sector gains with XLV (1.40%) and technology VGT (1.34%) among the strongest ETFs. Utilities lagged, with XLU (-1.13%) and real estate VNQ (-0.38%) the weakest. Notable stock movers included SNOW (+36.48%), BRAI (+26.60%) and CHRN (+23.25%) on the upside and PLAB (-36.31%), P (-14.85%) and FLY (-14.11%) on the downside.

Macro highlights

The BEA's second estimate revised Q1 GDP down to +1.6% while April PCE showed core PCE at +3.3% year-over-year and headline PCE at +3.8% year-over-year (core +0.2% m/m, headline +0.4% m/m). Markets repriced toward a higher-for-longer Fed path as personal income was flat, personal spending rose and the personal saving rate fell to 2.6%, prompting softer equity futures at the open and moves in Treasury yields.

News that moved markets

Snowflake's fiscal Q1 beat and upgraded product-revenue guidance, together with a multiyear $6 billion infrastructure commitment with AWS, sparked a sharp rally in SNOW and lifted sentiment across software peers. Futu reported strong operating metrics but disclosed a CSRC pre-notification proposing about RMB1.85 billion in penalties that was recorded as a subsequent event, adding regulatory downside risk for the stock. Weibo's Q1 revenue and user metrics gave advertisers fresh data points, and Dollar Tree's Q1 beat and raised guidance drove a pronounced rally in discount-retail peers. Several transactions closed on May 28, including American Securities' sale of MW Components to Rosebank Industries, 26North's completed acquisition of Intermedia Intelligent Communications, WindRose Health Investors' sale of Altruix to Frazier Healthcare Partners, and FG Communities' purchase of a mobile-home community in Myrtle Beach. Notable announced deals included Fertitta Entertainment's definitive agreement to acquire Caesars Entertainment in an approximately $17.6 billion all-cash transaction and Beeline Holdings' letter of intent to acquire MagicBlocks.

Upcoming session watchlist

01JP Consumer Confidence (May) — consensus 32 vs 32.2 prior, May 29, 05:00 AM | Captures household sentiment and signals potential consumer spending momentum.
02FR Inflation Rate YoY Prel (May) — consensus 2.6% vs 2.2% prior, May 29, 06:45 AM | Gauges France’s annual consumer price inflation and near-term price pressures.
03IT Inflation Rate YoY Prel (May) — forecast 3.2% vs 2.7% prior, May 29, 09:00 AM | Shows Italy’s annual inflation trend and consumer price momentum.
04DE Inflation Rate YoY Prel (May) — consensus 2.9% vs 2.9% prior, May 29, 12:00 PM | Indicates Germany’s annual inflation pace and broader price pressure direction.
05CA GDP Growth Rate Annualized (Q1) — consensus 1.5% vs -0.6% prior, May 29, 12:30 PM | Summarizes Canada’s quarterly growth at an annualized rate, indicating demand momentum.
06CA GDP Growth Rate QoQ (Q1) — forecast 0.1% vs -0.2% prior, May 29, 12:30 PM | Tracks quarter-on-quarter economic growth momentum in Canada’s economy.

Key Takeaways

01US equities closed higher: S&P 500 (SPX) +0.58%, Nasdaq +0.91%, Dow +0.05% as markets digested the Q1 GDP revision and April PCE.
02Healthcare and technology ETFs led sector gains (XLV, VGT); utilities (XLU) and real estate (VNQ) were the weakest.
03Snowflake's Q1 beat, raised guidance and $6 billion AWS commitment sparked a one-day SNOW surge and boosted software peers.
04Deal activity included several closed transactions and announced deals, notably Fertitta's definitive agreement to acquire Caesars and Beeline's LOI for MagicBlocks.

References