The Personal Consumption Expenditures (PCE) Price Index, keenly watched by businesses and consumers alike, provides a window into changes in the costs of goods and services in the United States.
Key Economic Indicator
Core PCE, a critical measure for the Federal Reserve in assessing inflation, excludes volatile elements like food and energy to reveal the average price changes of consumer goods. May saw a modest 0.1% uptick compared to April’s 0.3% surge, with a year-over-year increase of 2.6%, marking the slowest annual gain in three years, as per Yahoo Finance.
Positive Economic Sign
Although above the Fed’s 2% annual inflation target, May’s Core PCE data bodes well for the economy and stocks, further reinforced by the cooler Consumer Price Index data from the previous month.
Stock Recommendations
Following the favorable operating environment, three stocks merit investor attention:
Nvidia (NVDA)
Nvidia, a frontrunner in producing AI chips, stands to benefit from increased spending in artificial intelligence. This tech giant displayed a positive trend with sturdy earnings estimates and a Zacks Rank #1 (Strong Buy).
Amazon (AMZN)
The e-commerce behemoth Amazon is poised to thrive with the stable inflationary environment. With a Zacks Rank #3 (Hold) and 27% gains this year, Amazon is a strong contender in the retail sector.
Bank of America (BAC)
Bank of America, leveraging technology for lower costs, presents an attractive investment opportunity with a Zacks Rank #2 (Buy). Its competitive pricing and earnings growth potential make it a compelling choice in the banking sector.
Final Thoughts
With core PCE data indicating a positive trajectory for businesses and the broader economy, keeping an eye on Nvidia, Amazon, and Bank of America in the upcoming quarter could prove beneficial for investors.