PCE Data, Sticky Inflation, & 401(K) Rollovers

This week, the Money Wise guys review a quieter stretch for Wall Street, with all three major indexes slightly down. The Dow is off 68 points (-0.1%), the S&P 500 is down 21 points (-0.3%), and the NASDAQ down 147 points (-0.7%). Despite the dip, year-to-date numbers remain strong: Dow up 8.7%, S&P up 13%, and NASDAQ up 16.4%. The big focus was Friday’s Personal Consumption Expenditures (PCE) report, which came in line with expectations at 2.9% core inflation year-over-year. While inflation remains “sticky,” the guys emphasize that dire predictions about tariffs causing runaway inflation haven’t materialized. They also revisit April’s “Liberation Day” selloff, pointing out that their decision not to sell, and even to buy during the dip, has proven wise, as April 8 may stand as the market low of the year. The discussion also highlights how volatility this year has matched expectations, but downturns like this week’s have mostly drawn out “doom and gloom” commentary rather than lasting market damage. They caution listeners not to get spooked by exaggerated comparisons to past bubbles, especially with markets still near record highs.

Sticky Inflation

Sticky inflation was a big theme in this week’s episode, especially as the crew dug into the latest Personal Consumption Expenditures (PCE) data. While the headline numbers came in right on expectations, the fact that inflation is still running at 2.9% year-over-year shows that it hasn’t fallen quickly back to the Fed’s 2% target. As the team pointed out, this “stickiness” doesn’t necessarily stem from tariffs, as the financial press often claims, but from the service side of the economy, areas like housing, healthcare, and everyday services that don’t adjust as easily as goods prices. For investors, it means the Federal Reserve may feel compelled to keep rates higher for longer, even if some market voices argue for cuts. The takeaway: while markets rallied earlier this year on hopes of easing inflation, the persistence of sticky inflation keeps monetary policy and volatility in the spotlight.

In the second hour, the Money Wise guys dive into all things 401(K) Rollovers. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.