U.S. stock markets have seen an impressive rally in 2024 barring an April setback. This strong performance continues after an astonishing rally in 2023. However, several key economic data from April indicate that the U.S. economy is cooling. The Department of Commerce reported that U.S. GDP grew at a 1.6% annualized rate in first-quarter 2024, well below the consensus estimate of 2.5%. Moreover, the Institute of Supply Management reported that both manufacturing and services PMIs (purchasing managers' index) contracted in April. The U.S. economy added 175,000 jobs in April, missing the consensus estimate of 200,000. The unemployment rate increased to 3.9% in April, compared with the consensus estimate and March's data of 3.8%. April marked the highest level since January 2022. Month over month, the average hourly earnings rate dropped to 0.2% in April, compared with the consensus estimate and March's data of 0.3%. Year over year, the wage rate increased 3.9% in April, below the consensus estimate of 4%. The Department of Commerce reported that retail sales in April remained flat month over month. However, the consensus estimate was for an increase of 0.4%. The data for March was revised downward to an increase of 0.6% from 0.7% reported earlier. Year over year, retail sales increased 2.7% in April. Meanwhile, the consumer price index — a key inflation gauge — increased 3.4% year over year in April. This clearly indicates that consumers did not keep up with the pace of price increases. The University of Michigan reported that the final reading of consumer sentiment in May came in at 69.1%. However, the final reading of May was well below April's final reading of 77.2%. May's reading was the lowest since November 2023. The sub-index for current economic conditions in May came in at 69.6% compared with 79% in April. Similarly, the sub-index for consumer expectations came in at 68.8%, compared with 76% in April. At this stage, investment in defensive stocks like ...