Despite drops in consumer confidence, import and export prices, crude oil inventories, and producer prices, the stock market rallied at the end of the week to post positive gains across the board lead by the S&P 500, which closed at an all-time high. However, the biggest gainers for the week were the Nasdaq (0.89%) and the Russell 2000, which gained 0.73% over last week. The domestic market's positive close to the week may be in response to the rather sluggish economic news, which has increased sentiment that a Federal Reserve interest rate hike is not in the immediate future.
|Market/Index||2014 Close||Prior Week||As of 5/15||Weekly Change||YTD Change|
|10-year Treasuries||2.17%||2.13%||2.15%||2 bps||-2 bps|
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Last Week's Headlines
- The Treasury Department reported that government receipts in April reached an all-time high. Total receipts came in at $471.8 billion, which created a surplus of $156.7 billion, the largest surplus in the last seven years. Of course, April is generally the biggest tax month of the year, with the bulk of the government's receipts coming from individual income taxes ($288 billion). Through the first seven months of the budget, the deficit ($282.8 billion) is about 7.7% lower compared to this time last year.
- Compared to February, the March nonfarm jobs market saw fewer job openings (4.99 million vs. 5.14 million) according to the Department of Labor's Job Openings and Labor Turnover Survey (JOLTS). Yet the number of unemployment claims continued to decrease, down 1,000 for the week ending May 9, while the four-week moving average (271,750) is the lowest level since April 22, 2000. It appears that while employers aren't hiring at a brisk pace, they're also not letting employees go either.
- Continuing a trend, U.S. import prices fell 0.3%, while prices for U.S. exports fell 0.7% in April. Compared to last April, import prices are down 10.7% with export prices dropping 6.3%.
- April also saw producer prices fall 0.4%, while industrial production decreased 0.3% for its fifth consecutive monthly loss.
- The Census Bureau's latest report for April showed virtually no change in advance estimates of retail and food sales compared to March. Sales of autos, furniture, electronics/appliances, and food/beverages all declined, as did department store sales.
- For a second week in a row, crude oil inventories fell, a decrease of 2.2 million barrels from the previous week. Nevertheless, at 484.8 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.
- Last quarter's sluggish economy coupled with increasing gas prices at the pumps may have caused a distinct drop in consumer confidence, according to the University of Michigan's preliminary index of consumer sentiment for May. The 7.3% decrease from April (95.9 to 88.6) is the largest decrease since December 2012.
Eye on the Week Ahead
The week begins with housing data. Will this lagging sector begin to gain momentum during the spring season? And will jobless claims reports continue to show a positive trend?
Data sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market data: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.
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