Stocks faltered for the second straight week as traders dealt with market-moving inflation data and a less-than-impressive start to first-quarter corporate earnings season. Both the Consumer Price Index and the Producer Price Index rose higher last week. Taken together, increases in the CPI and the PPI support a more cautious approach relative to the Federal Reserve’s current monetary policy. It is certainly not likely that the Fed will lower interest rates in June. Also, last Friday, earnings reports from some major banks fell short of expectations. All major stock market benchmark indexes ended the week in the red. Among the market sectors, only information technology and communication services gained. Financials, health care, real estate, and materials each lost at least 2.0%. The dollar and gold prices edged higher. Crude oil prices slipped lower.
Last Week’s Economic News
- Consumer prices rose in March, like February, and slightly higher than expectations. While the preferred inflation indicator for the Federal Reserve is the personal consumption expenditures price index, the increase in the CPI over the past few months certainly supports the notion that getting inflation down to the Fed’s 2.0% objective is going to take time and patience.
- The Producer Price Index increased in March after advancing even more in February. For the 12 months ended in March, producer prices rose 2.1%, the largest advance since rising 2.3% for the 12 months ended April 2023.
- Prices for both imports and exports advanced in March for the third straight month.
- The Federal Treasury budget deficit was $236.0 billion in March, roughly $60.0 billion less than the February monthly deficit.
- The national average retail price for regular gasoline was $3.591 per gallon on April 8, $0.074 per gallon more than the prior week’s price.
- For the week ended April 6, there were 211,000 new claims for unemployment insurance, a decrease of 11,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended March 30 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended March 30 was 1,817,000, an increase of 28,000 from the previous week’s level, which was revised down by 2,000.
Eye on the Week Ahead
This is a light week for important economic news. The March report on retail sales is out this Monday. The previous month saw retail sales rise 0.6%, partially reflective of rising consumer prices. The report from the Federal Reserve on industrial production is also available this week. Industrial production ticked up 0.1% in February, while manufacturing rose 0.8%.
Have a nice week!
Sincerely,
Robert G. Carpenter