Wall Street posted another strong week of gains, buoyed by upbeat corporate earnings, a better-than-expected April jobs report, and optimism around renewed trade dialogue between the U.S. and China. The Dow extended its winning streak to 10 sessions, while the S&P 500 logged nine straight days of gains. Investor sentiment remained surprisingly resilient, despite the release of data showing that GDP contracted in the first quarter. Technology stocks were at the forefront of the rally, with the information technology sector rising nearly 6.0% for the week. Energy, on the other hand, was flat. Crude oil prices declined for the second consecutive week as concerns grew about waning demand from China, increased U.S. production, and the possibility of higher output from OPEC+. The dollar ticked higher, while bond yields edged up amid speculation that trade-related economic headwinds could pressure the Federal Reserve to cut interest rates later this year.
Last Week’s Economic News
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The labor market showed steady growth in April, with 177,000 new jobs added, according to the Bureau of Labor Statistics.
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The advance estimate of first-quarter gross domestic product showed that the economy contracted slightly as stated above.
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Consumer spending remained strong in March.
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The number of job openings fell to 7.2 million in March, down 280,000 from February and nearly one million below the level a year ago. Hires and separations were little changed, although layoffs dropped by 222,000 to 1.6 million.
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The manufacturing sector expanded modestly in April, according to S&P Global. The Manufacturing PMI held steady at 50.2.
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The trade deficit in goods widened to $162.0 billion in March, up from $147.9 billion in February.
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The national average price for regular gasoline was $3.133 per gallon on April 28, down $0.008 from the prior week and $0.520 lower than one year ago.
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For the week ended April 26, initial claims for unemployment insurance rose by 18,000 to 241,000.
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Eye on the Week Ahead
The Federal Open Market Committee meets this week. While no change to the federal funds rate is expected, investors will closely analyze the Fed’s policy statement for any shifts in tone regarding the path of interest rates for the remainder of the year. Many are anticipating at least two rate cuts before year-end if inflation continues to ease and growth remains subdued.
Have a nice week!
Sincerely,
Robert G. Carpenter