Despite Friday’s rally, U.S. stocks were down modestly. Developed foreign stocks had significant gains and emerging markets had substantial losses. The Federal Reserve met this week and, as expected, left interest rates unchanged with little change to their wording and the forecast for two more 0.25% rate increases this year. Inflation moved closer to the FED’s target but wage increases moderated from last month. Consumer spending came in strong as did corporate earnings. Treasury yields were largely unchanged. The U.S. dollar rose and oil was little changed.
In the numbers this week:
- The ISM purchasing managers index fell from 59.3 in March to 57.3 in April. The March reading was a 14 year high and 57.3 still represents healthy expansion.
- The China Caixin manufacturing PMI fell from 51.1 to 51.0. Everything over 50 represents expansion just at a slower pace.
- Eurozone inflation fell from 1.3% in March to 1.2% in April.
- The U.S. trade deficit fell 15.2% in March. Imports fell and exports rose.
- The Commerce Department reported:
- The price index for personal consumption expenditures was unchanged in March but has risen 2% over the past year. Excluding volatile food and energy, prices rose 0.2% in March and 1.9% over the past year. The PCE index is the FED’s preferred measure of inflation and 2% represents the FED’s target. If inflation move significantly above this, they FED may get more aggressive in hiking interest rates.
- Personal consumption expenditures increased 0.4% in March.
- Personal income rose 0.3% in March.
- Wages & salaries rose 0.2%.
- Dividends rose 0.9%.
- The personal savings rate fell from 3.3% to 3.1%.
- According to Factset with 81% of the S&P 500 companies reporting, the blended earnings increase in the first quarter is 24.2%.
- The Labor department reported:
- Productivity rose in the first quarter at an annual rate of 0.7%.
- Unit Labor costs rose at an annual rate of 2.7% in the first quarter.
- First time claims for unemployment increased 2,000 to a seasonally adjusted 211,000,. The four week moving average of claims fell 7750 to 221,500.
- The U.S. added 164,000 new jobs in April.
- The unemployment rate fell to 3.9%, the lowest since 2000.
- Wages have gained 2.6% from a year ago.
- The Energy Information Administration weekly report is here wpsrsummary (7). Also the EIA reported:
- Weekly field production of crude oil rose 33 thousand barrels per day.
- Storage of Natural Gas rose 62BN cubic feet.
- According to Baker Hughes, In the past week the number of active oil rigs rose 9 to 834 and the number of active gas rigs rose to 196.
Please call us if you have any questions.
Loren C. Rex, CFP®, AIF®, MA Erik A Smith
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
77 E. Michigan Ave, Suite 140
Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
Visit our Website: www.genfinplan.com
Registered Representative of and securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Generations Financial Planning & Wealth Management are separate companies and are not affiliated.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.