US and foreign stocks ended the volatile week with gains in the holiday shortened week, with the Nasdaq index experiencing the largest gains. This followed a selloff on Tuesday regarding concerns over Italy’s failure to form a coalition government. The Five Star Movement won a plurality in the election but failed to form a ruling coalition. By weeks end the Five Star Movement formed a coalition with the League party. Also, in Spain, Premier Minister Rajoy was forced out by a no confidence vote on Friday led by the opposition Socialist party. 230 Chinese A-share stocks (A-shares are traded on the mainland.) were added to the MSCI emerging markets index. China now makes up 31% of the index.
The markets seemed to take news of protective tariffs against U.S. allies, Canada, Mexico and the EU in stride despite the retaliatory tariffs placed on U.S. goods. 10-year treasury yields dropped to 2.76% during Tuesday but finished the week near 2.9%. Commodities were mostly down led by crude oil and the dollar fell slightly. The May jobs number was released Friday, before the markets opened, and managed to ignite a rally carrying the markets to weekly gains.
In the numbers this week:
- The Commerce Department reported
- Gross domestic product in the first quarter was revised from an initial reading of 2.3% annualized to 2.2% annualized. The revision showed an increase in business investment and a drop in inventories. While a drop in inventories reduced output it typically bodes well for the future as inventories are rebuilt. From a year earlier GDP was up 2.8%.
- The personal-consumption expenditures price index rose 0.2% in April. From a year earlier prices were up 2%. Excluding volatile food and energy, prices were up 1.8% over the past year.
- Consumer spending rose 0.6% in April. Gasoline expenditures increased 0.7% due to higher prices. Also, utility expenditures rose 0.5% in April due to colder than normal weather.
- Personal income rose 0.3% in April.
- The Labor department reported
- First time claims for unemployment fell 16,000 to a seasonally adjusted 221,000 in the prior week. The four week moving average of claims rose 2500 to a seasonally adjusted 222,250.
- The U.S. added a seasonally adjusted 223,000 to non-farm payrolls in May. Average hourly earnings were up 2.7% from a year ago. The unemployment rate fell from 3.9% to 3.8%.
- The Energy Information Administration weekly report here wpsrsummary (11)attached. Also the EIA reported:
- Weekly field production of crude oil rose 44 thousand barrels per day.
- Storage of Natural Gas rose 96BN cubic feet.
- According to Baker Hughes, In the past week the number of active oil rigs rose 2 to 861 and the number of active gas rigs fell 1 to 197.
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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
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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.