Stocks “labored” for much of last week only to rally following a strong employment report. That report, coupled with the Fed holding interest rates steady, gave investors the confidence to stay in the “game” a little longer. Other than the Dow, the markets posted moderate gains by week’s end, led by the Russell 2000. While the Nasdaq bumped up a little less than a quarter of a point last week, it was enough to push that index to another record high. Equally impressive is the year-to-date performance of the stock market. The Nasdaq is more than 23.0% above its 2018 closing value, while the Russell 2000 is close to 20.0% higher. Oil prices fell slightly last week and the price of gold (COMEX) fell last week as well.
LAST WEEK’S ECONOMIC HEADLINES
- As expected, the Federal Open Market Committee maintained interest rates at their present level. The Committee noted that the labor market remains strong and that economic activity rose at a solid rate. As to the prospect of future rate increases, the FOMC determined that it would be patient in light of global economic and financial developments and inflation running below its 2% objective.
- April saw a whopping 263,000 new jobs added, and the unemployment rate dropped 0.2 percentage point to 3.6% — the lowest rate since December 1969. The April tally far exceeded the average monthly gain over the prior 12 months of 213,000. The number of unemployed persons decreased by 387,000 to 5.8 million. In April, average hourly earnings rose by $0.06 to $27.77. Over the year, average hourly earnings have increased by 3.2%. The average workweek decreased by 0.1 hour to 34.4 hours in April.
- Personal income grew marginally in March, increasing 0.1% over February, according to the latest figures from the Bureau of Economic Analysis.
- The international trade in goods (not including services) deficit for March was $71.3 billion, up $0.5 billion from February.
- The IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 52.6, up slightly from March’s recent low of 52.4. Manufacturing increased moderately in April as new orders increased from March’s dreary totals. Although new business grew at a faster pace, the rate of job creation eased in April.
- The Institute for Supply Management® also conducts a survey of purchasing managers. According to the report, survey respondents were not bullish on their assessment of the manufacturing sector in April. The PMI® fell 2.5 percentage points from its March reading. New orders, production expansion, prices, and employment all fell behind their March ratings. Only supplier deliveries and inventories advanced in April.
- In the services sector, purchasing and supply executives indicated that business activity increased in April.
EYE ON THE WEEK AHEAD