What I’m Watching This Week – 10 May 2021

The Markets (as of market close May 7, 2021)

Stocks opened generally higher last Monday, with only the Nasdaq (-0.5%) losing ground. The Dow closed up 0.7%, followed by the Global Dow (0.6%), the Russell 2000 (0.5%), and the S&P 500 (0.3%). Losses in consumer discretionary, communication services, real estate, and information technology were offset by gains in energy, materials, health care, industrials, consumer staples, and financials. Crude oil prices rose by more than 1.3%, pushing the price per barrel over $64.40. The dollar and Treasury yields slid.

Tech shares plunged lower last Tuesday, sending the Nasdaq (-1.9%) to its worst single-day performance since March. By the end of trading, only the Dow was able to avoid a losing session — and only barely as it inched up 0.1%. The Russell 2000 fell 1.3%, the S&P 500 dropped 0.7%, and the Global Dow declined 0.6%. Information technology lost 1.9%, consumer discretionary fell 1.2%, and communication services decreased 0.9%. Sectors posting positive returns were materials (1.0%), financials (0.7%), and industrials (0.4%). The yield on 10-year Treasuries declined for the second consecutive day, while the dollar and crude oil prices advanced.

Last Wednesday saw stocks close generally mixed, with the Global Dow (1.1%), the Dow (0.3%), and the S&P 500 (0.1%) posting moderate gains, while the Nasdaq (-0.4%) and the Russell 2000 (-0.3%) fell. Treasury yields continued to fall, as bond prices advanced. Crude oil prices and the dollar declined. Among the sectors, energy (3.3%), materials (1.3%), and financials (0.9%) held up the best, while utilities (-1.7%) and real estate (-1.5%) fell the furthest.

Tech shares rebounded last Thursday, helping to drive stocks higher. The Dow reached a record high, gaining 0.9% by the close of trading. The Global Dow advanced 1.0%, the S&P 500 climbed 0.8%, the Nasdaq gained 0.4%, while the Russell 2000 was unchanged from the previous day. Treasury yields, crude oil prices, and the dollar all declined. Each of the market sectors rose, led by financials, consumer staples, communication services, and information technology.

Tech shares and cyclicals led the way last Friday, pushing stocks higher as both the Dow and S&P 500 reached new highs. The Russell 2000 added 1.4%, followed by the Global Dow, which advanced 1.2%, the Nasdaq climbed 0.9%, the S&P 500 gained 0.7%, and the Dow increased 0.7%. Treasury yields pushed higher for the first time in several days, crude oil prices rose, while the dollar slid. Energy led the market sectors, with real estate, industrials, materials, consumer discretionary, and information technology also advancing.

For the week, the markets may have been aided by strong first-quarter earnings reports and declining unemployment claims. However, a lower-than-expected number of new hires in April may lend credence to the Federal Reserve’s suggestion that the economy is still far from full recovery and accommodative measures are still needed. While tech shares rebounded at the end of last week, it wasn’t enough to keep the Nasdaq from falling after closing 1.5% lower. However, the remaining benchmark indexes listed here advanced, led by the Global Dow, followed by the Dow, the S&P 500, and the Russell 2000. The market sectors were also mixed for the week. Energy (8.9%), materials (5.9%), financials (4.2%), industrials (3.4%), health care (2.3%), and consumer staples (1.6%) advanced, while consumer discretionary (-1.2%), utilities (-1.1%), real estate (-0.9%), and information technology (-0.5%) fell. Communication services closed the week unchanged. The yield on 10-year Treasuries dipped, crude oil and gold prices climbed, while the dollar fell.

The national average retail price for regular gasoline was $2.890 per gallon on May 3, $0.018 per gallon more than the prior week’s price and $1.101 higher than a year ago. U.S. crude oil refinery inputs averaged 15.2 million barrels per day during the week ended April 30, which was 225,000 barrels per day more than the previous week’s average. Refineries operated at 86.5% of their operable capacity last week. Gasoline production decreased last week, averaging 9.1 million barrels per day.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 5/7Weekly ChangeYTD Change
DJIA30,606.4833,874.8534,777.762.67%13.63%
Nasdaq12,888.2813,962.6813,752.24-1.51%6.70%
S&P 5003,756.074,181.174,232.601.23%12.69%
Russell 20001,974.862,266.452,271.630.23%15.03%
Global Dow3,487.523,924.144,061.263.49%16.45%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.63%1.57%-6 bps66 bps
US Dollar-DXY89.8491.2690.22-1.14%0.42%
Crude Oil-CL=F$48.52$63.50$64.892.19%33.74%
Gold-GC=F$1,893.10$1,768.20$1,831.503.58%-3.25%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • April saw the addition of 266,000 new jobs after 770,000 (revised) new jobs were added in March. The unemployment rate, at 6.1%, inched up 0.1 percentage point from the previous month, and the number of unemployed persons, at 9.8 million, increased by 102,000 from March. These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the COVID-19 pandemic (3.5% and 5.7 million, respectively, in February 2020). The number of permanent job losers, at 3.5 million, was also little changed over the month but is 2.2 million higher than in February 2020. The labor force participation rate increased by 0.2 percentage point to 61.7%, and the employment-population ratio was essentially unchanged at 57.9%. In April, the number of persons not in the labor force who currently want a job was 6.6 million, about 200,000 less than the March total but up by 1.6 million since February 2020. In April, 18.3% of employed persons teleworked because of the COVID-19 pandemic, down from 21.0% in the prior month. In April, 9.4 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic — down from 11.4 million in the previous month. In April, notable job gains occurred in leisure and hospitality, food services and drinking places, and financial activities. Employment edged down in manufacturing, couriers and messengers, motor vehicles and parts, and in food and beverage stores. In April, average hourly earnings increased by $0.21 to $30.17. Average hourly earnings have increased just $0.10 since April 2020. The average workweek increased by 0.1 hour to 35.0 hours in April, and has risen 0.8 hours since April 2020.
  • According to the latest April PMI™ data from IHS Markit, the purchasing managers’ index was 60.5 in April, up from 59.1 in March. This figure is the highest since data collection began in May 2007. Driving the overall increase in manufacturing was a sharp upturn in output and new orders. Fiscal and monetary stimulus directed toward the manufacturing sector are helping drive the surge.
  • The services sector is booming, according to the IHS Markit U.S. Services PMI™. The services purchasing managers’ index registered 64.7 in April, up from 60.4 in March. This is the sharpest upturn since the index began in late 2009. Stronger client demand and a rise in new sales helped drive the surge in services. Pressure on capacity remained evident, as backlogs of work accumulated at a faster pace, and employment rose at the second-sharpest rate on record. Meanwhile, input costs advanced at the quickest rate since data collection began in October 2009 amid supplier price hikes. Many businesses passed the increase in input costs on to consumers, who saw output prices increase for the fourth consecutive month.
  • According to the latest report, the goods and services trade deficit increased for the third consecutive month after climbing 5.6% in March. Exports increased 6.6%, while imports advanced 6.3%. March exports were $200.0 billion, $12.4 billion more than February exports. March imports were $274.5 billion, $16.4 billion more than February imports. Year to date, the goods and services deficit increased $83.2 billion, or 64.2%, from the same period in 2020. Exports decreased $21.0 billion, or 3.5%. Imports increased $62.2 billion, or 8.5%.
  • The number of initial claims for unemployment benefits continued to fall last week. For the week ended May 1, there were 498,000 new claims for unemployment insurance, a decrease of 92,000 from the previous week’s level, which was revised up by 37,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.6% for the week ended April 24, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 24 was 3,690,000, an increase of 37,000 from the prior week’s level, which was revised down by 7,000. For comparison, during the same period last year, there were 2,784,000 initial claims for unemployment insurance, and the insured unemployment claims rate had risen to 14.9%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates in the week ended April 17 were in Nevada (6.2%), Connecticut (5.2%), the Virgin Islands (4.9%), Alaska (4.7%), New York (4.3%), Illinois (4.1%), Pennsylvania (4.1%), Vermont (4.1%), Rhode Island (4.0%), and the District of Columbia (3.7%). The largest increases in initial claims for the week ended April 24 were in Virginia (+23,605), Florida (+9,179), Michigan (+8,234), California (+5,731), and Oregon (+4,064), while the largest decreases were in Texas (-12,673), Wisconsin (-7,504), Tennessee (-4,063), Georgia (-3,617), and Iowa (-3,026).

Eye on the Week Ahead

This is a busy week for important economic reports. Data focusing on inflationary trends for April is available through the Consumer Price Index, the Producer Price Index, and the retail sales report. Consumer prices were up 2.6% over the 12 months ended in March, largely driven by surging energy prices. The CPI, less food and energy prices, is up 1.6% during the same 12-month period. The April monthly budget statement from the Federal Reserve is also out this week. The government deficit in March was $660 billion and $1.7 trillion year to date.

Monthly Market Review – April 2021

The Markets (as of market close April 30, 2021)

Stocks climbed higher in April on the heels of strong first-quarter corporate earnings reports and encouraging employment data. Vaccine distributions increased and several states relaxed COVID-related restrictions. More stimulus checks were given out, which encouraged consumer spending.

The number of jobless claims decreased, while nearly 1,000,000 new jobs were added. The Federal Reserve noted that the economy was improving, but that accommodative measures would remain in place. President Biden offered a plan to infuse nearly $2 trillion of capital into the United States infrastructure, to be paid for by a slew of corporate tax increases.

Each of the benchmark indexes listed here posted solid monthly gains in April, led by the Nasdaq, followed by the S&P 500, the Global Dow, the Dow, and the Russell 2000. Year to date, the Russell 2000 remains well ahead of its 2020 closing value, followed by the Global Dow, the S&P 500, the Dow, and the Nasdaq.

The market sectors ended the month higher, with communication services and consumer discretionary advancing 10.0% and 8.0%, respectively. Information technology (6.8%), financials (6.2%), and real estate (6.2%) were the other sectors enjoying a notable monthly boost. The yield on 10-year Treasuries fell 11 basis points in April. The dollar declined. Crude oil prices climbed 7.0% to close at $63.50 per barrel. Gold advanced for the second consecutive month. The national average retail price for regular gasoline was $2.872 on April 26, $0.020 higher than the March 29 selling price of $2.852, and $1.099 more than a year ago.

Stock Market Indexes

Market/Index2020 ClosePrior MonthAs of April 30Monthly ChangeYTD Change
DJIA30,606.4832,981.5533,874.852.71%10.68%
Nasdaq12,888.2813,246.8713,962.685.40%8.34%
S&P 5003,756.073,972.894,181.175.24%11.32%
Russell 20001,974.862,220.522,266.452.07%14.77%
Global Dow3,487.523,813.593,924.142.90%12.52%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.74%1.63%-11 bps72 bps
US Dollar-DXY89.8493.2391.26-2.11%1.58%
Crude Oil-CL=F$48.52$59.32$63.507.05%30.87%
Gold-GC=F$1,893.10$1,708.40$1,768.203.50%-6.60%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Latest Economic Reports

  • Employment: Employment increased by a robust 916,000 new jobs in March after adding 379,000 new jobs in February. In March, the unemployment rate fell by 0.1 percentage point to 6.0%, down considerably from its April 2020 high but is 2.5 percentage points higher than its pre-pandemic level in February 2020. The number of unemployed persons decreased by 300,000 to 9.7 million, a positive trend, but still 4.0 million higher than February 2020. Among the unemployed, the number of persons on temporary layoff decreased in March by 203,000 to 2.0 million. This measure is down considerably from the recent high of 18.0 million in April 2020 but is 1.3 million higher than in February 2020. In March, the number of persons not in the labor force who currently want a job, at 6.9 million, is unchanged over the month but is 1.8 million higher than in February 2020. The number of employed persons who teleworked in March because of the coronavirus pandemic fell to 21.0, down from 22.7% in the prior month. In March, 11.4 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. This measure is down from 13.3 million in February. March saw notable job growth in leisure and hospitality (280,000), up 18.5% since February 2020. Nearly two-thirds of the increase in leisure and hospitality was due to a surge in food services and drinking establishments (+176,000). Both the labor force participation rate and the employment-population ratio inched up 0.1 percentage point to 61.5% and 57.8%, respectively. Average hourly earnings fell by $0.04 to $29.96 in March but are up 4.2% from a year ago. The average work week increased by 0.3 hour to 34.9 hours in March.
  • Claims for unemployment insurance continued to decrease as employment recovers from the effects of the pandemic. According to the latest weekly totals, as of April 17, there were 3,660,000 workers receiving unemployment insurance benefits, down from the March 13 total of 3,870,000. The insured unemployment rate fell 0.1 percentage point to 2.6%. During the week ended April 10, Extended Benefits were available in 15 states, (16 states during the week of March 6); 51 states and territories reported 6,974,068 continued weekly claims for Pandemic Unemployment Assistance benefits (7,735,491 in March), and 51 states and territories reported 5,192,711 continued claims for Pandemic Emergency Unemployment Compensation benefits (5,551,215 in March).
  • FOMC/interest rates: The Federal Open Market Committee met in April and decided to maintain the target range for the federal funds rate at its current 0.00%-0.25%. Noting that there are signs that employment and the economy are coming back from the effects of the COVID-19 pandemic, they still have not reached their pre-pandemic levels, and inflation remains below the Committee’s 2.0% target. Overall, the Committee indicated that it would continue to maintain an accommodative stance. However, the FOMC would be prepared to alter its current stance if it were deemed warranted by changing economic conditions.
  • GDP/budget: The economy accelerated at an annual rate of 6.4% in the first quarter of 2021 after advancing 4.3% in the fourth quarter of 2020. Consumer spending, as measured by personal consumption expenditures, increased 10.7% in the first quarter after rising 2.3% in the fourth quarter. Nonresidential (business) fixed investment climbed 9.9% following a 13.1% increase in the fourth quarter; residential fixed investment continued to advance, increasing 10.8% in the first quarter after soaring 36.6% in the prior quarter. Exports decreased 1.1% in the first quarter of 2021, after advancing 22.3% in the fourth quarter of 2020, and imports (which are a negative in the calculation of GDP) increased 5.7% in the first quarter (29.8% in the fourth quarter of 2020). Federal nondefense government expenditures climbed 44.8% following a fourth-quarter decline of 8.9% due primarily to added federal stimulus payments and aid.
  • The federal budget deficit was $659.6 billion in March, following February’s $310.9 billion deficit. The deficit is 454.0% higher than it was in March 2020. The deficit for the first six months of fiscal year 2021, at $1.706 trillion, is 130.0% higher than the first six months of the previous fiscal year. Government outlays rose 45.0% to $3.410 trillion, far exceeding the 6.0% increase in receipts of $1.704 trillion. Weighed against the comparable period in fiscal year 2020, the current fiscal year has seen expenditures for income security increase by 243.0%, commerce and housing credit rose by 2,430%, and outlays for health climbed 28.0%. On the other side of the ledger, individual income tax receipts increased 7.0%, corporate income tax receipts advanced 24.0%, and employment and general retirement receipts jumped 3.0%.
  • Inflation/consumer spending: Inflationary pressures continued to advance in March. According to the latest Personal Income and Outlays report, consumer prices edged up 0.5% in March after advancing 0.2% in February. Prices have increased 2.3% from March 2020. Excluding food and energy, consumer prices increased 1.8% over the last 12 months. Personal income increased 21.1% in March after falling 7.0% in February, and disposable personal income climbed 23.6% in March after dropping 0.8% the previous month. The increase in personal income in March is more a reflection of stimulus payments and increasing job growth. Consumer spending rose 4.2% in March after declining 1.0% in February. Over the last 12 months, personal consumption expenditures (consumer spending) have dipped 2.7%.
  • The Consumer Price Index climbed 0.6% in March following a 0.4% increase in February. The March increase was the largest 1-month rise since a 0.6% increase in August 2012. Over the 12 months ended in March, the CPI rose 2.6%. Gasoline prices continued to increase, rising 9.1% in March, accounting for over half of the overall CPI increase. Consumer prices less food and energy rose 0.3% in March. The CPI, less food and energy prices, is up 1.6% over the past 12 months ended in March. Food prices rose 0.1% in March after edging up just 0.2% in February. In February, prices for apparel fell 0.3% after falling 0.7% the prior month. Prices for new vehicles were unchanged in March, while prices for used cars and trucks climbed 0.5%.
  • Prices that producers receive for goods and services continued to climb in March, increasing 1.0% after advancing 0.5% in February. Producer prices increased 4.2% for the 12 months ended in March, which is the largest yearly gain since climbing 4.5% for the 12 months ended in September 2011. Producer prices less foods, energy, and trade services rose for the eleventh consecutive month after advancing 0.6% in March. Energy prices continued to contribute to the increase in the PPI, climbing 5.9% in March following a 6.0% jump in February.
  • Housing: In March, sales of existing homes fell for the second consecutive month, declining 3.7% after decreasing 6.6% in February. Nevertheless, over the past 12 months, existing home sales increased 12.3%. The median existing-home price was $329,100 in March ($313,000 in February), up 17.2% from March 2020. Unsold inventory of existing homes climbed 3.9% from February and represents a 2.1-month supply at the current sales pace. Sales of existing single-family homes decreased 4.3% in March following a 6.6% decline in February. Year over year, sales of existing single-family homes rose 10.4%. The median existing single-family home price was $334,500 in March, up from $317,100 in February.
  • New single-family home sales rebounded in March after plunging in February. New home sales rose 20.7% in March after declining 18.2% in February. Sales of new single-family homes have increased 66.8% since March 2020. The median sales price of new single-family houses sold in March was $330,800 ($349,400 in February). The March average sales price was $397,800 ($416,000 in February). The inventory of new single-family homes for sale in March represents a supply of 3.6 months at the current sales pace, down from the February estimate of 4.8 months.
  • Manufacturing: The manufacturing sector in March recovered from a February flop as industrial production increased 1.4% after declining 2.6% the previous month. Manufacturing output increased 2.7% in March following a 3.1% decline in February. Mining output rose 5.7% in March after falling 5.4% in February. March saw the output of utilities plunge 11.4%, as the demand for heating fell because of a swing in temperatures from an unseasonably cold February to an unseasonably warm March. Total industrial production in March was 1.0% higher than its year-earlier level, but it was 3.4% below its pre-pandemic (February 2020) level.
  • New orders for durable goods increased in March for the tenth time out of the last eleven months, increasing 0.5% following a 0.9% decrease in February. Motor vehicles and parts (5.5%) and communications equipment (4.3%), led the overall increase in new orders. New orders for nondefense aircraft and parts plunged 46.9% in March, after soaring 101.8% the previous month. Excluding transportation, new orders increased 1.6% in March. Excluding defense, new orders increased 0.5% in March. After advancing 2.9% in February and 8.7% in January, new orders for capital goods fell 3.5% in March, pulled lower by a 4.7% decrease in new orders for nondefense capital goods. In March, new orders for defense capital goods rose 3.8%, after falling 9.7% in February.
  • Imports and exports: Both import and export prices rose higher in March for the fourth consecutive month. Import prices climbed 1.2% in March following a 1.3% jump in February. Import prices rose 6.9% over the past year, the largest 12-month advance since increasing 6.9% for the year ended January 2012. Import fuel prices rose 6.3% in March following a 11.7% increase in February. Import fuel prices rose 54.3% for the year ended in March, the largest 12-month advance for the index since a 68.9% increase in February 2017. Nonfuel import prices rose 0.8% in March following a 0.5% advance in February. Export prices increased 2.1% in March after climbing 1.6% in February. For the year ended in March, the price index for exports rose 9.1%, the largest 12-month increase since the index advanced 9.4% in September 2011. Agricultural export prices increased 2.4% in March following a 2.8% jump in February. Nonagricultural exports rose 2.0% in March after increasing 5.1% in February.
  • In March, the international trade in goods deficit was $90.6 billion, up 4.0% over February’s deficit. Exports increased 8.7% and imports rose 6.8%. For the 12 months ended in March, exports have risen 11.5%, while imports have jumped 20.6%.
  • The latest information on international trade in goods and services, out April 7, is for February and shows that the goods and services trade deficit was $71.1 billion, 4.8% over the January deficit. February exports were $187.3 billion, or 2.6%, less than January exports. February imports were $258.3 billion, or 0.7%, lower than January imports. Year over year, the goods and services deficit increased $56.5 billion, or 68.6%, from February 2020. Exports decreased $36.2 billion, or 8.7%. Imports increased $20.3 billion, or 4.1%.
  • International markets: There are certainly signs that several of the world’s economies are turning the corner, particularly in the United Kingdom and Canada. However, some economic indicators in the Eurozone and China still remain well below pre-pandemic levels. Inflationary pressures may be ramping up globally. While the EU unemployment rate was unchanged from the previous month, 13.6 million people remain out of work. China’s GDP advanced 0.6% in the first quarter of 2021, after climbing 3.2% in the previous quarter. On the other hand, Japan’s industrial production increased 2.2% in March and is up 4.0% year over year. In the markets, the EURO STOXX Europe 600 Index gained about 1.4% in April; the United Kingdom’s FTSE rose 3.7%; Japan’s Nikkei 225 fell nearly 2.0%; and China’s Shanghai Composite Index lost nearly 1.1%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® climbed sharply in April after a significant gain in March. The April index stands at 121.7, up from 109.7 in March. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, soared from 110.1 in March to 139.6 last month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, rose to 109.8 in April, a modest gain over March’s 108.3.

Eye on the Month Ahead

May should see continued economic recovery. As more people are vaccinated, the number of reported COVID-19 cases should decrease. Businesses hit hardest, such as restaurants and airlines, are expected to see a significant uptick in activity. Investors, encouraged by these economic advances, are likely to continue to favor stocks.

What I’m Watching This Week – 3 May 2021

The Markets (as of market close April 30, 2021)

Last Monday saw small caps and tech shares drive the Russell 2000 and the Nasdaq higher. Investors may have drawn encouragement from strong, first-quarter corporate earnings reports, solid economic data, and the expectation that the Federal Reserve will maintain its accommodative stance. Following the Russell 2000 (1.2%) and the Nasdaq (0.9%), were the Global Dow (0.6%) and the S&P 500 (0.2%). The Dow dipped 0.2%. The yield on 10-year Treasuries inched up, while the dollar and crude oil prices fell. Energy and consumer discretionary each advanced 0.6% last Monday, while consumer staples fell 1.2%.

Stocks were mixed last Tuesday, with the Dow, Russell 2000, and Global Dow inching up, while the Nasdaq and the S&P 500 declined. Among the sectors, energy advanced 1.3%, while financials and industrials each climbed 0.9%. The remaining major market sectors lost ground with utilities (-0.8%) and health care (-0.5%) falling the furthest. Yields on 10-year Treasuries increased 3.3%, crude oil increased 2.1%, and the dollar inched up 0.1%.

Equities retreated last Wednesday, despite the Federal Reserve indicating that it would continue fiscal stimulus measures in place. Only the small caps of the Russell 2000 and the Global Dow ended the day in the black. The Dow dipped 0.5%, the Nasdaq fell 0.3%, and the S&P 500 dipped 0.1%. Energy advanced 3.4% on word that OPEC+ indicated plans to boost supply, while crude oil prices climbed 1.3%. Communication services gained 1.2%. Information technology fell 1.0%. The dollar and the yield on 10-year Treasuries declined.

Last Thursday, stocks closed higher in what was a volatile session. The large caps of the Dow and the S&P 500 led the way, each climbing 0.7%, followed by the Global Dow (0.4%) and the Nasdaq (0.2%). The small caps of the Russell 2000 ended the session down 0.4%. Treasury yields, the dollar, and crude oil prices all advanced. First-quarter corporate earnings season is in full force, and Thursday’s results for some major companies were mostly favorable. Stocks also were buoyed by a strong initial estimate for first-quarter gross domestic product and a notable reduction in new claims for unemployment insurance. Among the market sectors, only health care and information technology failed to gain. Communication services enjoyed a particularly strong day, closing up 2.8%.

Equities retreated last Friday, giving back some of the gains from earlier in the week. The Russell 2000 fell 1.3%, followed by the Global Dow (-0.9%), the Nasdaq (-0.9%), the S&P 500 (-0.7%), and the Dow (-0.5%). The yields on 10-year Treasuries dipped, and crude oil prices lost 2.3%, while the dollar gained 0,7%. Market sectors were mixed last Friday, with energy (-2.7%), information technology (-1.4%), and materials (-1.1%) falling the furthest, while utilities (+0.8%), real estate (+0.6%), and consumer discretionary (+0.3%) advanced.

For the week, stocks couldn’t maintain record highs reached earlier, despite strong corporate earnings reports. Only the S&P 500 and the Global Dow were able to end the week in positive territory, while the Dow, the Nasdaq, and the Russell 2000 each fell. Treasury yields, the dollar, and crude oil prices all closed the week up. Market sector performance was mixed, with energy, financials, communication services, real estate, and consumer discretionary ending the week ahead, while health care and information technology declined.

The national average retail price for regular gasoline was $2.872 per gallon on April 26, $0.017 per gallon more than the prior week’s price and $1.099 higher than a year ago. U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ended April 23, which was 253,000 barrels per day more than the previous week’s average. Refineries operated at 85.4% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 4/30Weekly ChangeYTD Change
DJIA30,606.4834,043.4933,874.85-0.50%10.68%
Nasdaq12,888.2814,016.8113,962.68-0.39%8.34%
S&P 5003,756.074,180.174,181.170.02%11.32%
Russell 20001,974.862,271.862,266.45-0.24%14.77%
Global Dow3,487.523,909.723,924.140.37%12.52%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.56%1.63%7 bps72 bps
US Dollar-DXY89.8490.8391.260.47%1.58%
Crude Oil-CL=F$48.52$62.14$63.502.19%30.87%
Gold-GC=F$1,893.10$1,776.40$1,768.20-0.46%-6.60%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Following its meeting last week, the Federal Open Market Committee decided to maintain the target range for the federal funds rate at 0.00%-0.25%. The Committee indicated that it expects to maintain this target range until labor market conditions have reached maximum employment and inflation has risen to 2.0% and is on track to moderately exceed 2.0% for some time with the objective that inflation averages 2.0% over time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals. It is worth noting that the Committee would be amenable to adjusting its current monetary stance if risks emerge that could impede the attainment of the Committee’s stated goals of maximum employment and inflation averaging at least 2.0% over the longer term.
  • According to the latest report from the Bureau of Economic Analysis, gross domestic product increased 6.4% in the first quarter of 2021. This initial estimate is based on data that is incomplete and likely to be revised in the second and third estimates to follow in May and June. Nevertheless, the estimate of first-quarter economic growth exceeds the fourth quarter 2020 rate of 4.3%. The increase in first quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic. In the first quarter, government assistance payments, such as direct economic impact payments, expanded unemployment benefits, and Paycheck Protection Program loans, were distributed to households and businesses. Compared to the fourth quarter of 2020, the first-quarter GDP saw a 10.7% increase in personal consumption expenditures, a 41.4% jump in nondurable goods, and a 23.6% rise in durable goods.
  • In March, personal income increased 21.1% and disposable personal income rose 23.6% — both figures impacted by increased employment and stimulus payments. Consumer spending, as measured by personal consumption expenditures, advanced 4.2% in March. Consumer prices increased 0.5%. Prices, less energy and food, climbed 0.4%. Over the 12 months ended in March, prices for consumer goods and services have risen 2.3%, personal income has risen 6.1%, disposable personal income has climbed 7.0%, while personal consumption expenditures have fallen 2.7%.
  • According to the latest report from the Census Bureau, new orders for durable goods increased 0.5% in March and are up 10.9% since March 2020. Excluding transportation, new orders rose 1.6%. Excluding defense, new orders advanced 0.5%. In March, shipments of durable goods climbed 2.5%, unfilled orders increased 0.4%, and inventories rose 1.0%. March saw new orders for capital goods drop 3.5%, pulled lower by new orders for nondefense capital goods, which fell 4.7%. New orders for defense capital goods increased 3.8%.
  • The international trade deficit was $90.6 billion in March, up $3.5 billion, or 4.0%, from February. Exports of goods for March were $142.0 billion, $11.4 billion, or 8.7%, more than February exports. Imports of goods for March were $232.6 billion, $14.9 billion, or 6.8%, more than February imports. Over the last 12 months ended in March, exports have increased 11.5%, while imports have advanced 20.6%.
  • Jobless claims continue to ease as the employment sector slowly recovers from the impact of the pandemic. For the week ended April 24, there were 553,000 new claims for unemployment insurance, a decrease of 13,000 from the previous week’s level, which was revised up by 19,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.6% for the week ended April 17, unchanged from the previous week’s rate. For comparison, during the same period last year, there were 3,451,000 initial claims for unemployment insurance, and the insured unemployment claims rate rose to 12.1% as the effects of the pandemic continued to impact the labor market. The advance number of those receiving unemployment insurance benefits during the week ended April 17 was 3,660,000, an increase of 9,000 from the prior week’s level, which was revised down by 23,000. States and territories with the highest insured unemployment rates in the week ended April 10 were in Nevada (5.9%), Connecticut (5.3%), Alaska (4.9%), New York (4.6%), Illinois (4.3%), Vermont (4.1%), Rhode Island (4.0%), Pennsylvania (3.9%), the District of Columbia (3.7%), and New Mexico (3.7%). The largest increases in initial claims for the week ended April 17 were in Virginia (+8,717), Michigan (+6,300), Indiana (+4,484), Utah (+4,060), and California (+3,417), while the largest decreases were in Texas (-20,036), New York (-16,840), Georgia (-6,001), Florida (-5,564), and Washington (-4,031).

Eye on the Week Ahead

Economic reports out the first week of May focus on manufacturing and employment. The manufacturing sector continued to advance in March and should maintain that trend in April. March saw an impressive 916,000 new jobs added. Some economists are predicting that the new hires in April will exceed 500,000 — a clear sign that businesses are recovering from the effects of the pandemic.