Month: June 2021

The Markets (as of market close June 25, 2021)

Despite hawkish rhetoric from some high-ranking Federal Reserve officials, equities kicked off last week on an upswing, enjoying their biggest rally in several sessions. Energy, financials, and industrials helped push the S&P 500 up 1.4%. The Russell 2000 rebounded from a rough prior week, gaining 2.2%. The Dow gained 1.8%. The Global Dow climbed 1.0%, while the Nasdaq advanced 0.8%. Treasury yields and crude oil prices moved higher, while the dollar dipped.

The Nasdaq set a fresh record last Tuesday as stocks posted solid gains after Federal Reserve Chair Jerome Powell reiterated his views that inflationary pressures will prove to be transitory and that prices will eventually come down. Among the indexes, the Nasdaq climbed 0.8%, followed by the Global Dow (0.6%), the S&P 500 (0.5%), the Russell 2000 (0.4%), and the Dow (0.2%). The market sectors generally advanced, with the exception of real estate and utilities. Treasury yields, the dollar, and crude oil prices fell.

Last Wednesday stocks closed mixed, with the Russell 2000 (0.3%) and the Nasdaq (0.1%) posting modest gains, while the Dow (-0.2%), the S&P 500 (-0.1%), and the Global Dow (-0.1%) dipped lower. Unlike the previous day, 10-year Treasury yields, crude oil prices, and the dollar advanced. Consumer discretionary led the sectors, closing up 0.6%, while utilities, materials, and consumer staples declined.

Both the Nasdaq and the S&P 500 reached record highs last Thursday as strong economic reports and President Joe Biden’s bipartisan $579 billion infrastructure deal may have provided optimism to investors that the economy is pushing ahead. The Russell 2000 gained 1.2%, followed by the Dow (1.0%), the Global Dow (0.7%), the Nasdaq (0.7%), and the S&P 500 (0.6%). Financials, communication services, energy, and industrials led the market sectors. Treasury yields and the dollar dipped slightly, while crude oil prices increased marginally.

Stocks closed generally higher last Friday with only the Nasdaq falling minimally. Stocks tied to economic recovery (e.g., consumer staples and consumer discretionary) performed well. The Dow advanced 0.7%, the Global Dow climbed 0.6%, the S&P 500 gained 0.3%, and the Russell 2000 inched up 0.2%. Falling bond prices sent the yield on 10-year Treasuries up 3.3%. Crude oil prices gained nearly 1.0%, while the dollar was essentially unchanged. The market sectors mostly advanced, led by financials and utilities, while information technology fell 0.2%.

The week ended with each of the benchmark indexes posting gains. The small caps of the Russell 2000 led the way, followed by the Dow, the S&P 500, the Global Dow, and the Nasdaq. Year to date, the benchmark indexes listed here are well ahead of their 2020 closing values, with the Russell 2000 up more than 18.0% and the Global Dow ahead by 16.0%. Last week was also a positive one for the major market sectors. Energy (6.7%) and financials (5.3%) gained the most, while utilities advanced less than 1.0%. Crude oil prices continued to surge, increasing 3.6% for the week to nearly $74.00 per barrel. Crude oil prices have risen 52.5% since the start of the year.

The national average retail price for regular gasoline was $3.060 per gallon on June 21, $0.009 per gallon less than the prior week’s price but $0.931 higher than a year ago. Gasoline production increased during the week of June 21, averaging 10.3 million barrels per day, up from the prior week’s average of 9.9 million barrels per day. U.S. crude oil refinery inputs averaged 16.1 million barrels per day during the week ended June 18; this was 224,000 barrels per day less than the previous week’s average. For the week ended June 18, refineries operated at 92.2% of their operable capacity, down from the prior week’s level of 92.6%.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 6/25	Weekly Change	YTD Change
DJIA	30,606.48	33,290.08	34,433.84	3.44%	12.51%
Nasdaq	12,888.28	14,030.38	14,360.39	2.35%	11.42%
S&P 500	3,756.07	4,166.45	4,280.70	2.74%	13.97%
Russell 2000	1,974.86	2,237.75	2,334.40	4.32%	18.21%
Global Dow	3,487.52	3,942.20	4,046.27	2.64%	16.02%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.45%	1.53%	8 bps	62 bps
US Dollar-DXY	89.84	92.32	91.80	-0.56%	2.18%
Crude Oil-CL=F	$48.52	$71.41	$73.97	3.58%	52.45%
Gold-GC=F	$1,893.10	$1,765.00	$1,780.10	0.86%	-5.97%

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

• The third and final estimate of first-quarter gross domestic product showed the economy advanced at an annualized rate of 6.4%, unchanged from the second estimate. Personal consumption expenditures (consumer spending) rose 11.4%. The personal consumption expenditures price index (consumer prices) increased 3.7%. Contributing to the increase in GDP were durable goods (+26.6%), nondurable goods (+49.2%), residential fixed investment (+13.1%), nonresidential (business) fixed investment (+11.7%), and nondefense government spending (+45.0%). Exports fell 2.1%, while imports (a negative in the calculation of GDP) rose 9.5%.
• The Personal Income and Outlays report for May includes the personal consumption expenditures price index, an inflationary indicator favored by the Federal Reserve. In May, the PCE price index advanced 0.4% and is up 3.9% from May 2020. Personal income decreased 2.0% in May. Disposable (after-tax) personal income dipped 2.3%, and personal consumption expenditures, a measure of consumer spending, were essentially unchanged from April. The decline in personal income and consumer spending is likely related, in part, to a decrease in government assistance benefits, as both economic impact payments to households and pandemic unemployment compensation decreased.
• Existing-home sales decreased for a fourth straight month in May, according to the National Association of Realtors®. Total sales of existing homes dipped 0.9% last month but are still up 44.6% year over year. Lack of inventory continues to be a primary factor holding back sales, along with surging home prices, which may be squeezing some first-time buyers out of the market. The median existing home price in May was $350,300, up from April’s price of $341,600 and well above the May 2020 price of $283,500. Total housing inventory sits at a 2.5-month supply at the present sales pace, up slightly from April’s 2.4-month supply. Single-family home sales fell 1.0% in May but are up 39.2% from one year ago. The median existing single-family home price was $356,600 in May, higher than April’s price of $347,400.
• Sales of new single-family homes also fell in May, down 5.9% from April but still 9.2% ahead of the May 2020 total. The median sales price of new houses sold in May 2021 was $374,400, 2.5% above the April median sales price. The average sales price was $430,600, 2.3% higher than the April average sales price. Inventory of new single-family homes for sale sat at a 5.1-month supply at the current sales rate, up from 4.6 months in April. The dip in sales of new single-family homes may be attributable to several factors, including an increase in new home construction, rising new home prices, and a predictable slow-down in the pace of sales when compared to last year’s surge.
• The manufacturing sector continues to rebound from the pandemic-driven slowdown. New orders for durable goods increased 2.3% in May. This increase, up for 12 of the last 13 months, followed a 0.8% April decrease. Excluding transportation, new orders increased 0.3%. Excluding defense, new orders increased 1.7%. In May, transportation equipment, up 7.6% following two consecutive monthly decreases, led the increase. Shipments of durable goods in May, up for two of the last three months, increased 0.4%. Last month, increasing demand impacted unfilled orders, which increased 0.8%, and inventories, which rose 0.7%. In May, nondefense new orders for capital goods climbed 2.7%, while new orders for defense capital goods climbed 17.4%.
• In May, the international trade in goods (excluding services) deficit widened by $2.4 billion, or 2.8%. Exports of goods dipped by 0.3%, while imports of goods increased 0.8%. For the 12 months ended in May, exports have risen 58.6%, while imports have climbed 39.2%.
• For the week ended June 19, there were 411,000 new claims for unemployment insurance, a decrease of 7,000 from the previous week’s level, which was revised up by 6,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended June 12 was 2.4%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 12 was 3,390,000, a decrease of 144,000 from the prior week’s level, which was revised up by 16,000. This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000. For comparison, during the same period last year, there were 1,460,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 12.4%. 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 June 5 were in the Virgin Islands (19.5%), Rhode Island (4.8%), Nevada (4.5%), California (3.9%), Connecticut (3.9%), Puerto Rico (3.9%), Alaska (3.7%), Illinois (3.6%), New York (3.6%), and the District of Columbia (3.2%).The largest increases in initial claims for the week ended June 12 were in Pennsylvania (+21,905), California (+15,131), Kentucky (+9,172), Florida (+3,344), and Texas (+3,127), while the largest decreases were in Michigan (-5,615), Delaware (-2,516), Washington (-1,998), Tennessee (-1,746), and Alabama (-1,706).

Eye on the Week Ahead

One of the most closely watched economic indicators is out this week: the employment situation. The labor market has been picking up steam for the past several months. May saw 559,000 new jobs added, while the unemployment rate and the number of unemployed persons dropped. Also of note is the inflationary trend in wages, which have risen 2.0% since May 2020.

The Markets (as of market close June 11, 2021)

Stocks were mixed last Monday, with the Russell 2000 (1.4%) and the Nasdaq (0.5%) gaining, while the Dow fell 0.4% and the S&P 500 and the Global Dow closed the day essentially unchanged. Treasury yields, crude oil prices, and the dollar fell. Communication services, health care, and real estate advanced, while materials, industrials, and financials dipped lower.

Gains by cyclicals, energy, real estate, and meme stocks helped propel the Russell 2000 (1.1%) and the Nasdaq (0.3%) higher last Tuesday. The Dow, the Global Dow, and the S&P 500 were little changed for the second consecutive session. Treasury yields fell, while the dollar advanced. Crude oil prices climbed 1.4%, driving prices to over $70.00 per barrel — the highest price this year.

Last Wednesday saw stocks post gains early in the day, only to dip by the close of trading. Bond prices rose, pulling yields lower. The 10-year Treasury yield closed below 1.50% for the first time since the beginning of March. The dollar declined, while crude oil prices were little changed. Each of the benchmark indexes listed here lost value, with the Russell 2000 dropping nearly 0.75%, while the large caps of the Dow and the S&P 500 declined 0.4%. Among the market sectors, health care and utilities outperformed, while financials and industrials each fell nearly 1.0%.

Stocks closed last Thursday higher, with the S&P 500 reaching a record closing high. Investors apparently looked beyond another increase in consumer prices (the Consumer Price Index rose 0.6% in May), instead betting that the Federal Reserve will maintain its accommodative policies. Tech shares and megacaps advanced, helping to push the Nasdaq up 0.8%. The S&P 500 rose 0.5%, while the Global Dow and the Dow ticked up 0.1%. The small caps of the Russell 2000 fell 0.7%. Most of the market sectors advanced, led by health care, real estate, information technology, and communication services. Financials, industrials, materials, and energy lost ground. The yield on 10-year Treasuries continued to slip, falling to 1.46%, while crude oil prices rose. The dollar was mixed.

Last Friday saw stocks continue to tick higher following Thursday’s advance. The Russell 2000 reversed course from Thursday to post a solid 1.1% gain on Friday. The Nasdaq gained 0.4%, the S&P 500 edged up 0.2%, and both the Dow and the Global Dow inched up 0.1%. Treasury yields, crude oil prices and the dollar advanced. Financials, information technology, consumer discretionary, and materials led the sectors, while health care and real estate fell.

Stocks closed generally higher last week, with the Russell 2000 and the Nasdaq leading the benchmark indexes, followed by the S&P 500. Both the Dow and the Global Dow lost value. Among the market sectors, health care, real estate, consumer discretionary, utilities, and information technology notched weekly gains, while financials, industrials, and materials lost ground. The dollar rose moderately, Treasury yields dipped, and crude oil prices climbed again and have risen more than 45.0% year to date.

Prices at the pump continue to increase. The national average retail price for regular gasoline was $3.035 per gallon on June 7, $0.008 per gallon more than the prior week’s price and $0.999 higher than a year ago. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended June 4, which was 327,000 barrels per day more than the previous week’s average. For the week ended June 4, refineries operated at 91.3% of their operable capacity, up from the prior week’s level of 88.7%. Gasoline production decreased last week, averaging 9.4 million barrels per day, down from the prior week’s average of 9.6 million barrels per day.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 6/11	Weekly Change	YTD Change
DJIA	30,606.48	34,756.39	34,479.60	-0.80%	12.65%
Nasdaq	12,888.28	13,814.49	14,069.42	1.85%	9.16%
S&P 500	3,756.07	4,229.89	4,247.44	0.41%	13.08%
Russell 2000	1,974.86	2,286.41	2,335.81	2.16%	18.28%
Global Dow	3,487.52	4,111.49	4,091.55	-0.48%	17.32%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.56%	1.46%	-10 bps	55 bps
US Dollar-DXY	89.84	90.13	90.52	0.43%	0.76%
Crude Oil-CL=F	$48.52	$69.31	$70.78	2.12%	45.88%
Gold-GC=F	$1,893.10	$1,894.30	$1,877.80	-0.87%	-0.81%

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

• Consumer prices rose 0.6% in May after climbing 0.8% in April. Over the last 12 months, the Consumer Price Index increased 5.0% — the largest 12-month increase since a 5.4% increase for the 12 months ended in August 2008. Prices for used cars and trucks continued to rise sharply, increasing 7.3% in May, which accounted for about one-third of last month’s overall CPI increase. Food prices rose 0.4% in May, while energy prices were essentially unchanged. Core prices less food and energy rose 0.7% in May and 3.8% over the last 12 months, which is the largest 12-month increase since the comparable period ended in June 1992. Over the last 12 months, energy prices have risen 28.5%, of which gasoline prices have risen 56.2%. Used car and truck prices have increased 29.7% since May 2020, while food prices are up 2.2% over the same period. This data will likely stoke the debate over whether inflationary pressures are temporary or long-lasting. On the one hand, the Federal Reserve has maintained that the rise in prices is due to transitory factors resulting from a broader reopening of the economy. Conversely, recent data showing labor shortages during a time of business reopenings may bolster concerns that rising inflation could have some staying power, which could lead to earlier-than-expected fiscal tightening by the Fed.
• The international trade in goods and services deficit was $68.9 billion in April, down $6.1 billion, or 8.2%, from the March deficit. April exports were $205.0 billion, $2.3 billion, or 1.1%, more than March exports. April imports were $273.9 billion, $3.8 billion, or 1.4%, less than March imports. Year to date, the goods and services deficit increased $94.5 billion, or 50.5%, from the same period in 2020. Exports increased $42.0 billion, or 5.6%. Imports increased $136.4 billion, or 14.6%.
• In April, there were 9.3 million job openings and the rate of job openings climbed to 6.0% — all-time highs since the Job Openings and Labor Turnover report began in December 2000. Job openings increased in accommodation and food services and in manufacturing. In April, the number of hires was little changed from the prior month, while the number of total separations increased by 324,000. Over the 12 months ended in April, hires totaled 75.4 million and separations totaled 64.0 million, yielding a net employment gain of 11.3 million.
• The federal budget deficit decreased for the third consecutive month in May. At $132.0 billion, the deficit was $93.6 billion less than the April deficit and 67% smaller than the May 2020 deficit. In May, government receipts increased 5.6% to $463.7 billion, while government expenditures decreased 11.6% to $595.7 billion. Through the first eight months of the fiscal year, the government deficit sits at $2.064 trillion, 9.8% higher than the deficit over the same period of the last fiscal year.
• The number of new claims for unemployment insurance benefits fell for the sixth consecutive time last week. For the week ended June 5, there were 376,000 new claims for unemployment insurance, a decrease of 9,000 from the previous week’s level. 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 2.5% for the week ended May 29, a decrease of 0.2 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 29 was 3,499,000, a decrease of 258,000 from the prior week’s level, which was revised down by 14,000. This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000. For comparison, during the same period last year, there were 1,537,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 13.2%. 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 May 22 were in Nevada (4.8%), Rhode Island (4.5%), Connecticut (4.2%), Puerto Rico (4.1%), California (4.0%), Alaska (3.9%), Pennsylvania (3.9%), New York (3.7%), Illinois (3.6%), and the District of Columbia (3.3%). The largest increases in initial claims for the week ended May 29 were in Pennsylvania (+7,064), Illinois (+4,298), Kentucky (+3,454), Missouri (+2,744), and Michigan (+1,664), while the largest decreases were in Texas (-3,114), Oregon (-1,822), Virginia (-1,753), Florida (-1,625), and Washington (-1,577).

Eye on the Week Ahead

Several market-moving economic reports are out this week. Inflation is the focus with the Producer Price Index and prices for imports and exports. The Federal Reserve’s industrial production report for May is also available. Manufacturing has been picking up steam with the easing of pandemic-related restrictions. Investors seem to be waiting to see if the Group of Seven (G-7) agree to impose levies on big firms to help participating countries collect more taxes. Also, investors will be watching for signs from the Federal Open Market Committee, which meets this week, that fiscal stimulus will remain in place, despite rising inflationary pressures.

The Markets (as of market close June 4, 2021)

Stocks were mixed last Tuesday to begin the holiday-shortened week. The Russell 2000 climbed 1.1%, the Global Dow added 0.6%, and the Dow eked out a 0.1% gain. The Nasdaq and the S&P 500 each dipped 0.1%. Yields on 10-year Treasuries, the dollar, and crude oil prices advanced. Energy gained nearly 4.0% as the OPEC+ alliance agreed to increase output in July. Real estate and materials also advanced more than 1.0%, while health care fell 1.6%. European markets closed higher for the fourth consecutive month as economies continue to show signs of recovery from the pandemic.

Stocks closed last Wednesday slightly higher as investors awaited the release of important employment data due later in the week. The energy sector continued to climb as crude oil prices jumped 1.5%, reaching $68.75 per barrel. Real estate, consumer staples, technology, utilities, and financials were the other market sectors to post gains. Materials dipped 0.9%. The Global Dow led the benchmark indexes, up 0.4%. The S&P 500, the Nasdaq, the Dow, and the Russell 2000 were little changed. Treasury yields fell, while the dollar was mixed.

The downward trend in unemployment claims wasn’t enough to spur the market last Thursday. Each of the benchmark indexes listed here lost value, with the Nasdaq (-1.0%) and the Russell 2000 (-0.8%) leading the decline. Treasury yields, the dollar, and crude oil prices advanced. The market sectors were mixed, with utilities, consumer staples, health care, energy, and financials gaining, while consumer discretionary, technology, and communication services dropped.

Stocks climbed higher last Friday on the heels of decreasing unemployment claims and increasing hires. Tech and communication services led the sectors. Each of the benchmark indexes listed here gained value by the close of trading last Friday, led by the Nasdaq (1.5%), and followed by the S&P 500 (0.9%), the Dow and the Global Dow (0.5%), and the Russell 2000 (0.3%). The yields on 10-year Treasuries dipped 4.0% and the dollar lost nearly 0.5%. Crude oil prices continued to rise, climbing 0.7% on the day.

Last week ended with each of the benchmark indexes listed here scoring gains, led by the Global Dow, followed by the Russell 2000, the Dow, the S&P 500, and the Nasdaq. Favorable jobs data may have offset concerns of rising inflation for investors. Also of importance were reports that President Biden would accept a 15% floor on corporate taxes rather than raising the tax rate from 21% to 28%. The President also offered a $1 trillion infrastructure plan, down from $1.7 trillion originally proposed. Among the market sectors, energy again led the way, up 6.7% for the week, while consumer discretionary shares and health care fell. Crude oil prices have increased nearly 43.0% year to date.

The national average retail price for regular gasoline was $3.027 per gallon on May 31, $0.007 per gallon more than the prior week’s price and $1.053 higher than a year ago. U.S. crude oil refinery inputs averaged 15.6 million barrels per day during the week ended May 28, which was 358,000 barrels per day more than the previous week’s average. Refineries operated at 88.7% of their operable capacity last week. Gasoline production decreased last week, averaging 9.6 million barrels per day, down from the prior week’s average of 9.7 million barrels per day.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 6/4	Weekly Change	YTD Change
DJIA	30,606.48	34,529.45	34,756.39	0.66%	13.56%
Nasdaq	12,888.28	13,748.74	13,814.49	0.48%	7.19%
S&P 500	3,756.07	4,204.11	4,229.89	0.61%	12.61%
Russell 2000	1,974.86	2,269.15	2,286.41	0.76%	15.78%
Global Dow	3,487.52	4,064.85	4,111.49	1.15%	17.89%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.58%	1.56%	-2 bps	65 bps
US Dollar-DXY	89.84	90.04	90.13	0.10%	0.32%
Crude Oil-CL=F	$48.52	$66.64	$69.31	4.01%	42.85%
Gold-GC=F	$1,893.10	$1,907.40	$1,894.30	-0.69%	0.06%

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

• The employment data for May was very encouraging. There were 559,000 new jobs added in May, the unemployment rate declined 0.3 percentage point to 5.8%, and the number of unemployed persons fell by 496,000 to 9.3 million. 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). Notable job gains occurred in leisure and hospitality, in public and private education, and in health care and social assistance. The number of those who permanently lost their jobs decreased by 295,000 to 3.2 million in May but is 1.9 million higher than in February 2020. The labor force participation rate dipped 0.1 percentage point to 61.6%, and the employment-population ratio rose by 0.1 percentage point to 58.0%. In May, 16.6% of employed persons teleworked because of the pandemic, down from 18.3% in the prior month. In May, 7.9 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, down from 9.4 million in the previous month. Average hourly earnings increased by $0.15 to $30.33 in May, following an increase of $0.21 in April. Average hourly earnings are up 2.0% since May 2020. In May, the average workweek was 34.9 hours for the third month in a row.
• Purchasing managers were bullish on the state of manufacturing in May. The IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ posted 62.1 in May, up from 60.5 in April — a new record high. Stronger client demand and a commensurate increase in new orders pushed output higher in May. Also, strong demand and supply constraints drove supplier prices higher, leading to the sharpest rise in cost burdens since July 2008. The rise in cost was passed on to customers, with the rate of charge inflation quickening to a record high.
• According to the latest report from IHS Markit, the services sector experienced its fastest rise since October 2009. The record expansion in output was driven by an increase in new business, particularly in new export orders. Employment in the services sector also expanded, although firms reported having difficulties filling vacancies. Input costs increased, prompting service providers to pass on their higher costs to clients, with the pace of inflation quickening at the steepest rate since the survey began.
• For the week ended May 29, there were 385,000 new claims for unemployment insurance, a decrease of 20,000 from the previous week’s level, which was revised down by 1,000. 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 2.7% for the week ended May 22, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 22 was 3,771,000, an increase of 169,000 from the prior week’s level, which was revised down by 40,000. For comparison, during the same period last year, there were 1,605,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 13.3%. 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 May 15 were in Nevada (5.5%), Rhode Island (4.6%), Puerto Rico (4.5%), Connecticut (4.3%), Alaska (4.2%), New York (3.8%), Pennsylvania (3.8%), Illinois (3.6%), California (3.5%), and the District of Columbia (3.5%). The largest increases in initial claims for the week ended May 22 were in Delaware (+2,187), Illinois (+1,688), Pennsylvania (+1,347), California (+773), and Rhode Island (+644), while the largest decreases were in Washington (-8,020), New Jersey (-5,290), Florida (-4,679), Ohio (-3,844), and Michigan (-2,605).

Eye on the Week Ahead

An important inflation indicator, the Consumer Price Index for May, is available this week. Consumer prices rose 0.8% in April and are up 4.2% since April 2020. Information provided in this report is very important for investors and will likely be a market mover following its release.

The Markets (as of market close May 28, 2021)

Stocks were volatile in May, likely a reflection of strength in the U.S. economy as well as concerns about inflation and the timing of when the Federal Reserve might begin to taper its accommodative policies. Regarding inflation, members of the Federal Open Market Committee acknowledged that prices may run higher than the 2.0% target set by the Committee due to transitory supply-chain bottlenecks, which are expected to fade.

Strong first-quarter corporate earnings reports, coupled with declining jobless claims, helped bolster equities during May. Stocks began the month on a high note, despite a lower-than-expected jobs report.

Stocks retreated mid-month as inflation indicators pointed to price growth, while cryptocurrency volatility added to investor uncertainty. Nevertheless, stocks rebounded during the last week of May to pull the major market indexes higher, with only the Nasdaq failing to outperform its April value. Otherwise, the Global Dow led the benchmarks for the month, followed by the Dow, the S&P 500, and the Russell 2000. Year to date, the Global Dow is up nearly 17.0%, followed by the Russell 2000, the Dow, the S&P 500, and the Nasdaq.

The market sectors ended the month mixed, with financials (5.6%), materials (4.6%), energy (3.2%), industrials (2.9%), and consumer staples (2.8%) closing the highest, while consumer discretionary (-3.5%) and information technology (-2.5%) fell the most. The yield on 10-year Treasuries fell 5 basis points in May. The dollar declined 1.3%. Crude oil prices climbed 5.0% to close at $66.64 per barrel. Gold prices advanced for the third consecutive month. The national average retail price for regular gasoline was $3.020 on May 24, $0.148 higher than the April 26 selling price of $2.872 and $1.060 more than a year ago.

Stock Market Indexes

Market/Index	2020 Close	Prior Month	As of May 28	Monthly Change	YTD Change
DJIA	30,606.48	33,874.85	34,529.45	1.93%	12.82%
Nasdaq	12,888.28	13,962.68	13,748.74	-1.53%	6.68%
S&P 500	3,756.07	4,181.17	4,204.11	0.55%	11.93%
Russell 2000	1,974.86	2,266.45	2,269.15	0.12%	14.90%
Global Dow	3,487.52	3,924.14	4,064.85	3.59%	16.55%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.63%	1.58%	-5 bps	67 bps
US Dollar-DXY	89.84	91.26	90.04	-1.34%	0.22%
Crude Oil-CL=F	$48.52	$63.50	$66.64	4.94%	37.35%
Gold-GC=F	$1,893.10	$1,768.20	$1,907.40	7.87%	0.76%

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 is expanding, but not at the pace that was forecast. April saw 266,000 new jobs added, well below the level predicted. The March figure was revised down from 916,000 to 770,000 — an indication that job gains were not quite as robust as had been estimated. In April, the unemployment rate edged up 0.1 percentage point to 6.1%, the first increase in a year. The number of unemployed persons rose by roughly 100,000 to 9.8 million in April. Among the unemployed, the number of persons on temporary layoff increased in April by 100,000 to 2.1 million. This measure is down considerably from the recent high of 18.0 million in April 2020 but is 1.4 million higher than in February 2020. The number of persons not in the labor force who currently want a job fell from 6.9 million in March to 6.6 million in April. The number of employed persons who teleworked in April because of the coronavirus pandemic fell to 18.3%, 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. This measure is down from 11.4 million in March. Notable job growth in April occurred in leisure and hospitality, which increased by 331,000. More than half of the increase in leisure and hospitality was due to a rise in food services and drinking establishments (+187,000). In April, the labor force participation rate inched up 0.2 percentage point to 61.7%, and the employment-population ratio rose 0.1 percentage point to 57.9%. Average hourly earnings increased by $0.21 to $30.17 in April after declining $0.04 in March. Average hourly earnings are up 0.3% from a year ago. The average work week increased by 0.1 hour to 35.0 hours in April.
• Claims for unemployment insurance have maintained a fairly steady pace over the past few months. According to the latest weekly totals, as of May 15 there were 3,642,000 workers receiving unemployment insurance benefits, down marginally from the April 17 total of 3,660,000. Since April 17, the insured unemployment rate remained unchanged at 2.6%. During the week ended May 8, Extended Benefits were available in 14 states (15 states during the week of April 10); 51 states and territories reported 6,515,657 continued weekly claims for Pandemic Unemployment Assistance benefits (6,974,068 in April), and 51 states and territories reported 5,191,642 continued claims for Pandemic Emergency Unemployment Compensation benefits (5,192,711 in April).
• FOMC/interest rates: The Federal Open Market Committee did not meet in May, so the target range for the federal funds rate remained at its current 0.00%-0.25%. The FOMC next meets in June.
• GDP/budget: According to the second estimate, 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 11.3% in the first quarter after rising 2.3% in the fourth quarter. Nonresidential (business) fixed investment climbed 10.8% following a 13.1% increase in the fourth quarter; residential fixed investment continued to advance, increasing 12.7% in the first quarter after climbing 36.6% in the prior quarter. Exports decreased 2.9% 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 6.7% 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 Treasury budget deficit was $225.6 billion in April, following the March deficit of $659.6 billion. Government receipts were $439.2 billion in April ($267.6 in March), while outlays in April totaled $664.8 billion ($927.2 billion in March). The deficit is 69.0% lower than it was in April 2020. The deficit for the first seven months of fiscal year 2021, at $1.932 trillion, is 30.0% higher than the same period in the previous fiscal year, as government outlays rose by 22.0% to $4.075 trillion, far exceeding the 16.0% increase in receipts of $2.143 trillion.
• Inflation/consumer spending: Inflationary pressures continued to advance in April. According to the latest Personal Income and Outlays report, consumer prices edged up 0.6% in April after advancing 0.6% in March. Prices have increased 3.6% since April 2020. Excluding food and energy, consumer prices increased 0.7% in April and 3.1% since April 2020. Personal income decreased 13.1% in April after climbing 20.9% in March. Disposable personal income dropped 14.6% in April following a 23.4% advance the prior month. The decrease in personal income in April primarily reflected a decrease in government social benefits, as payments to individuals from the American Rescue Plan Act of 2021 and unemployment insurance decreased. Consumer spending increased 0.5% in April following a 4.7% increase in March.
• The Consumer Price Index climbed 0.8% in April following a 0.6% increase in March. Over the 12 months ended in April, the CPI rose 4.2% — the largest 12-month increase since a 4.9% increase for the period ended in September 2008. Core prices, excluding food and energy, advanced 0.9% in April and are up 3.0% over the last 12 months, which is the largest gain since January 1996. Energy prices slipped 0.1% in April but are 25.1% higher than a year ago. Food prices rose 0.4% in April and are up 2.4% since April 2020. Overall, nearly every component of core prices rose in April, led by a 10.0% increase in prices for used cars and trucks.
• Prices that producers receive for goods and services continued to climb in April, increasing 0.6% after advancing 1.0% in March. Producer prices increased 6.2% for the 12 months ended in April, which is the largest yearly gain since November 2010 when 12-month data was first calculated. Producer prices less foods, energy, and trade services rose for the twelfth consecutive month after advancing 0.7% in April. Food prices rose 2.1%, while energy prices fell 2.4% in April.
• Housing: In April, sales of existing homes fell for the third consecutive month, declining 2.7% after decreasing 3.7% in March. Nevertheless, over the past 12 months, existing home sales increased 33.9%. The median existing-home price was $341,600 in April ($329,100 in March), up 19.1% from April 2020. Unsold inventory of existing homes represented a 2.4-month supply in April, slightly higher than the 2.1-month supply in March. Sales of existing single-family homes decreased 3.2% in April following a 4.3% drop in March. Year over year, sales of existing single-family homes rose 28.9%. The median existing single-family home price was $347,400 in April, up from $334,500 in March.
• New single-family home sales declined in April after advancing in March. New home sales fell 5.9% in April after increasing 20.7% in March. Sales of new single-family homes have increased 48.3% from April 2020. The median sales price of new single-family houses sold in April was $372,400 ($334,200 in March). The April average sales price was $435,400 ($400,500 in March). The inventory of new single-family homes for sale in April represents a supply of 4.4 months at the current sales pace, up from the March estimate of 4.0 months.
• Manufacturing: Industrial production increased 0.7% in April after advancing 2.4% the previous month. Manufacturing output increased 0.4% in April following a 3.1% increase in March. In April, mining increased 0.7% (5.7% in March) and utilities rose 2.6% (-11.4% in March). Total industrial production in April was 16.5% higher than its year-earlier level, but it was 2.7% below its pre-pandemic (February 2020) level.
• New orders for durable goods decreased in April for the first time in 11 months, falling 1.3% after advancing 1.3% in March. New orders for transportation equipment (-6.7%), motor vehicles and parts (-6.2%) and defense aircraft and parts (-8.5%) contributed to the overall downturn in April. Excluding transportation, new orders increased 1.0% in April. Excluding defense, new orders were unchanged. New orders for capital goods fell 0.5% in April following a 2.7% decline in March.
• Imports and exports: Both import and export prices rose higher in April for the fifth consecutive month. Import prices climbed 0.7% in April following a 1.4% increase in March. Import prices rose 10.6% over the 12 months ended in April, the largest 12-month advance since an 11.1% increase for the 12 months ended October 2011. Import fuel prices rose 0.5% in April following a 7.5% increase in March. Import fuel prices rose 126.5% for the year ended in April, the largest 12-month advance for the index since a 145.1% increase for the 12 months ended in February 2000. Nonfuel import prices rose 0.7% in April following a 0.9% advance in March. Export prices increased 0.8% in April after climbing 2.4% in March. For the year ended in April, the price index for exports rose 14.4%, the largest 12-month increase since the index was first published in September 1983. Agricultural export prices increased 0.6% in April following a 2.4% jump in March. Nonagricultural exports rose 0.9% in April after increasing 2.4% in March.
• In April, the international trade in goods deficit was $85.1 billion, down $6.8 billion, or 7.3%, from March. Exports increased 1.2%, while imports fell 2.2%. For the 12 months ended in April, exports have risen 50.4%, while imports have increased 37.2%.
• The latest information on international trade in goods and services, out May 4, is for March and shows that the goods and services trade deficit was $74.4 billion, 5.6% over the February deficit. March exports were $200.0 billion, or 6.6%, greater than February exports. March imports were $274.5 billion, or 6.3%, higher than February imports. Year over year, the goods and services deficit increased $83.2 billion, or 64.2%, from March 2020. Exports decreased $21.0 billion, or 3.5%. Imports increased $62.2 billion, or 8.5%.
• International markets: Inflationary pressures are beginning to mount globally as countries begin phasing out lockdowns. Consumer prices rose 0.5% in Canada in April and are up 3.4% on the year. In April and over the last 12 months, consumer prices have risen in several countries including Germany (0.7%/2.2%), France (0.3%/1.4%), the United Kingdom (0.6%/1.5%), and China (0.6%/1.5%). However, inflationary pressures have been slow to develop in Japan, where prices dipped 0.4% in April and are down 0.4% for the year. In the markets, the STOXX Europe 600 Index gained about 2.8% in May; the United Kingdom’s FTSE rose 1.1%; Japan’s Nikkei 225 index climbed 1.2%; and China’s Shanghai Composite Index added nearly 4.5%.
• Consumer confidence: According to the latest report from the Conference Board, consumer confidence dipped slightly in May from the previous month. The Consumer Confidence Index® fell 0.2 percentage point in May to 117.2, after rising sharply in April to 117.5. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased from 131.9 in April to 144.3 last month. However, the Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell to 99.1 in May from April’s 107.9. According to the report, consumers’ assessment of present-day conditions improved; however, consumers’ short-term optimism weakened, prompted by expectations of decelerating economic growth and softening labor market conditions in the months ahead. Consumers were also less upbeat in May about their income prospects, which could be a reflection of both rising inflation expectations and a waning of further government support.

Eye on the Month Ahead

The easing of COVID-related restrictions in June should encourage for more travel. Labor should see more new jobs added, while unemployment claims are expected to decrease. Overall, economic activity is expected to pick up. However, rising inflation will remain in a concern, especially based on April’s Consumer Price Index and Personal Income and Outlays report.

The Markets (as of market close May 28, 2021)

Monday kicked off last week on a high note for stocks. Each of the benchmark indexes listed here posted gains, with the Nasdaq advancing 1.4% to lead the way. The S&P 500 gained 1.0%, the Russell 2000 climbed 0.6%, the Dow and the Global Dow each added 0.5%. Information technology and communication services led the market sectors, each rising 1.8%, followed by real estate (1.1%), energy (1.0%), and consumer discretionary (1.0%). The yield on 10-year Treasuries declined 1.5%. The dollar slipped, while crude oil prices climbed 3.7%.\

Stocks ended last Tuesday slightly lower as consumer confidence slipped amid concerns of rising inflation. The small caps of the Russell 2000 fell 1.0%, while the Dow, the S&P 500, the Nasdaq, and the Global Dow each dipped no more than 0.2%. The market sectors were mixed, with consumer discretionary, real estate, communication services, consumer staples, and information technology advancing, while industrials, health care, materials, financials, utilities, and energy slid. Treasury yields, crude oil prices, and the dollar declined.

Small caps and tech shares pushed the Russell 2000 and the Nasdaq higher last Wednesday. The Dow and the S&P 500 closed slightly higher, while the Global Dow was unchanged. The yield on 10-year Treasuries fell for the third consecutive day, falling below 1.6%. The dollar and crude oil prices advanced. Only health care and consumer staples failed to advance, as the remaining market sectors pushed higher, led by energy and consumer discretionary.

Last Thursday saw stocks close mostly higher, supported by a drop in initial jobless claims and solid economic data. The Russell 2000 led the way, closing up 2.0%, followed by the Dow (0.4%), the Global Dow (0.3%), and the S&P 500 (0.1%). The Nasdaq was unchanged from the previous day. Treasury yields broke a three-day trend, closing higher. Crude oil prices rose, while the dollar was mixed. Industrials and financials led the market sectors, with consumer staples, utilities, and information technology lagging.

Stocks closed generally higher last Friday with only the Russell 2000 losing value. The Global Dow advanced 0.4%, followed by the Dow (0.2%). The S&P 500 and the Nasdaq each gained 0.1%. Treasury yields and crude oil prices lagged, while the dollar was mixed. Real estate and utilities led the market sectors, which otherwise closed the day mixed.

Although last week had its ups and downs, stocks closed generally higher. The Russell 2000 climbed 2.4%. Tech stocks drove the Nasdaq 2.1% higher last week, followed by the S&P 500, the Global Dow, and the Dow. Year to date, the Global Dow has outpaced the other benchmark indexes, with the Russell 2000 close behind. Gold prices continued to advance and crude oil prices climbed $2.80 per barrel. The dollar was little changed, and the yield on 10-year Treasuries dipped. The majority of the market sectors increased last week with only consumer staples, health care, and utilities losing ground.

The national average retail price for regular gasoline was $3.020 per gallon on May 24, $0.008 per gallon lower than the prior week’s price but $1.060 higher than a year ago. U.S. crude oil refinery inputs averaged 15.2 million barrels per day during the week ended May 21, which was 123,000 barrels per day more than the previous week’s average. Refineries operated at 87.0% of their operable capacity last week. Gasoline production decreased last week, averaging 9.7 million barrels per day, down from the prior week’s average of 9.8 million barrels per day.

Stock Market Indexes

Market/Index	2020 Close	Prior Week	As of 5/28	Weekly Change	YTD Change
DJIA	30,606.48	34,207.84	34,529.45	0.94%	12.82%
Nasdaq	12,888.28	13,470.99	13,748.74	2.06%	6.68%
S&P 500	3,756.07	4,155.86	4,204.11	1.16%	11.93%
Russell 2000	1,974.86	2,215.27	2,269.15	2.43%	14.90%
Global Dow	3,487.52	4,022.28	4,064.85	1.06%	16.55%
Fed. Funds target rate	0.00%-0.25%	0.00%-0.25%	0.00%-0.25%	0 bps	0 bps
10-year Treasuries	0.91%	1.63%	1.58%	-5 bps	67 bps
US Dollar-DXY	89.84	90.00	90.04	0.04%	0.22%
Crude Oil-CL=F	$48.52	$63.84	$66.64	4.39%	37.35%
Gold-GC=F	$1,893.10	$1,880.70	$1,907.40	1.42%	0.76%

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

• Gross domestic product increased at an annual rate of 6.4% in the first quarter of 2021, according to the second estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2020, GDP increased 4.3%. The GDP increase in the first quarter reflected increases in personal consumption expenditures (consumer spending), nonresidential (business) fixed investment, federal government spending, residential fixed investment, and state and local government spending that were partly offset by decreases in private inventory investment and exports. Imports, which are subtracted from GDP, increased. The rise in consumer spending reflected increases in durable goods (led by motor vehicles and parts), nondurable goods (led by food and beverages), and services (led by food services and accommodations). Consumer prices increased 3.7% in the first quarter, compared with an increase of 1.5% in the fourth quarter of 2020. Excluding food and energy, prices increased 2.5%, compared with an increase of 1.3%.
• In what may worry some investors, inflation, as measured by the personal consumption expenditures price index, rose 0.6% in April, and is up 3.6% since April 2020. Prices, less food and energy, advanced 0.7% in April and 3.1% since April 2020. Personal income fell 13.1% in April as government subsidy payments and unemployment insurance decreased. Disposable personal income dipped 14.6% in April. Personal consumption expenditures (consumer spending) rose 0.5% in April.
• Orders for long-lasting (durable) goods declined in April for the first time following 11 consecutive monthly increases. New orders in April fell 1.3% from the March total, but are 22.4% over the April 2020 estimate. Excluding transportation, new orders for durable goods advanced 1.0% in April. Excluding defense, new orders were virtually unchanged in April from the previous month. Transportation equipment, down two consecutive months, drove the April decrease, falling 6.7%. In April, shipments of durable goods increased 0.6%, unfilled orders rose 0.2%, and inventories climbed 0.5%. New orders for nondefense capital goods increased 3.5% in April, while new orders for defense capital goods fell 25.8%.
• The easing of COVID restrictions may be having a positive impact on cross-the-border trade. The international trade in goods (excluding services) deficit in April was $85.2 billion, down $6.8 billion, or 7.3%, from March. Exports of goods for April were $144.7 billion, $1.7 billion, or 1.2%, more than March exports. Imports of goods for April were $229.9 billion, $5.1 billion, or 2.2%, less than March imports. Exports of capital goods rose 4.8% in April, while exports of automotive vehicles fell 8.0%. Imports of foods, feeds, and beverages increased 3.4%, while imports of consumer goods fell 4.2%.
• New home sales dipped in April, according to the latest information from the Census Bureau. Sales of new, single-family homes fell 5.9% from the March estimate. Nevertheless, new home sales are up 48.3% from April 2020. Sales fell in the Northeast (-13.7%), the Midwest (-8.3%), and the South (-8.2%). New home sales increased 7.9% in the West. The median sales price of new houses sold in April was $372,400 (+11.4% from March). The average sales price was $435,400 (+8.7% from March). The estimate of new homes for sale at the end of April was 316,000, which represents a supply of 4.4 months (4.0 months in March).
• For the week ended May 22, there were 406,000 new claims for unemployment insurance, a decrease of 38,000 from the previous week’s level. 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 May 15, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 15 was 3,642,000, a decrease of 96,000 from the prior week’s level, which was revised down by 13,000. For comparison, during the same period last year, there were 1,887,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 13.2%. 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 May 8 were in Nevada (5.7%), Connecticut (4.5%), Rhode Island (4.5%), Alaska (4.3%), Puerto Rico (4.3%), California (3.9%), New York (3.9%), Pennsylvania (3.9%), Illinois (3.7%), and Vermont (3.6%). The largest increases in initial claims for the week ended May 15 were in New Jersey (+4,812), Washington (+3,023), Minnesota (+1,806), West Virginia (+907), and Rhode Island (+792), while the largest decreases were in Georgia (-7,392), Kentucky (-7,123), Texas (-3,881), Michigan (-3,560), and Florida (-2,994).

Eye on the Week Ahead

The labor figures for May are out this week. April saw 266,000 new jobs added, which was below expectations, but still encouraging. The May reports on the manufacturing and services sectors are also available this week. Purchasing managers saw favorable increases in both manufacturing and services in April.