Month: May 2022

The Markets (as of market close May 27, 2022)

Stocks closed higher last week, ending a seven-week slide. More upbeat corporate news and favorable economic data helped quell investor angst, at least temporarily. The S&P 500 posted its best week since November 2020 and is headed for a positive month in May. A few factors may have helped increase investor confidence. Several large retailers released quarterly earnings results that largely exceeded Wall Street estimates. The personal consumption expenditures price index (the Fed’s preferred inflation indicator) rose 0.2% in April after increasing 0.9% in March, signaling that inflationary pressures may be subsiding. In addition to the S&P 500, the Dow, the Nasdaq, and the Russell 2000 gained more than 6.0% by week’s end. Nevertheless, to put the latest drought into perspective, the S&P 500 and the Nasdaq hadn’t suffered seven consecutive weekly declines since the dot.com bubble burst in early 2000. And the Dow’s eight-week slide was the longest since 1932.

Wall Street did something unusual last Monday: It opened the week on an uptick. Each of the benchmark indexes listed here posted solid gains, led by the Dow and the Global Dow (2.0%), followed by the S&P 500 (1.9%), the Nasdaq (1.6%), and the Russell 2000 (1.1%). Ten-year Treasury yields jumped 7.2 basis points to 2.85%. Crude oil prices climbed to $110.66 per barrel. The dollar slid lower, while gold prices advanced. The financial sector made the biggest gains as several major banks saw their stocks record notable gains.

Last Tuesday saw the Dow inch up 0.2%, while the remaining market indexes ended the day in the red. A tech sell-off pulled the Nasdaq down 2.4%. The Russell 2000 slid 1.6%, the S&P 500 dropped 0.8%, and the Global Dow declined 0.3%. Unfavorable economic news weighed on investors, following a substantial drop in new home sales last month (see below). Ten-year Treasury yields fell 9.9 basis points to 2.76%. Crude oil prices dipped to $109.72 per barrel and the dollar declined against a bucket of currencies.

Stocks ended higher last Wednesday following a choppy day of trading. The Nasdaq rebounded from last Tuesday’s decline, gaining 1.5%. The Russell 2000 jumped 2.0%. The Global Dow advanced 0.5%. The large caps of the S&P 500 (1.0%) and the Dow (0.6%) also advanced. Crude oil prices rose $1.07 to $110.84 per barrel. Ten-year Treasuries dipped 11 basis points to 2.74%. The dollar climbed higher, while gold prices fell. Investors gained some solace following the release of the minutes from the last Federal Reserve meeting. The Fed gave no indication that a more hawkish course of action is in the offing, lending credence to the expectation that the next two rate hikes will be no more than 50 basis points each.

Equities closed higher last Thursday for the second day in a row. Consumer shares led gains as several retailers raised their sales projections. The Nasdaq again led the surge, adding 2.7%, followed by the Russell 2000 (2.2%), the S&P 500 (2.0%), the Dow (1.6%), and the Global Dow (1.4%). The yield on 10-year Treasuries inched up to 2.75%. Crude oil prices jumped more than $3.50 to $113.87 per barrel. The dollar fell against a bucket of currencies. Gold prices advanced.

Stocks climbed higher last Friday, with each of the benchmark indexes listed here adding notable gains. The Nasdaq jumped 3.3%, the S&P 500 added 2.5%, the Russell 2000 rose 2.7%, the Dow gained 1.8%, and the Global Dow increased 1.4%. Investors were buoyed by more upbeat corporate results and economic indications that inflation may be slowing. Crude oil prices continued to increase, adding another $1.00 to reach $115.10 per barrel. Ten-year Treasury yields slid 13 basis points to 2.74%. The dollar declined for the second consecutive day, while gold prices climbed higher for the second day in a row.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 5/27	Weekly Change	YTD Change
DJIA	36,338.30	31,261.90	33,212.96	6.24%	-8.60%
Nasdaq	15,644.97	11,354.62	12,131.13	6.84%	-22.46%
S&P 500	4,766.18	3,901.36	4,158.24	6.58%	-12.76%
Russell 2000	2,245.31	1,773.27	1,887.86	6.46%	-15.92%
Global Dow	4,137.63	3,730.18	3,913.19	4.91%	-5.42%
Fed. Funds target rate	0.00%-0.25%	0.75%-1.00%	0.75%-1.00%	0 bps	75 bps
10-year Treasuries	1.51%	2.78%	2.74%	-4 bps	123 bps
US Dollar-DXY	95.64	103.06	101.68	-1.34%	6.32%
Crude Oil-CL=F	$75.44	$112.70	$115.12	2.15%	52.60%
Gold-GC=F	$1,830.30	$1,843.90	$1,857.20	0.72%	1.47%

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 second estimate of first-quarter gross domestic product showed that the economy contracted at an annualized rate of -1.5%. The decrease in GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending; imports, which are a subtraction in the calculation of GDP, increased. However, consumer spending, as measured by personal consumption expenditures, increased 3.1% in the first quarter. On the other hand, exports fell 5.4%, while imports increased 18.3%. The personal consumption expenditures price index (a measure of price inflation) increased 7.0% in the first quarter. Excluding food and energy prices, the PCE price index increased 5.1% (revised).
• According to the latest report on personal income and outlays, inflationary pressures waned in April as the personal consumption expenditures price index rose 0.2% after increasing 0.9% in March. Since April 2021, consumer prices have risen 6.3%. Personal consumption expenditures, a measure of consumer spending, increased 0.9% following a 1.4% advance in March. Personal income increased 0.4% in April, and disposable (after-tax) personal income rose 0.3%.
• The international trade in goods deficit was $105.9 billion in April, a decrease of 15.9% from March. Exports rose 3.1%, while imports fell 5.0%.
• The housing sector has slowed considerably from the pace set last year as rising home prices and mortgage rates have impacted the market. New single-family home sales fell 16.6% in April. Since April 2021, sales of new single-family homes are down 26.9%. The median sales price of new houses sold in April 2022 was $450,600 ($435,000 in March). The average sales price was $570,300 ($522,500 in March). Inventory of new single-family homes for sale sits at a supply of 9.0 months at the current sales rate, well off the April 2021 pace of 4.7 months.
• New durable goods orders increased 0.4% in April following a 0.6% advance in March. Durable goods orders have increased in six of the last seven months. Excluding transportation, new orders increased 0.3%. Excluding defense, new orders increased 0.3%. Transportation equipment, up following two consecutive monthly decreases, led the April increase after advancing 0.6%. Since April 2021, new orders for durable goods have risen 10.5%. New orders for nondefense capital goods used in the production of final products rose 0.4% in April. New orders for defense capital goods jumped 2.5% last month.
• The national average retail price for regular gasoline was $4.593 per gallon on May 23, $0.102 per gallon above the prior week’s price and $1.573 higher than a year ago. Also as of May 25, the East Coast price increased $0.10 to $4.53 per gallon; the Gulf Coast price rose $0.10 to $4.26 per gallon; the Midwest price climbed $0.10 to $4.40 per gallon; the West Coast price increased $0.13 to $5.49 per gallon; and the Rocky Mountain price increased $0.05 to $4.33 per gallon. Residential heating oil prices averaged $3.74 per gallon on May 20, about $0.18 per gallon less than the prior week’s price. According to the U.S. Energy Information Administration, the average retail price of regular gasoline is the highest inflation-adjusted price since 2012 and the fourth highest price on record. The high price of gasoline is currently driven by several factors, including the price of crude oil, the effects of Russia’s full-scale invasion of Ukraine, and U.S. gasoline demand growth outpacing refinery runs, resulting in large gasoline inventory draws.
• For the week ended May 21, there were 210,000 new claims for unemployment insurance, a decrease of 8,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 14 was 1.0%, 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 14 was 1,346,000, an increase of 31,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended May 7 were California (2.0%), New Jersey (1.9%), Alaska (1.7%), New York (1.4%), Puerto Rico (1.4%), Rhode Island (1.3%), Massachusetts (1.3%), Minnesota (1.2%), Illinois (1.2%), Pennsylvania (1.2%), and the Virgin Islands (1.2%). The largest increases in initial claims for the week ended May 14 were in Kentucky (+6,712), California (+1,968), Illinois (+1,742), Ohio (+1,189), and Florida (+629), while the largest decreases were in Michigan (-384), Georgia (-325), Colorado (-301), Arizona (-278), and the District of Columbia (-251).

Eye on the Week Ahead

The employment figures for May are out at the end of this week. April saw over 400,000 new jobs added and the unemployment rate dipped to 3.6%. It will be interesting to see whether the labor sector remains strong in the face of the anticipated slowdown in the economy due to rising interest rates.

The Markets (as of market close May 20, 2022)

In another volatile week of trading, stocks fell for the seventh consecutive week. A late-day surge last Friday kept the S&P 500 out of bear territory, but not enough to keep it out of the red for the week. Disappointing earnings and declining profits from some major retailers apparently caused concern that retailers will pass on higher input costs to customers. Federal Reserve Chair Jerome Powell added to the angst when he said that “some pain” may be involved in the fight to tame inflation. This was enough to prompt investors to pull away from stocks. By the end of last week, the Nasdaq, the Dow, and the S&P 500 all fell by 2.9% or more. Crude oil prices climbed higher, while the dollar slid lower. Ten-year Treasury yields fell 15 basis points as bond prices increased. Gold prices rose by nearly $37.00.

Wall Street got off to a rough start last week after downbeat Chinese economic data increased worries of a global economic slowdown. Among the benchmark indexes listed here, only the Dow (0.1%) and the Global Dow (0.4%) eked out gains. The Nasdaq (-1.2%), the Russell 2000 (-0.5%), and the S&P 500 (-0.4%) dipped lower. Bond prices rose pulling yields down. Ten-year Treasury yields fell 5.8 basis points to close the day at 2.87%. Crude oil prices climbed $3.60 to $114.04 per barrel. The dollar slid lower, while gold prices advanced.

Stocks rallied last Tuesday, with all 11 major industry sectors advancing to drive the S&P 500 up over 2.0%. The Nasdaq jumped 2.8% as several major tech companies bounced back from Monday’s sell-off. The Russell 2000 increased 3.2%, the Global Dow rose 2.0%, and the Dow added 1.3%. Ten-year Treasury yields climbed 9.1 basis points to reach 2.96%. Crude oil prices, the dollar, and gold prices declined.

Last Tuesday’s rally was short-lived as stocks plunged lower last Wednesday, posting the largest one-day drop in nearly two years. The S&P 500 and the Nasdaq fell more than 4.0%, the Dow and the Russell 2000 slid 3.6%. The Global Dow dipped 2.2%. Ten-year Treasury yields lost more than 8.0 basis points, closing at 2.88%. Crude oil prices declined over $3.00 to $109.23 per barrel. The dollar advanced, while gold prices decreased. Consumer shares, particularly those of major retailers, tumbled as investors tried to weigh the impact of higher prices and monetary policy tightening on corporate earnings and economic growth.

Equities continued to spiral lower last Thursday, with only the Russell 2000 able to close barely in the black. The Dow (-0.8%), the S&P 500 (-0.6%), and the Nasdaq (-0.3%) declined on a volatile day of trading. Crude oil prices climbed $1.70 to $111.30 per barrel. The dollar sank lower, while gold prices advanced. Ten-year Treasury yields slipped to 2.85%.

Stocks closed last Friday with mixed returns, with the Dow and the S&P 500 barely eking out a gain, while the Nasdaq and the Russell 2000 slid lower. Ten-year Treasury yields fell for the third consecutive session, closing the day down 6.8 basis points. Crude oil prices rose for the second day in a row. The dollar and gold prices also advanced on the day.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 5/20	Weekly Change	YTD Change
DJIA	36,338.30	32,196.00	31,261.90	-2.90%	-13.97%
Nasdaq	15,644.97	11,805.00	11,354.62	-3.82%	-27.42%
S&P 500	4,766.18	4,023.89	3,901.36	-3.05%	-18.14%
Russell 2000	2,245.31	1,792.67	1,773.27	-1.08%	-21.02%
Global Dow	4,137.63	3,743.16	3,730.18	-0.35%	-9.85%
Fed. Funds target rate	0.00%-0.25%	0.75%-1.00%	0.75%-1.00%	0 bps	75 bps
10-year Treasuries	1.51%	2.93%	2.78%	-15 bps	127 bps
US Dollar-DXY	95.64	104.56	103.06	-1.43%	7.76%
Crude Oil-CL=F	$75.44	$110.46	$112.70	2.03%	49.39%
Gold-GC=F	$1,830.30	$1,806.90	$1,843.90	2.05%	0.74%

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

• Retail sales in April rose 0.9% after increasing 1.4% in March. Retail sales advanced 8.2% since April 2021. Retail trade sales in April were up 0.7% from March and increased 6.7% over last year. Gasoline station sales dropped 2.7% last month but were up 36.9% from April 2021, while sales at food services and drinking places climbed 2.0% in April and were up 19.8% from last year.
• Industrial production increased for the fourth consecutive month following a 1.1% advance in April. Manufacturing output rose 0.8%, utilities moved up 2.4%, and mining gained 1.6%. Total industrial production in April was 6.4% above its year-earlier level.
• The housing market is showing definite signs of slowing. In April, building permits (-3.2%), housing starts (-0.2%), and housing completions (-5.1%) decreased from their respective March totals. In particular, single-family new home construction is beginning to wane. The number of single-family building permits issued in April was 4.6% below the March figure, while single-family housing starts (-7.3%), and housing completions (-4.9%) also declined.
• Sales of existing homes fell for the third consecutive month after declining 2.4% in April. Existing-home sales are down 5.9% since April 2021. According to the National Association of Realtors®, higher home prices and rising mortgage rates have limited buyer activity. The median existing-home price in April was $391,200, up from the March price of $374,800 and well ahead of the April 2021 price of $340,700. Unsold inventory sits at a 2.2 month supply at the current sales pace, slightly ahead of the March rate of 1.9 months. Sales of existing single-family homes also declined in April after dropping 2.5% from March. Single-family existing-home sales are off 4.8% from a year ago. The median existing single-family home price was $397,600 in April, higher than the $381,300 March price.
• The national average retail price for regular gasoline was $4.491 per gallon on May 16, $0.163 per gallon above the prior week’s price and $1.463 higher than a year ago. Also as of May 16, the East Coast price increased $0.20 to $4.43 per gallon; the Gulf Coast price rose $0.14 to $4.16 per gallon; the Midwest price climbed $0.15 to $4.30 per gallon; the West Coast price increased $0.14 to $5.36 per gallon; and the Rocky Mountain price increased $0.05 to $4.28 per gallon. Residential heating oil prices averaged $3.92 per gallon on May 13, about $0.03 per gallon less than the prior week’s price. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended May 13, which was 239,000 barrels per day more than the previous week’s average. During the week ended May 13, refineries operated at 91.8% of their operable capacity, while gasoline production decreased, averaging 9.6 million barrels per day.
• For the week ended May 14, there were 218,000 new claims for unemployment insurance, an increase of 21,000 from the previous week’s level, which was revised down by 6,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 7 was 0.9%, 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 7 was 1,317,000, a decrease of 25,000 from the previous week’s level, which was revised down by 1,000. This is the lowest level for insured unemployment since December 27, 1969, when it was 1,304,000. States and territories with the highest insured unemployment rates for the week ended April 30 were California (2.1%), New Jersey (2.0%), Alaska (1.8%), New York (1.5%), Puerto Rico (1.4%), Rhode Island (1.4%), Massachusetts (1.3%), Minnesota (1.3%), and Illinois (1.2%). The largest increases in initial claims for the week ended May 7 were in California (+3,046), Ohio (+772), Texas (+452), Arkansas (+393), and Iowa (+337), while the largest decreases were in New York (-9,899), Kentucky (-1,479), Indiana (-1,341), Florida (-746), and Massachusetts (-615).

Eye on the Week Ahead

Two important reports are available this week: one related to the economy and the other targeting inflation. The second estimate of the first-quarter gross domestic product is out this week. The economy decelerated at an annualized rate of 1.4%, according to the initial estimate. The April report on personal income and outlays is also available this week. The Personal Consumption Expenditures Price Index, a measure of inflationary trends favored by the Federal Reserve, shows prices have risen 6.6% since April 2021 — well above the 2.0% rate targeted by the Fed.

The Markets (as of market close May 13, 2022)

Despite a late-week rally, stocks closed last week lower, extending the market’s streak of losses to six consecutive weeks. In what proved to be a very choppy week of trading, each of the benchmark indexes lost value, led by the Nasdaq, which is down over 24.0% so far this year. The large caps of the Dow and the S&P 500 are down 11.4% and 15.6%, respectively, in 2022. On the other hand, 10-year Treasury yields have risen over 140 basis points so far this year. Last week, crude oil prices ended relatively flat, while the dollar advanced marginally. Gold prices slid lower. Investors are still grappling with the economic impact of the Federal Reserve’s response to persistent inflation. In a sign that inflation is still running hot, two major inflation reports, the Producer Price Index and the Consumer Price Index (see below) showed annual increases of 11.0% and 8.3% through April.

Last Monday saw the S&P 500 dip 3.2% to fall below 4,000 for the first time since March 2021. Investors moved away from stocks, uncertain of how aggressive the Federal Reserve will be to slow rising inflation. The Nasdaq fell 4.3% to its lowest level since November 2020. The Russell 2000 dropped 4.2%, and the Dow declined more than 650 points, or 2.0%. Ten-year Treasury yields slipped 4.4 basis points, but remained over 3.00%, closing the day at 3.07%. The dollar was flat. Crude oil prices fell $7.30 to $102.47 per barrel.

Stocks ended last Tuesday slightly higher in a day of choppy trading. The Nasdaq gained 1.0% and the S&P 500 rose 0.3%. The Dow inched up less than 0.1%, the Global Dow gained 0.1%, while the Russell 2000 lost 0.3%. Ten-year Treasury yields fell for the second consecutive day, sliding more than 10 basis points to 2.97%. Crude oil prices also dipped below $100.00, to close the day at around $99.87 per barrel. The dollar increased, while gold prices fell.

Wall Street saw stocks retreat last Wednesday, with each of the benchmark indexes listed here ending the day in the red. A drop in the Consumer Price Index (see below) wasn’t enough to temper investor concerns about rising inflation. Once again, the Nasdaq led the declines, dropping 3.2%, followed by the Russell 2000 (-2.5%), the S&P 500 (-1.7%), the Dow (-1.0%), and the Global Dow (-0.1%). Crude oil prices vaulted higher, jumping nearly $5.50 to reach $105.25 per barrel. The dollar and gold prices advanced, while 10-year Treasury yields fell to 2.92%.

Last Thursday was another day of extreme volatility in the market. Ultimately, the Nasdaq eked out a 0.1% gain, the Russell 2000 rose 1.2%, while the Dow (-0.3%) and the S&P 500 (-0.1%) dipped lower. Ten-year Treasury yields fell 10.4 basis points to 2.81% as bond prices climbed higher. Crude oil prices jumped for the second consecutive day, closing at $106.73 per barrel. The dollar also advanced, while gold prices fell.

In what may prove to be a robust day of dip buying, stocks rebounded last Friday. Each of the benchmark indexes listed here posted solid gains, led by the Nasdaq (3.8%) and the Russell 2000 (3.3%). The S&P 500 advanced 2.4%, the Global Dow rose 1.6%, and the Dow gained 1.5%. As equity values rose, so did bond yields, reversing a rally in bond prices. Ten-year Treasury yields added 11.8 basis points to reach 2.93%. Crude oil prices advanced over $4.00 to hit $110.30 per barrel. The dollar slid lower for the first time all week.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 5/13	Weekly Change	YTD Change
DJIA	36,338.30	32,899.37	32,196.00	-2.14%	-11.40%
Nasdaq	15,644.97	12,144.66	11,805.00	-2.80%	-24.54%
S&P 500	4,766.18	4,123.34	4,023.89	-2.41%	-15.57%
Russell 2000	2,245.31	1,839.56	1,792.67	-2.55%	-20.16%
Global Dow	4,137.63	3,805.92	3,743.16	-1.65%	-9.53%
Fed. Funds target rate	0.00%-0.25%	0.75%-1.00%	0.75%-1.00%	0 bps	75 bps
10-year Treasuries	1.51%	3.12%	2.93%	-19 bps	142 bps
US Dollar-DXY	95.64	103.67	104.56	0.86%	9.33%
Crude Oil-CL=F	$75.44	$110.56	$110.46	-0.09%	46.42%
Gold-GC=F	$1,830.30	$1,882.10	$1,806.90	-4.00%	-1.28%

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

• Inflation decelerated in April, according to the Consumer Price Index. The CPI rose 0.3% last month after advancing 1.2% in March. The year-over-year rate lowered from 8.5% in March to 8.3% in April. However, the CPI, excluding food and energy prices, rose 0.3 percentage point to 0.6% in April. Helping to pull the April CPI lower was a 2.7% drop in energy prices after increasing 11.0% in March. On the other hand, food prices rose 0.9% in April and have increased 9.4% over the last 12 months, the largest year-over-year increase since April 1981. Also, contributing to the April rise in the CPI were increases in prices for shelter, airline fares, new vehicles, medical care, recreation, and household furnishings and operations. Whether the April data is a sign of slowing inflation remains to be seen. It is unlikely to have an immediate impact on the fiscal tightening policy of the Federal Reserve.
• The Producer Price Index for April rose 0.5% after advancing 1.6% in March. Producer prices have increased 11.0% since April 2021. Energy and food prices increased last month and have risen 40.0% and 16.3%, respectively, over the past 12 months. Also marking a notable increase in April were prices for construction, which climbed 4.0%. Prices less foods, energy, and trade services moved up 0.6% in April after increasing 0.9% in March. For the 12 months ended in April, the index less foods, energy, and trade services rose 6.9%.
• In a sign that inflationary pressures may have peaked, April import prices were unchanged from a month earlier. Import prices are up 12.0% since April 2021. Fuel import prices declined 2.4% in April following a 17.3% increase the previous month, the first one-month drop since December 2021. Despite the decrease in April, import fuel prices rose 64.3% over the past 12 months. Nonfuel import prices increased 0.4% in April. Higher prices for nonfuel industrial supplies and materials, capital goods, foods, feeds, and beverages, and automotive vehicles all contributed to the April increase in nonfuel import prices. Nonfuel imports rose 7.2% over the past 12 months. Export prices advanced 0.6% last month after climbing 4.1% in March. Agricultural exports advanced 1.1% in April, after increasing 4.3% the previous month. Nonagricultural exports advanced 0.5% in April following an increase of 4.1% in March.
• The federal budget in April posted a $308.2 billion surplus, compared to a $225.6 billion deficit a year ago. Government receipts totaled $863.6 billion, or $548.4 billion more than March receipts and 97.0% above the total from April of last year. Government expenditures were $555.4 billion, or $47.6 billion more than March outlays. Through the first seven months of the fiscal year, the government budget deficit sits at $360.0 billion, 81.0% lower than the $1,931.8 billion shortfall over the same period last year. Contributing to the increase in government receipts this fiscal year is a 69.0% increase in individual income tax receipts. Also, employment and general retirement tax receipts are up 7.0% and corporate income taxes increased 22.0%.
• The national average retail price for regular gasoline was $4.328 per gallon on May 9, $0.146 per gallon above the prior week’s price and $1.367 higher than a year ago. Also as of May 9, the East Coast price increased $0.15 to $4.24 per gallon; the Gulf Coast price rose $0.15 to $4.01 per gallon; the Midwest price climbed $0.17 to $4.15 per gallon; the West Coast price increased $0.12 to $5.22 per gallon; and the Rocky Mountain price increased $0.04 to $4.23 per gallon. Residential heating oil prices averaged $3.95 per gallon on May 6, about $0.83 per gallon less than the prior week’s price. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended May 6, which was 230,000 barrels per day more than the previous week’s average. During the week ended May 6, refineries operated at 90.0% of their operable capacity, and gasoline production increased, averaging 9.7 million barrels per day.
• For the week ended May 7, there were 203,000 new claims for unemployment insurance, an increase of 1,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 30 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 30 was 1,343,000, a decrease of 44,000 from the previous week’s level, which was revised up by 3,000. This is the lowest level for insured unemployment since January 3, 1970, when it was 1,332,000. States and territories with the highest insured unemployment rates for the week ended April 23 were California (2.1%), New Jersey (2.1%), Alaska (1.9%), Rhode Island (1.8%), New York (1.7%), Puerto Rico (1.6%), Massachusetts (1.5%), Minnesota (1.5%), Pennsylvania (1.4%), Connecticut (1.3%), and Illinois (1.3%). The largest increases in initial claims for the week ended April 30 were in New York (+7,329), Illinois (+3,140), Kentucky (+1,152), Michigan (+1,092), and New Hampshire (+469), while the largest decreases were in Massachusetts (-3,029), California (-2,816), New Jersey (-2,466), Connecticut (-2,319), and Ohio (-2,018).

Eye on the Week Ahead

The April figures for existing home sales are out this week. The housing sector has slowed from last year’s torrid pace. Sales of existing homes have declined in both February and March. An indicator of consumer spending, the retail sales report for April is available this week. March saw retail sales advance 0.5%, bringing the year-over-year increase to 5.5%. Also out this week is the Federal Reserve’s monthly index of industrial production for April. Industrial production advanced 0.9% in March and is up 5.5% from March 2021.

The Markets (as of market close May 6, 2022)

Stocks ended last week lower, marking the fifth consecutive week of losses. Despite suggestions from Federal Reserve Chair Jerome Powell that the central bank is not likely to raise interest rates by 75 basis points, stubbornly high inflation has set the Fed on a path of quantitative tightening and interest-rate advances that presents a risk to economic growth. April’s solid jobs numbers (see below) suggest employers may be inclined to keep raising wages in order to attract workers, adding to inflationary pressures. Once again, tech shares took the brunt of the sell off, with only energy shares and utility stocks posting gains. The Nasdaq and the Russell 2000 each fell more than 1.2% last week, while the S&P 500 extended its losing streak after slipping 0.2%. Treasury bond prices continued to drop, pushing yields higher. Crude oil prices advanced again last week on supply concerns fueled by the impending European Union sanctions on Russian oil.

Stocks began last week on an uptick, likely influenced by dip buyers. Each of the benchmark indexes listed here gained ground, led by the Nasdaq, which rose 1.6% on the heels of a rally by several major tech companies. The Russell 2000 added 1.0%, the S&P 500 gained 0.6%, and the Dow climbed 3.0%. The Global Dow slid 0.5%. Ten-year Treasury yields traded near 3.0%, ending the day at 2.99%. The dollar rose $0.67 to reach $103.63 against a basket of foreign currencies. Crude oil prices increased $1.13 to $105.82 per barrel.

For the second session in a row, stocks ended the day higher last Tuesday as investors awaited Wednesday’s expected Federal Reserve rate hike. The Russell 2000 (1.0%) and the S&P 500 (0.5%) led the indexes, followed by the Global Dow (0.8%). The Nasdaq and the Dow each gained 0.2%. Crude oil prices, 10-year Treasury yields, and the dollar declined. Gold prices advanced.

Wall Street rallied last Wednesday after Jerome Powell eased concerns that the central bank would pursue a more aggressive pace of tightening. Nevertheless, earlier in the day, the Federal Open Market Committee announced the steepest interest-rate hike in 20 years. Each of the benchmark indexes listed here posted notable gains, with both the Nasdaq and the S&P 500 adding 3.0%. The Dow jumped 2.8% and the Russell 2000 advanced 2.7%. The Global Dow rose 1.8%. Ten-year Treasury yields slid 4.3 basis points to 2.91%. The dollar dropped nearly 1.0%, while crude oil prices soared, adding $5.50 to reach $107.90 per barrel after the European Union proposed an import ban on Russian oil.

The Wall Street rally from last Wednesday reversed to a retreat last Thursday as stocks plunged by the end of trading. The Nasdaq fell 5.0%, the Russell 2000 dropped 4.3%, the S&P 500 slid 3.6%, and the Dow declined 3.1%. The Global Dow gave back 1.8%. Ten-year Treasury yields added nearly 15 basis points to close at 3.06%, the highest rate since 2018. The dollar rose to $103.50. Crude oil prices jumped to $108.25 per barrel.

Stocks fell again last Friday to end a roller-coaster week. The small caps of the Russell 2000 (-1.7%) and the tech-heavy Nasdaq (-1.4%) led the declining indexes, followed by the S&P 500 (-0.6%), the Global Dow (-0.4%), and the Dow (-0.3%). Ten-year Treasury yields gained 5.7 basis points to end the week at 3.12%. Crude oil prices topped $110.00 per barrel after climbing $2.23. The dollar was little changed, while gold prices advanced $6.10 to $1,881.80 per ounce.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 5/6	Weekly Change	YTD Change
DJIA	36,338.30	32,977.21	32,899.37	-0.24%	-9.46%
Nasdaq	15,644.97	12,334.64	12,144.66	-1.54%	-22.37%
S&P 500	4,766.18	4,131.93	4,123.34	-0.21%	-13.49%
Russell 2000	2,245.31	1,862.16	1,839.56	-1.21%	-18.07%
Global Dow	4,137.63	3,815.07	3,805.92	-0.24%	-8.02%
Fed. Funds target rate	0.00%-0.25%	0.25%-0.50%	0.75%-1.00%	50 bps	75 bps
10-year Treasuries	1.51%	2.88%	3.12%	24 bps	161 bps
US Dollar-DXY	95.64	103.17	103.67	0.48%	8.40%
Crude Oil-CL=F	$75.44	$104.07	$110.56	6.24%	46.55%
Gold-GC=F	$1,830.30	$1,897.90	$1,882.10	-0.83%	2.83%

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

• As expected, the Federal Open Market Committee increased the target range for the federal funds rate by 50 basis points to 0.75%-1.00%. The Committee anticipates that ongoing increases in the target range will be appropriate. In addition, the FOMC decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1. In support of its decision, the Committee noted that, despite strength in household spending and employment, overall economic activity edged down in the first quarter, while inflation remained elevated. This led to supply-and-demand imbalances related to the pandemic, higher energy prices, and broader price pressures. The FOMC also said the implications on the U.S. economy resulting from the invasion of Ukraine by Russia are highly uncertain. However, the invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply-chain disruptions. The Committee made it a point to state that it is “highly attentive” to inflation risks.
• The employment sector continued to show strength in April, with 428,000 new jobs added. Job gains were widespread, with the largest increases occurring in leisure and hospitality, in manufacturing, and transportation and warehousing. Total employment is nearing its February 2020 pre-pandemic level but remains down by 1.2 million, or 0.8%. In April, the unemployment rate, at 3.6%, was unchanged from the previous month, and the total number of unemployed persons edged down to 5.9 million. In another sign of the employment sector’s recovery from the pandemic, both the unemployment rate and the total number of unemployed are near their February 2020 levels (3.5% and 5.7 million, respectively). In April, both the labor force participation rate, at 62.2%, and the employment-population ratio, at 60.0%, were little changed over the previous month. In April, 7.7% of employed persons teleworked because of the coronavirus pandemic, down from 10.0% in March. In April, 1.7 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, which is down 2.5 million from the previous month. Average hourly earnings rose by $0.10, or 0.3%, to $31.85 in April. Over the past 12 months, average hourly earnings have increased by 5.5%. The average work week was unchanged at 34.6 hours in April.
• Manufacturing improved in April, according to the latest S&P Global US Manufacturing PMI™. The S&P Global US Manufacturing Purchasing Managers’ Index™ posted 59.2 in April, up from 58.8 in March. The rate of growth accelerated for the third consecutive month and was the sharpest since last September. Contributing to the uptick in manufacturing was a faster rise in output during April as new orders increased. Although manufacturing expanded in April, severe material and capacity shortages at suppliers led to sharper increases in cost burdens and selling prices.
• The S&P Global US Services PMI Business Activity Index registered 55.6 in April, down from 58.0 in March. The April reading marked an uptick in business activity in the services sector, but at a slower pace than in the previous month. At the same time, cost burdens rose substantially in April. Higher wage, transportation, and material costs drove up input prices. Service providers mentioned greater food, energy and fuel costs in particular. The rate of input price inflation accelerated for the third successive month to the fastest in more than 11 years. Service firms attempted to pass on the price increases to customers, which weighed on customer spending.
• According to the latest Job Openings and Labor Turnover report, at the end of March there were 11.5 million job openings, the highest level in the history of the series, which began in December 2000. Job openings increased in retail trade (+155,000) and in durable goods manufacturing (+50,000). Job openings decreased in transportation, warehousing, and utilities (-69,000); state and local government education (-43,000); and federal government (-20,000). Also in March, there were 6.7 million hires. On the other side of the ledger, 6.3 million people were separated from their jobs, including 4.5 million quits and 1.4 million layoffs and discharges, along with 380,000 other separations. Over the 12 months ended in March, hires totaled 77.7 million and separations totaled 71.4 million, yielding a net employment gain of 6.3 million.
• The goods and services trade deficit was $109.8 billion in March, up $20.0 billion, or 22.3%, from the February deficit. Exports increased 5.6% while imports vaulted 10.3% in March. Year to date, the goods and services deficit increased $84.8 billion, or 41.5%, from the same period in 2021. Exports increased $104.5 billion, or 17.7%. Imports increased $189.3 billion, or 23.8%. Of particular note, the trade in goods deficit with China increased $7.4 billion in March; the goods deficit with Canada rose $3.7 billion; while the goods deficit with the European Union decreased $1.3 billion.
• The national average retail price for regular gasoline was $4.182 per gallon on May 2, $0.075 per gallon above the prior week’s price and $1.292 higher than a year ago. Also as of April 25, the East Coast price increased $0.11 to $4.09 per gallon; the Gulf Coast price rose $0.07 to $3.86 per gallon; the Midwest price climbed $0.07 to $3.99 per gallon; the West Coast price increased $0.02 to $5.10 per gallon; and the Rocky Mountain price was unchanged at $4.19 per gallon. Residential heating oil prices averaged $4.78 per gallon on April 29, about $0.84 per gallon more than the prior week’s price. U.S. crude oil refinery inputs averaged 15.5 million barrels per day during the week ended April 29, which was 218,000 barrels per day less than the previous week’s average. During the week ended April 29, refineries operated at 88.4% of their operable capacity, and gasoline production increased, averaging 9.7 million barrels per day.
• For the week ended April 30, there were 200,000 new claims for unemployment insurance, an increase of 19,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 23 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 23 was 1,384,000, a decrease of 19,000 from the previous week’s level, which was revised down by 5,000. This is the lowest level for insured unemployment since February 17, 1970, when it was 1,371,000. States and territories with the highest insured unemployment rates for the week ended April 16 were California (2.1%), New Jersey (2.1%), Alaska (1.9%), Minnesota (1.6%), New York (1.6%), Illinois (1.5%), Puerto Rico (1.5%), Connecticut (1.4%), Massachusetts (1.4%), Michigan (1.4%), and Rhode Island (1.4%). The largest increases in initial claims for the week ended April 23 were in New York (+4,760), Massachusetts (+3,491), Connecticut (+1,045), Georgia (+932), and New Jersey (+888), while the largest decreases were in California (-2,860), Ohio (-2,609), Michigan (-1,887), Washington (-475), and Minnesota (-453).

Eye on the Week Ahead

Inflation data for April is available this week, including the Consumer Price Index. Consumer prices advanced 1.2% in March and were up 6.5% since March 2021. The Producer Price Index is also available this week. March showed that prices at the producer level rose 1.4% and are up a notable 11.2% for the 12 months ended in March. Another indicator of inflationary trends is the report on import and export prices. Import prices climbed 2.6% in March, while export prices rose 4.5%. Since March 2021, import prices have risen 12.5%, and export prices have climbed 18.8%.

The Markets (as of market close April 29, 2022)

April saw rising COVID cases in China prompt the shutdown of some of its biggest cities, causing global supply-chain issues. The ongoing war in Ukraine continues to exacerbate pressure on food and energy prices. While first-quarter earnings data was moderately favorable overall, several major companies reported disappointing results. And inflation continued to rise, leading to an almost certain 50-basis point interest rate increase from the Federal Reserve this week.

All of this led to April being a rather difficult month for Wall Street, capping the worst four-month start to a year in decades. The Dow and the S&P 500 endured the worst monthly returns since March 2020, but they weren’t as bad as the Nasdaq, which suffered its biggest drop since October 2008, according to Dow Jones Market Data.

Ten-year Treasury yields climbed 56 basis points to settle at 2.88%. Crude oil prices advanced $3.13 to $104.07 per barrel. Prices at the pump fell in April as the national average retail price for regular gasoline was $4.107 per gallon on April 25, up from the March 28 price of $4.334 per gallon. Gold prices decreased after climbing well above $1,900.00 per ounce in March. The U.S. dollar hit a 20-year high before pulling back but still posted the best month since January 2015.

Stock Market Indexes

Market/Index	2021 Close	Prior Month	As of April 29	Monthly Change	YTD Change
DJIA	36,338.30	34,678.35	32,977.21	-4.91%	-9.25%
Nasdaq	15,644.97	14,220.52	12,334.64	-13.26%	-21.16%
S&P 500	4,766.18	4,530.41	4,131.93	-8.80%	-13.31%
Russell 2000	2,245.31	2,070.13	1,862.16	-10.05%	-17.06%
Global Dow	4,137.63	4,098.73	3,815.07	-6.92%	-7.80%
Fed. Funds target rate	0.00%-0.25%	0.25%-0.50%	0.25%-0.50%	0 bps	25 bps
10-year Treasuries	1.51%	2.32%	2.88%	56 bps	137 bps
US Dollar-DXY	95.64	98.35	103.17	4.90%	7.87%
Crude Oil-CL=F	$75.44	$100.94	$104.07	3.10%	37.95%
Gold-GC=F	$1,830.30	$1,941.50	$1,897.90	-2.25%	3.69%

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

Latest Economic Reports

• Employment: Employment rose by 431,000 in March after 750,000 new jobs were added in February. Notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and manufacturing. The unemployment rate inched down by 0.2 percentage point to 3.6%. The number of unemployed persons decreased 318,000 in March to 6.0 million. These measures are little different from their pre-pandemic values in February 2020 (3.5% and 5.7 million, respectively). Among the unemployed, the number of workers who permanently lost their jobs declined by 191,000 to 1.4 million in March. Also in March, the number of persons who were unable to work because their employer closed or lost business due to the pandemic fell to 2.5 million — down from 4.2 million in the previous month. The labor-force participation rate increased 0.1 percentage point to 62.4% in March. The employment-population ratio increased by 0.2 percentage point to 60.1%. In March, average hourly earnings rose by $0.13 to $31.73. Over the last 12 months, average hourly earnings rose by 5.6%. The average work week fell by 0.1 hour to 34.6 hours in March.
• There were 180,000 initial claims for unemployment insurance for the week ended April 23. Over the first four months of 2022, initial weekly claims and total claims for unemployment insurance benefits steadily decreased. As of April 16, there were 1,408,000 total claims for unemployment benefits. This is the lowest level for insured unemployment since February 7, 1970, when it was 1,397,000. A year ago, there were 3,776,000 total claims for unemployment insurance benefits.
• FOMC/interest rates: The Federal Open Market Committee did not meet in April. However, with inflation sitting above 6.0% for the sixth consecutive month and continuously increasing since December 2020, pressure will be on the Federal Reserve to increase interest rates by at least 50 basis points following its meeting in May. The FOMC increased the federal funds target rate range by 25 basis points to 0.25%-0.50% after its March meeting, the first such increase since December 2018.
• GDP/budget: Gross domestic product fell 1.4% in the first quarter of 2022 compared with a 6.9% advance in the fourth quarter of 2021. While data for this advance estimate of GDP is based on incomplete information, the decrease in GDP primarily reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Consumer spending, as measured by personal consumption expenditures, was 2.7% in the first quarter (2.5% in the previous quarter). Spending on goods rose 4.1%, while spending on services climbed 4.3%. The PCE price index, a measure of inflation, increased 7.0% in the first quarter after advancing 6.4% in the fourth quarter. Gross private domestic investment, which includes nonresidential and residential fixed investment, vaulted 2.3% in the first quarter after gaining 36.7% in the previous quarter. Nonresidential (business) fixed investment increased 9.2% (2.9% in the fourth quarter), while residential fixed investment increased 2.1% (2.2% in the fourth quarter). Net exports declined 5.9% in the first quarter, with goods exports dropping 9.6% while services rose 3.8%. Imports climbed 17.7% following a 17.9% rise in the fourth quarter.
• The Treasury budget deficit came in at $192.7 billion in March, 12.4% less than the February deficit of $216.6 billion and 71.0% under the March 2021 deficit of $659.6 billion. Through the first six months of fiscal year 2022, the deficit sits at $668.3 billion, 155.0% lower than the deficit over the same period in fiscal year 2021 ($1.71 trillion). So far in this fiscal year, individual income tax receipts have risen 36.0% and corporate income tax receipts have increased 22.0%. Compared to March 2021, government expenditures are down 45.0%, while receipts are up 18.0%.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report for March, personal income and disposable personal income rose 0.5% after each increased 0.7% in February. Consumer spending increased 1.1% following a 0.6% jump in February. Consumer prices climbed 0.9% in March after advancing 0.5% the previous month. Consumer prices have risen 6.6% since March 2021. Year over year, energy prices vaulted 33.9%, while food prices increased 9.2%.
• The Consumer Price Index increased 1.2% in March after climbing 0.8% in the previous month. Increases in the indexes for gasoline, shelter, and food were the largest contributors to the CPI increase. The gasoline index rose 18.3% in March and accounted for over half of the overall March increase. Since March 2021, the CPI has risen 8.5% — the largest increase since the 12-month period ended December 1981.

• Prices that producers receive for goods and services jumped 1.4% in March following a 0.9% increase in February. Producer prices have increased 11.2% since March 2021. Prices less foods, energy, and trade services increased 0.9% in March, the largest increase since rising 1.0% in January 2021. For the year, prices less foods, energy, and trade services moved up 7.0%. In March, prices for goods jumped 2.3%, while prices for services rose 0.9%. A major factor in the March increase in goods prices was a 5.7% increase in energy prices.

• Housing: Sales of existing homes declined for the second consecutive month, falling 2.7% in March after dropping 7.2% in February. Year over year, existing home sales were 4.5% under the March 2021 estimate. According to the latest survey from the National Association of Realtors®, home shoppers are feeling the effects of rising mortgage rates and higher inflation. The median existing-home price was $375,300 in March, up from $357,300 in February and 15.0% more than March 2021 ($326,300). Unsold inventory of existing homes represents a 2.0-month supply at the current sales pace. Sales of existing single-family homes also fell in March, down 2.7% after dropping 7.0% in February. Since March 2021, sales of existing single-family homes have fallen 3.8%. The median existing single-family home price was $382,000 in March, up from $363,800 in February.
• Sales of new single-family homes fell 8.6% in March after decreasing 2.2% (revised) in February. The median sales price of new single-family houses sold in March was $436,700 ($421,600 in February). The March average sales price was $523,900 ($508,100 in February). The inventory of new single-family homes for sale in March represented a supply of 5.7 months at the current sales pace, up from February’s 5.3-month supply. Sales of new single-family homes in March were 12.6% below the March 2021 estimate.
• Manufacturing: Industrial production increased 0.9% in March, the same increase as in February. All three major industry groups advanced in March. Manufacturing rose 0.9%, mining increased 1.7%, and utilities climbed 0.4%. Total industrial production in March was 5.5% higher than it was a year earlier. Since February 2021, manufacturing has risen 4.9%, mining has jumped 7.0%, while utilities increased 7.5%.
• March saw new orders for durable goods increase 0.8% following a 1.7% February decrease. Excluding transportation, new orders rose 1.1% in March. Excluding defense, new orders increased 1.2%. While the March advance was widespread, areas of particular note include computers and electronic products (2.6%), electrical equipment, appliances, and components (3.9%), and motor vehicles and parts (5.0%). New orders for nondefense capital goods decreased 0.5% in March, while new orders for defense capital goods slid 5.6% lower. Since March 2021, new orders for durable goods have increased 12.6%.
• Imports and exports: Import prices rose 2.6% in March after advancing 1.6% in February, according to the U.S. Bureau of Labor Statistics. The March increase in import prices was the largest monthly rise since April 2011. Import prices have advanced 12.5% since March 2021. Higher fuel prices drove the increases in both months. Contributing to the March increase in import prices was a 14.6% jump in fuel prices after increasing 10.0% the previous month. Prices for nonfuel imports rose 1.2% in March. For the 12 months ended in March, prices for fuel have increased 66.7%. Prices for U.S. exports advanced 4.5% in March following a 3.0% rise the previous month. The March advance in export prices was the largest since January 1989. Higher prices for both agricultural and nonagricultural exports in March contributed to the overall increase in U.S. export prices. Export prices have risen 18.8% since March 2021 — the largest over-the-year increase since 12-month percent changes were first published in September 1984.
• The international trade in goods deficit was $125.3 billion in March, up $19.0 billion, or 17.8%, from February. Exports of goods were $169.3 billion in March, $11.4 billion more than in February. Imports of goods were $294.6 billion, $30.3 billion more than February imports. The 11.5% increase in imports was spread among most major categories, particularly industrial supplies (15.0%), consumer goods (13.6%), autos (12.0%), capital goods (7.6%), and food, feeds, and beverages (6.2%). While gains in exports were smaller (7.2%), they were also widespread, with notable increases in industrial supplies (12.3%), autos, (8.4%), consumer goods (3.1%), and capital goods (1.7%).
• The latest information on international trade in goods and services, released April 5, is for February and shows that the goods and services trade deficit decreased $0.1 billion, or 0.1%, to $89.2 billion. February exports were $228.6 billion, 1.8% above the January estimate. February imports were $317.8 billion, 1.3% more than January imports. Year over year, the goods and services deficit increased $45.7 billion, or 34.5%, from the same period in 2021. Exports increased 17.6%. Imports increased 22.0%.
• International markets: The European Union saw a modest uptick in its first-quarter gross domestic product. However, the economy could be facing a significant slowdown as Russia’s war with Ukraine has kept energy costs high and reduced household spending power. The World Bank forecasts that the Russia-Ukraine war could drive energy prices up by more than 50.0% from last year, and food prices are projected to rise nearly 23.0%. Also, citing the war’s impact on energy and food prices, the International Monetary Fund last week offered sizable cuts in its forecasts for economic growth for 2022 and 2023. The IMF projects global growth will slow to 3.6% in 2022 (6.1% in 2021), with an additional 0.2 percentage point drop in 2023. A spike in COVID cases in China prompted Beijing to institute lockdowns, which impacted global economies still trying to recover from the pandemic. Overall, for the markets in April, the STOXX Europe 600 Index dipped 1.8%. The United Kingdom’s FTSE was flat. Japan’s Nikkei 225 Index declined 3.5%, while China’s Shanghai Composite Index dropped 7.2%.
• Consumer confidence: The Conference Board Consumer Confidence Index® decreased slightly in April following an increase in March. The index stands at 107.3 in April, down from 107.6 in March. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 152.6 in April, down from 153.8 in March. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, inched higher to 77.2 in April from 76.7 in March.

Eye on the Month Ahead

The Federal Open Market Committee meets in May for the first time since March. It is expected that the Committee will follow its most recent 25-basis point rate increase with a rate hike of at least 50 basis points. Many analysts expect the economy and stock market to be impacted by the ongoing Russia-Ukraine conflict and the restrictive monetary policy adopted by the Federal Reserve as it attempts to slow rising inflation.

The Markets (as of market close April 29, 2022)

The markets seemed to react with fear last week. The major indexes fell, with about 90% of S&P 500 stocks losing ground and every major market sector closing in the red. Investors turned to bonds, sending the price of 10-year Treasury notes up and the yield down. Wall Street is also preparing for what is expected to be the first 50-basis point increase in the federal funds rate since 2000, following the meeting of the Federal Open Market Committee this Tuesday and Wednesday. The Nasdaq (-3.9%) and the Russell 2000 (-4.1%) led the drop in the indexes, followed by the S&P 500 (-3.3%), the Global Dow (-3.0%), and the Dow (-2.5%). Crude oil prices added more than $3.00 to climb past $104.00 per barrel. The dollar advanced, while gold prices slid.

Last Monday, tech stocks posted solid gains, helping to drive the major benchmark indexes higher. Conversely, stocks that move with the economy slid lower as a rise in COVID-19 cases in China raised concerns about a global economic slowdown. Energy, materials, real estate, and utilities were sectors that performed poorly, while communication services, consumer discretionary, and information technology moved higher. Among the market indexes, the Nasdaq (1.3%) led the advance, followed by the Dow (0.7%), the Russell 2000 (0.7%), and the S&P 500 (0.6%). The Global Dow fell 1.3%. Ten-year Treasury yields dipped 8 basis points to close at 2.82%. The dollar continued to rise, increasing $0.52 to $101.74. Crude oil prices dropped $3.34 to $98.73 per barrel.

Stocks fell last Tuesday, unable to maintain the previous day’s momentum. Disappointing first-quarter earnings data from some major companies, coupled with more shutdowns in China in response to the increasing spread of the coronavirus, helped drive stocks to a six-week low. The Nasdaq (-4.0%) and the Russell 2000 (-3.3%) dropped the furthest, followed by the S&P 500 (-2.8%), the Dow (-2.4%), and the Global Dow (-1.6%). Bond prices continued to climb, pulling yields lower, with 10-year Treasury yields slipping 5.4 basis points to 2.77%. The dollar, crude oil, and gold prices advanced.

Equities closed last Wednesday with mixed results following a choppy day of trading. The Dow and the S&P 500 edged up 0.2%, while the Russell 2000 and the Global Dow fell 0.3%. The Nasdaq ended the day flat. Ten-year Treasury yields ended a streak of declines after rising 4.6 basis points to close at 2.81%. Crude oil prices climbed to $102.24 per barrel as the European Union’s ban on Russian crude gained support from Germany. The dollar rose higher for the sixth straight session.

Wall Street continued to be marked by volatility as stocks shot higher last Thursday. Favorable first-quarter earnings reports from several large companies provided the impetus behind the market’s best rally in seven weeks. The Nasdaq jumped 3.1% and the S&P 500 added 2.5% to lead the benchmark indexes listed here. The Dow (1.9%), the Russell 2000 (1.8%), and the Global Dow (1.3%) also edged higher. Bond prices slid, pushing yields higher, with 10-year Treasuries gaining 4.5 basis points to 2.86%. Crude oil prices also advanced, gaining $3.31 to reach $105.33 per barrel. The dollar rose again, as did gold prices. Stocks closed last Friday in the red, with each of the benchmark indexes listed here losing value. Disappointing first-quarter earnings reports from some major tech companies drove tech shares lower, causing the S&P 500 (-3.6%) and the Nasdaq (-4.2%) to tumble. The Dow lost nearly 900 points, ultimately giving back 2.8% by the close of trading last Friday. The Russell 2000 fell about 3.0% and the Global Dow slipped 1.0%. Ten-year Treasury yields rose 2.4 basis points to 2.88%. Crude oil prices declined $1.30 to $104.07 per barrel. The dollar dipped for the first time in several sessions.

Stock Market Indexes

Market/Index	2021 Close	Prior Week	As of 4/29	Weekly Change	YTD Change
DJIA	36,338.30	33,811.40	32,977.21	-2.47%	-9.25%
Nasdaq	15,644.97	12,839.29	12,334.64	-3.93%	-21.16%
S&P 500	4,766.18	4,271.78	4,131.93	-3.27%	-13.31%
Russell 2000	2,245.31	1,940.66	1,862.16	-4.05%	-17.06%
Global Dow	4,137.63	3,933.14	3,815.07	-3.00%	-7.80%
Fed. Funds target rate	0.00%-0.25%	0.25%-0.50%	0.25%-0.50%	0 bps	25 bps
10-year Treasuries	1.51%	2.90%	2.88%	-2 bps	137 bps
US Dollar-DXY	95.64	101.11	103.17	2.04%	7.87%
Crude Oil-CL=F	$75.44	$101.22	$104.07	2.82%	37.95%
Gold-GC=F	$1,830.30	$1,934.40	$1,897.90	-1.89%	3.69%

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

• Not unexpectedly, the initial, or advance, estimate of the first quarter gross domestic product for 2022 slid 1.4% after increasing 6.9% in the fourth quarter of 2021. While this data is somewhat incomplete and based on assumptions, as these numbers will probably change when more complete data becomes available over the next two months. Also, much of the decline in GDP is likely due more to geopolitical events (e.g., the Ukraine war, China COVID lockdown) and not necessarily attributable to significant weakness in the U.S. economy. A primary cause in the decrease in GDP can be traced to an expansion of net exports. Goods exports fell 9.6%, while exports of services rose 3.8%. On the other hand, imports of goods rose 20.5%, and services advanced 4.1%. There were also negative contributions from private inventories and government expenditures. However, an important economic indicator, personal consumption expenditures, increased 2.7% (2.5% in the fourth quarter). Also of note, the personal consumption expenditures price index, a measure of inflation, increased 7.0% compared with an increase of 6.4% in the previous quarter.
• Overall, income and prices climbed higher in March, further evidence of rising inflationary pressures. According to the latest data from the Bureau of Economic Analysis, both personal income and disposable personal income increased 0.5% in March. The personal consumption price index, a measure of inflation valued by the Federal Reserve, increased 0.9% in March and 6.6% from one year ago. Energy prices climbed 33.9%, while food prices advanced 9.2%. Excluding food and energy, prices have increased 5.2% since March 2021. Consumer spending climbed 1.1% in March. Wages and salaries advanced 0.6% in March, while payouts for unemployment insurance benefits fell 7.2% as the job market recovers from pandemic-related layoffs. Consumers spent more on nondurable goods such as food and energy and services. Expenditures on durable goods fell 1.0%.
• New orders for durable goods rose 0.8% in March, rebounding from a 1.7% decrease in February. Excluding transportation, new orders increased 1.1%. Excluding defense, new orders increased 1.2%. Computers and electronic products, up for two of the last three months, led the increase, climbing 2.6%. New orders for nondefense capital goods decreased 0.5% in March, and new orders for defense capital goods fell 5.6%. Over the 12 months ended in March, new orders for durable goods have advanced 12.6%.
• Sales of new single-family homes fell 8.6% in March and are 12.6% below the March 2021 estimate. The median sales price of new houses sold in March 2022 was $436,700. The average sales price was $523,900. In March, inventory of new single-family homes for sale represented a supply of 6.4 months at the current sales rate.
• The advance report on the international trade in goods deficit, released April 27, shows that the trade deficit for March rose $19.0 billion, or 17.8%, to $125.3 billion. Exports increased $11.4 billion, or 7.2%, in March. Imports rose $30.3 billion, or 11.5%, in March. Since March 2021, the trade in goods balance has increased 37.3%.
• The national average retail price for regular gasoline was $4.107 per gallon on April 25, $0.041 per gallon above the prior week’s price and $1.235 higher than a year ago. Also as of April 25, the East Coast price increased $0.06 to $3.98 per gallon; the Gulf Coast price rose $0.06 to $3.79 per gallon; the Midwest price climbed $0.04 to $3.92 per gallon; the West Coast price decreased $0.01 to $5.08 per gallon; and the Rocky Mountain price edged up $0.04 to $4.19 per gallon. Residential heating oil prices averaged $3.94 per gallon on April 22, about $0.08 per gallon more than the prior week’s price. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended April 22, which was 33,000 barrels per day less than the previous week’s average. During the week ended April 22, refineries operated at 90.3% of their operable capacity, and gasoline production decreased, averaging 9.5 million barrels per day.
• For the week ended April 23, there were 180,000 new claims for unemployment insurance, a decrease of 5,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 16 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 16 was 1,408,000, a decrease of 1,000 from the previous week’s level. This is the lowest level for insured unemployment since February 7, 1970, when it was 1,397,000. States and territories with the highest insured unemployment rates for the week ended April 9 were California (2.2%), New Jersey (2.2%), Alaska (1.9%), Minnesota (1.8%), New York (1.6%), Rhode Island (1.6%), Illinois (1.5%), Massachusetts (1.5%), Pennsylvania (1.3%), and Puerto Rico (1.3%). The largest increases in initial claims for the week ended April 16 were in Connecticut (+1,391), New Jersey (+1,116), Rhode Island (+368), Montana (+340), and Maryland (+147), while the largest decreases were in Missouri (-7,498), Michigan (-3,509), New York (-2,956), Ohio (-2,902), and Texas (-2,330).

Eye on the Week Ahead

The Federal Open Market Committee meets this week, the results of which are almost certainly to include at least a 50-basis point interest-rate hike. The April employment figures are also available this week. There were 431,000 new jobs added in March. Average hourly earnings have risen 5.6% since March 2021.