Author: dredheadz

The Markets (as of market close June 23, 2023)

Recession fears sent stocks lower during the holiday-shortened week. Each of the benchmark indexes listed here closed in the red, with the small caps of the Russell 2000 and the Global Dow losing over 2.50%. The downturn ended a three-week rally for the Dow, a five-week winning streak for the S&P 500, and an eight-week surge by the Nasdaq. Concerns about rising interest rates and slowing economic growth weighed on equities. Rising inflation in Europe and Asia prompted more interest rate hikes by many central banks, which also dampened market growth. Ten-year Treasury yields dipped lower, while the dollar eked out a gain. Gold prices declined for the second straight week. Crude oil prices declined on fears of waning demand.

Wall Street ended last Tuesday lower as investors awaited House testimony from Federal Reserve Chair Jerome Powell, hoping to glean any clues as to the prospects of further interest rate hikes. Each of the benchmark indexes listed here closed the session lower, with the Dow falling 0.7%, followed by the Global Dow (-0.6%), the S&P 500 (-0.5%), the Russell 2000 (-0.4%), and the Nasdaq (-0.2%). Crude oil prices slid 1.2% to close at around $70.94 per barrel amid concerns over weakening demand. Ten-year Treasury yields declined 4.0 basis points to settle at 3.72%. The dollar was flat, while gold prices dipped lower.

Last Wednesday saw stocks fall for the second straight session, following Federal Reserve Chair Jerome Powell’s intimation that interest rate increases will continue until inflation recedes to the Fed’s 2.0% target rate. Tech shares slid lower, dragging the Nasdaq down 1.2%. The S&P 500 fell 0.5%, the Dow dipped 0.3%, the Russell 2000 declined 0.2%, and the Global Dow ended where it began. Crude oil prices rebounded, rising nearly 2.0% to reach $72.58 per barrel. Ten-year Treasury yields fell 0.6 basis points to close at 3.72%. The dollar dropped nearly 0.5%, while gold prices fell 0.2%.

Stocks ended last Thursday with mixed results. The Nasdaq (1.0%) and the S&P 500 (0.4%) posted gains, buoyed by rallies in consumer discretionary, information technology, and communications. The small caps of the Russell 2000 (-0.9%) and the Global Dow (-0.4%) slid lower. The Dow was flat. Several central banks, including the Bank of England, raised interest rates, following a spike in inflation data. Ten-year Treasury yields closed at 3.79%, up 7.6 basis points from the previous day. Crude oil prices plunged 4.3%, to $69.38 per barrel, impacted by the aforementioned interest rate hikes. The dollar rose 0.3%, while gold prices fell 1.1%.

Last Friday saw stocks close lower, with each of the benchmark indexes listed here losing value. The Russell 2000 fell the furthest, dropping 1.4%, followed by the Global Dow (-1.1%), the Nasdaq (-1.0%), the S&P 500 (-0.8%), and the Dow (-0.7%). Ten-year Treasury yields slipped 6.0 basis points, settling at 3.73%. Crude oil prices declined 0.4% to end the day at about $69.34 per barrel. The dollar and gold prices advanced.

Stock Market Indexes

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 number of residential building permits issued in May rose 5.2% over the previous month’s total, but was 12.7% below the May 2022 rate. Issued building permits for single-family construction in May rose 4.8% above the April figure. Housing starts increased 21.7% in May and are 5.7% above the May 2022 rate. Single-family housing starts jumped 18.5% in May. The overall rise in housing starts was driven by construction in the Midwest, which saw the number of housing starts increase 66.9% in May. Lastly, housing completions in May were 9.5% above the April total. Single-family housing completions were 3.9% above April’s pace.
• Existing home sales inched up 0.2% in May from April, but were down 20.4% from May 2022. According to the latest report from the National Association of REALTORS®, rising mortgage rates and lower inventory have impacted sales of existing homes. Total housing inventory sat at a three-month supply at the current sales pace, up from 2.9 months in April. The median existing-home price for all housing types in May was $396,100, up from $385,900 in April, but down from $408,600 in May 2022. Sales of single-family homes dipped 0.3% in May and 20.0% from May 2022. The median existing single-family home price was $401,100 in May, 2.8% above the April figure ($390,200), but down 3.4% from May 2022 ($415,400).
• The national average retail price for regular gasoline was $3.577 per gallon on June 19, $0.018 per gallon lower than the prior week’s price and $1.385 less than a year ago. Also, as of June 19, the East Coast price decreased $0.013 to $3.419 per gallon; the Midwest price fell $0.024 to $3.489 per gallon; the Gulf Coast price declined $0.036 to $3.109 per gallon; the Rocky Mountain price increased $0.014 to $3.721 per gallon; and the West Coast price dipped $0.015 to $4.569 per gallon.
• For the week ended June 17, there were 264,000 new claims for unemployment insurance, unchanged 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 June 10 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 10 was 1,759,000, a decrease of 13,000 from the previous week’s level, which was revised down by 3,000. States and territories with the highest insured unemployment rates for the week ended June 3 were California (2.3%), New Jersey (2.1%), Massachusetts (1.9%), New York (1.6%), Oregon (1.6%), Puerto Rico (1.6%), Rhode Island (1.5%), Washington (1.5%), Illinois (1.4%), Nevada (1.4%), and Pennsylvania (1.4%). The largest increases in initial claims for unemployment insurance for the week ended June 10 were in Texas (+7,327), Minnesota (+3,653), Pennsylvania (+3,455), Georgia (+1,918), and Indiana (+1,591), while the largest decreases were in Tennessee (-716), Massachusetts (-655), Idaho (-313), and Iowa (-200).

Eye on the Week Ahead

There’s plenty of important economic data available this week, including two of the more important economic indicators; gross domestic product and the report on personal income and outlays. The third and final iteration of first-quarter GDP is released this week. The latest data showed the economy advanced at a rate of 1.3%. Also, the report on personal income and outlays includes two important sub-categories: personal consumption expenditures and the personal consumption expenditures price index. Consumer spending rose 0.8% in April, while consumer prices for goods and services increased 0.4%.

The Markets (as of market close June 16, 2023)

Stocks advanced for the third straight week, as each of the benchmark indexes listed here climbed higher. Inflationary pressures may finally be subsiding, according to the latest data (see below). In addition, the Federal Reserve held interest rates at their current range following their meeting last week, although there are indications that at least one, and possibly two more rate hikes are in store by the end of the year. With more interest rate hikes forecast, long- and short-term Treasury yields advanced. Despite a dip at the end of the week, the Nasdaq and the S&P 500 had their best week since March. Crude oil prices ebbed and flowed throughout much of the week, ultimately rallying to close higher. The dollar and gold prices declined.

Wall Street saw stocks rally last Monday ahead of inflation data and the Federal Reserve meeting. Traders may have acted based on the anticipation that the Fed would not hike interest rates. Information technology, consumer discretionary, and communication services led the market sectors. The Nasdaq gained 1.5%, the S&P 500 rose 0.9%, the Dow added 0.6%, the Russell 2000 advanced 0.4%, and the Global Dow increased 0.3%. Crude oil prices dropped 4.2%, settling at about $67.24 per barrel, the lowest price since December 2021. Ten-year Treasury yields inched up 2.0 basis points to 3.76%. The dollar climbed marginally higher, while gold prices dipped lower.

Stocks followed last Monday’s solid performance with another rally last Tuesday. The Russell 2000, which is generally sensitive to economic data, jumped 1.2% following last Tuesday’s Consumer Price Index (see below). The Global Dow rose 0.9%, the Nasdaq gained 0.8%, the S&P 500 advanced 0.7%, and the Dow edged up 0.4%. With the possibility that the Federal Reserve might pause interest rate increases, the dollar and gold prices slid lower. The yield on 10-year Treasuries rose 7.4 basis points to close at 3.83%. Crude oil prices jumped 3.1% to reach $69.20 per barrel.

Last Wednesday saw stocks end mixed, with the Dow sliding 0.7% and the Russell 2000 falling 1.2%, while the Global Dow (0.7%), the Nasdaq (0.4%), and the S&P 500 (0.1%) closed higher. The day began with a moderate selloff, only to pick up the pace following the Federal Reserve’s policy announcement (see below). The yield on 10-year Treasuries dipped 4.3 basis points to close at 3.79%. The dollar and gold prices declined. Crude oil prices gave back gains from the previous day after falling 1.1% to settle at about $68.68 per barrel.

Investors moved to equities last Thursday, driving each of the benchmark indexes listed here higher. Inflation indicators out last week showed price pressures may be cooling, although the Federal Reserve is suggesting more interest rate hikes are in the offing this year. The Dow led the indexes, climbing 1.3%, followed by the S&P 500 and the Nasdaq (1.2%), the Russell 2000 (0.9%), and the Global Dow (0.7%). In what is proving to be a volatile week, crude oil prices reversed the prior day’s trend, closing up 3.4% to about $70.58 per barrel. Ten-year Treasury yields fell 6.8 basis points, closing at 3.72%. The dollar fell, while gold prices inched higher.

Stocks slid lower to close out the week. Of the benchmark indexes listed here, only the Global Dow posted a gain, advancing 0.2% by the close of trading last Friday. The Russell 2000 (-0.8%), the Nasdaq (-0.7%), the S&P 500 (-0.4%), and the Dow (-0.3%) closed lower. Ten-year Treasury yields added 4.1 basis points to close at 3.76%. Crude oil prices rose for the second straight day, advancing $1.04, or 1.5%. The dollar inched higher, while gold prices dipped lower.

Stock Market Indexes

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

• In a move that was not totally unexpected, the Federal Open Market Committee decided to maintain the present target range for the federal funds rate at 5.00%-5.25%. The Committee noted that, while economic activity continued to expand and job growth was robust, inflation remained elevated. However, the FOMC proffered that it was unable to determine the effects that tighter credit conditions would have on households and businesses. To that extent, holding the target range steady allows the Committee to assess additional information and its implications for monetary policy. In determining the direction of its monetary policy going forward, the Committee will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
• The Consumer Price Index edged up 0.1% in May, slightly below most expectations and under the April increase of 0.4%. For the 12 months ended in May, the CPI rose 4.0%, the smallest 12-month increase since the period ended March 2021. The index for shelter (+0.6%) was the largest contributor to the monthly increase, followed by an increase in the index for used cars and trucks (+4.4%). The food index increased 0.2% in May after being unchanged in the previous two months. The energy index declined 3.6% in May. The CPI less food and energy rose 0.4% in May, the same increase as in April and March. This report might support a pause in interest rate increases by the Federal Reserve.
• Prices producers received for the sale of goods and services declined 0.3% in May after advancing 0.2% in April. For the 12 months ended in May, producer prices moved up 1.1%. The decrease in producer prices is attributable to a 1.6% drop in prices for goods, the largest decrease since July 2022. Prices for services increased 0.2% in May. Producer prices less foods, energy, and trade services were unchanged in May after inching up 0.1% in April. For the 12 months ended in May, prices less foods, energy, and trade services increased 2.8%. In May, prices for energy fell 6.8%, while prices for food decreased 1.3%.
• In yet another sign that inflation might be declining, May saw import prices fall 0.6% and export prices decline 1.9%, according to the latest report from the Bureau of Labor Statistics. Import prices fell 5.9% for the year ended in May, the largest 12-month decline since the comparable period ended May 2020. Import prices for fuel fell 6.4% in May after rising 4.1% in April. This is the largest one-month drop in import fuel prices since August 2022. Nonfuel import prices dipped 0.1% in May. Nonfuel import prices declined 1.6% since May 2022. The May decrease in export prices was the largest monthly decline since December 2022. In May, lower prices for nonagricultural exports and agricultural exports each contributed to the overall decrease in export prices. Export prices fell 10.1% for the year ended in May, the largest 12-month decline since the series was first published in September 1984.
• Sales at the retail level rose 0.3% in May and have increased 1.6% since May 2022. Retail trade sales also increased 0.3% in May. Nonstore retail sales were up 6.5% from last year, while sales at food services and drinking places were up 8.0% from May 2022.
• Industrial production declined 0.2% in May, following two consecutive monthly increases. Most of the major market groups declined in May, with final products and materials down 0.1% and 0.3%, respectively. Manufacturing edged up 0.1% in May, while the indexes for utilities and mining fell 1.8% and 0.4%, respectively. Despite the downturn in May, total industrial production was 0.2% above its year-earlier level.
• The government deficit for May was $240.0 billion, well above the May 2022 deficit of $66.2 billion. In May, government receipts were $307.5 billion and expenditures totaled $547.8 billion. Through the first eight months of the fiscal year, the government deficit sits at $1,164.9 trillion, significantly higher than the $426.2 billion deficit over the comparable period from the previous fiscal year.
• The national average retail price for regular gasoline was $3.595 per gallon on June 12, $0.054 per gallon higher than the prior week’s price but $1.411 less than a year ago. Also, as of June 12, the East Coast price increased $0.022 to $3.432 per gallon; the Midwest price rose $0.083 to $3.513 per gallon; the Gulf Coast price advanced $0.080 to $3.145 per gallon; the Rocky Mountain price increased $0.053 to $3.707 per gallon; and the West Coast price rose $0.061 to $4.584 per gallon.
• For the week ended June 10, there were 262,000 new claims for unemployment insurance, unchanged 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 June 3 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended June 3 was 1,775,000, an increase of 20,000 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 27 were California (2.2%), New Jersey (2.1%), Massachusetts (1.9%), New York (1.6%), Oregon (1.6%), Puerto Rico (1.5%), Rhode Island (1.5%), Washington (1.5%), Alaska (1.4%), and Illinois (1.4%). The largest increases in initial claims for unemployment insurance for the week ended June 3 were in Ohio (+6,447), California (+4,103), Minnesota (+2,693), Pennsylvania (+2,069), and Tennessee (+732), while the largest decreases were in Connecticut (-2,544), New York (-1,325), Texas (-617), New Jersey (-560), and Oregon (-450).

Eye on the Week Ahead

This week focuses on the housing sector. The May figures on housing starts and building permits are out this week. In April, the number of issued building permits declined for all housing types, however building permits for single-family construction advanced over 3.0%. Housing starts increased for all housing types. The latest data on existing home sales is also available this week. Sales of existing homes declined in April, as total housing inventory sat at just below three months, while existing home prices increased.

The Markets (as of market close June 9, 2023)

Stocks closed another week higher, with each of the benchmark indexes listed here posting gains. With last week’s advance, the Nasdaq has risen for seven consecutive weeks, while the S&P 500 hit its highest level since August 2022. The S&P 500 is more than 20% above its October 2022 low, putting it in bull territory. The Russell 2000 led the indexes, despite falling at the end of last week. The Global Dow also gained more than 1.0%. Long-term bond prices held steady, with yields on 10-year Treasuries inching up 5.0 basis points on the week. Crude oil prices fell for the second consecutive week. The dollar dipped lower, while gold prices edged higher.

Stocks ended last Monday lower, as late-day selling wiped out gains from earlier in the day. The small caps of the Russell 2000 took the biggest hit among the benchmark indexes listed here, falling 1.3%. The Dow lost 0.6%, the S&P 500 slipped 0.2%, while the Global Dow and the Nasdaq dipped less than 0.1%. The dollar and yields on 10-year Treasuries were flat, while gold prices edged higher. Crude oil prices barely moved, closing at $71.80 per barrel, even after Saudi Arabia indicated it would cut oil output by 1 million barrels per day starting in July. The remaining OPEC+ countries agreed to hold to their current oil production through the remainder of the year.

Wall Street rebounded last Tuesday, with several sectors performing well including financials and consumer discretionary. The Russell 2000 more than recouped its losses from the previous day, climbing 2.7%. The Global Dow and the Nasdaq rose 0.4%, followed by the S&P 500 (0.2%). The Dow ended the session flat. Yields on 10-year Treasuries remained at 3.69% for the third straight session. Crude oil prices fell nearly 1.0% to close at around $71.52 per barrel. The dollar and gold prices advanced.

Stocks closed with mixed results last Wednesday. A downturn in mega-cap tech stocks pulled the Nasdaq (-1.30%) and the S&P 500 (-0.4%) lower. The Russell 2000 jumped 1.8%, the Dow added 0.3%, while the Global Dow eked out a 0.1% gain. Bond prices slid, driving yields higher, with 10-year Treasury yields gaining 8.5 basis points to close at 3.78%. The Bank of Canada hiked interest rates in a somewhat unexpected move, which may have led some investors to believe the Fed is not done with its rate increases. Crude oil prices rose 1.1% to hit $72.52 per barrel. The dollar was flat, while gold prices slumped 1.3% to $1,956.20 per ounce.

Last Thursday saw mega caps recover much of Wednesday’s losses, helping to lift the benchmark indexes higher. The Nasdaq added 1.0%, followed by the S&P 500 (0.6%), with the Dow and the Global Dow gaining 0.5%. The small caps of the Russell 2000 edged lower, falling 0.4%. Ten-year Treasury yields dipped 7.0 basis points to close at 3.71%. Crude oil prices continued to ride an ebb and flow, following last Wednesday’s gains by falling 0.6% to $70.89 per barrel. The dollar and gold prices were flat.

Stocks ended last week on a high note (expect for small-cap stocks). While last Friday’s gains enjoyed by most of the benchmark indexes listed here weren’t particularly notable, each index added between 0.1%-0.2% by the close of trading. Only the small-cap heavy Russell 2000 closed the session in the red, falling 0.8%. Ten-year Treasury yields settled at 3.74%, up about 3.1 basis points from the previous day’s close. Crude oil prices fell 1.3% to $70.38 per barrel. The dollar advanced, while gold prices slid marginally.

Stock Market Indexes

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

• In May, business activity in the services sector expanded at the fastest pace since April 2022, according to the S&P Global US Services PMI™. Increased demand drove new orders in both the domestic and export markets, which drove firms to increase their hiring activity. Survey respondents noted that greater client confidence supported the expansion in new orders, as customers, especially in consumer markets, were more inclined to spend.
• In April, the goods and services trade deficit increased by $14.0 billion to $74.6 billion. Exports fell $9.2 billion, while imports increased $4.8 billion. Year to date, the goods and services deficit decreased $86.5 billion, or 23.9%, from the same period in 2022. Exports increased $55.9 billion, or 5.8%. Imports decreased $30.6 billion, or 2.3%.
• The national average retail price for regular gasoline was $3.541 per gallon on June 5, $0.030 per gallon lower than the prior week’s price and $1.335 less than a year ago. Also, as of June 5, the East Coast price decreased $0.017 to $3.410 per gallon; the Midwest price declined $0.054 to $3.430 per gallon; the Gulf Coast price fell $0.056 to $3.065 per gallon; the Rocky Mountain price advanced $0.032 to $3.654 per gallon; and the West Coast price decreased $0.011 to $4.523 per gallon.
• For the week ended June 3, there were 261,000 new claims for unemployment insurance, an increase of 28,000 from the previous week’s level, which was revised up by 1,000. This is the highest level for initial claims since October 30, 2021, when it was 264,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 27 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 27 was 1,757,000, a decrease of 37,000 from the previous week’s level, which was revised down by 1,000. States and territories with the highest insured unemployment rates for the week ended May 20 were California (2.2%), New Jersey (2.1%), Massachusetts (1.8%), New York (1.6%), Oregon (1.6%), Puerto Rico (1.5%), Rhode Island (1.5%), Washington (1.5%), Alaska (1.4%), and Illinois (1.4%). The largest increases in initial claims for unemployment insurance for the week ended May 27 were in Ohio (+2,159), Texas (+1,229), New York (+1,177), Illinois (+1,117), and Missouri (+962), while the largest decreases were in California (-771), Arkansas (-455), Iowa (-419), North Carolina (-388), and Michigan (-365).

Eye on the Week Ahead

The Federal Open Market Committee meets this week. Many speculate that the Committee will not raise interest rates at this time. However, it is unlikely that the abatement of interest rate increases will last past the July meeting.

The Markets (as of market close June 2, 2023)

Stocks began the week on a downturn, but rallied later to end last week higher. Each of the benchmark indexes listed here posted solid weekly gains, led by the Russell 2000, followed by the Nasdaq, the Dow, the S&P 500, and the Global Dow. Investors began the week concerned that the debt ceiling agreement between President Biden and House Speaker McCarthy would not pass the House and Senate. However, both chambers of Congress passed the debt ceiling bill later in the week, removing the risk of government default. In addition, investors may have been encouraged by a strong jobs report (see below), which is somewhat paradoxical as a strong labor market could support more interest rate hikes by the Federal Reserve. Nevertheless, Wall Street ended the week on a positive note. The Nasdaq rose for the sixth consecutive week, the longest weekly winning streak since January 2020. Despite a surge last Thursday and Friday, crude oil prices ended the week lower. The yield on 10-year Treasuries slipped lower, while the dollar changed little. Gold prices advanced nearly 1.0%.

Stocks were mixed last Tuesday following the Memorial Day holiday. Despite an apparent debt ceiling agreement between President Biden and House Speaker McCarthy, investors remained jittery ahead of a Congressional vote. The Nasdaq (0.3%) was the only benchmark index of those listed here to post a gain. The S&P 500 ended the session flat, the Russell 2000 and the Global Dow fell 0.3%, and the Dow dipped 0.2%. Ten-year Treasury yields dropped 11.0 basis points to close at 3.70%. The dollar dipped lower, while gold prices rose 0.8%. Crude oil prices declined 4.0% to $69.75 per barrel, impacted by debt ceiling worries and reported tensions between Saudi Arabia and Russia ahead of an important OPEC+ meeting.

Wall Street endured another sour day last Wednesday as investors remained concerned about the passage of the debt ceiling bill. In addition, the latest JOLTS report (see below) showed the number of job openings increased, raising the prospects of another interest rate hike by the Federal Reserve in June. The Global Dow fell 1.3%, likely impacted by China’s lackluster industrial production report. The Russell 2000 dipped 1.0%, the Nasdaq and the S&P 500 lost 0.6%, while the Dow slipped 0.4%. Bond prices jumped higher, pulling yields lower. Ten-year Treasury yields lost 6.3 basis points to close at 3.63%. Crude oil prices fell 2.5% to $67.71 per gallon. The dollar and gold prices advanced.

Equities advanced last Thursday as stocks kicked off June on an upswing, with each of the benchmark indexes listed here posting notable gains. No doubt investors were encouraged by the House’s passage of the debt ceiling bill. The Global Dow (1.5%) led the way, followed by the Nasdaq (1.3%), the Russell 2000 (1.1%), the S&P 500 (1.00%), and the Dow (0.5%). Ten-year Treasury yields continued to trend lower, falling 2.9 basis points to settle at 3.60%. Crude oil prices rebounded, climbing 3.1% to reach $70.18 per barrel. The dollar slid lower, while gold prices advanced 0.7%.

Stocks pushed higher last Friday on positive jobs data (see below) and the passage of the debt ceiling bill by Congress. The Russell 2000 jumped 3.6%, followed by the Dow (2.1%), which enjoyed its best day of the year. The Global Dow rose 1.7%, the S&P 500 advanced 1.5%, and the Nasdaq increased 1.1%. Ten-year Treasury yields closed at 3.69%. Crude oil prices increased 2.7% to $71.97 per barrel, the dollar edged higher, while gold prices declined.

Stock Market Indexes

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 labor sector remained strong in May. According to the latest data from the Bureau of Labor Statistics, there were 339,000 new jobs added in May, in line with the average monthly gain of 341,000 over the prior 12 months. In May, job gains occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance. Despite the new hires, May saw the unemployment rate rise by 0.3 percentage point to 3.7%, and the number of unemployed persons increase by 440,000 to 6.1 million. The unemployment rate has ranged from 3.4% to 3.7% since March 2022. The labor force participation rate, at 62.6% has not changed over the past three months. The employment-population ratio dipped 0.1 percentage point to 60.3%. In May, average hourly earnings rose by $0.11, or 0.3%, to $33.44. Over the past 12 months, average hourly earnings have increased by 4.3%. The average workweek edged down by 0.1 hour to 34.3 hours in May.
• The number of job openings edged up 358,000 to 10.1 million in April. Job openings increased in retail trade, health care and social assistance, and transportation, warehousing, and utilities. In April, the number of hires changed little at 6.1 million. Total separations, which include quits, layoffs, discharges, and other separations, declined 286,000 to 5.7 million.
• Manufacturing slowed in May after expanding in April. The S&P Global US Manufacturing Purchasing Managers’ Index™ posted 48.4 in May, down from 50.2 in April. A reading under 50 indicates contraction. A reduction in new orders and muted overall demand slowed manufacturing. Despite the regression in demand, manufacturers increased output and employment, partly to fulfill existing backlogs of work, and to take advantage of a reduction in input costs to manufacturers, which fell for the first time since May 2020.
• The national average retail price for regular gasoline was $3.571 per gallon on May 29, $0.037 per gallon higher than the prior week’s price but $1.053 less than a year ago. Also, as of May 29, the East Coast price increased $0.046 to $3.427 per gallon; the Gulf Coast price rose $0.081 to $3.121 per gallon; the Midwest price increased $0.015 to $3.484 per gallon; the Rocky Mountain price advanced $0.043 to $3.622 per gallon; and the West Coast price climbed $0.020 to $4.534 per gallon.
• For the week ended May 27, there were 232,000 new claims for unemployment insurance, an increase of 2,000 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 May 20 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 20 was 1,795,000, an increase of 6,000 from the previous week’s level, which was revised down by 5,000. States and territories with the highest insured unemployment rates for the week ended May 13 were California (2.2%), New Jersey (2.1%), Massachusetts (2.0%), New York (1.6%), Oregon (1.6%), Puerto Rico (1.6%), Alaska (1.5%), Rhode Island (1.5%), Washington (1.5%), and Illinois (1.4%). The largest increases in initial claims for unemployment insurance for the week ended May 20 were in Texas (+2,808), Connecticut (+2,091), Iowa (+621), Pennsylvania (+540), and Missouri (+324), while the largest decreases were in Massachusetts (-2,127), Michigan (-1,024), Illinois (-1,000), New York (-625), and Oregon (-565).

Eye on the Week Ahead

There is very little economic data available during the first full week of June. The services purchasing managers’ index for May is available. April saw growth in the services sector, with new orders posting their best rate of growth since May 2022. Also out this week is the report on international trade in goods and services for April. March saw the trade deficit narrow by about $64.0 billion, as both imports and exports edged higher.

The Markets (as of market close May 31, 2023)

The markets in May were marked by ongoing volatility. Inflation, questions over the direction of monetary policy, and slower liquidity growth impacted equities. The ongoing debt ceiling negotiations cast a cloud over financial markets for much of May. Investors worried about the ramifications of inaction as the June 5 deadline loomed. Even after the president and House speaker reached an agreement toward the end of May, concerns persisted over whether Congress would pass the bill to lift the $31.4 trillion U.S. debt ceiling.

Tech shares and artificial intelligence stocks captured the attention of investors in May. One prominent chipmaker in particular saw its market capitalization briefly touch $1 trillion, with its stock up 36.0% in May. The Nasdaq was the clear winner in May among the benchmark indexes listed here, while the S&P 500 was able to eke out a monthly gain. The Dow, the Russell 2000, and the Global Dow finished the month lower. Year to date, the Nasdaq was well ahead of its 2022 closing value, followed by the S&P 500 and the Global Dow. The Dow and the Russell 2000 have fallen below their 2022 year-end values.

Investors saw the Federal Reserve hike the federal funds target rate 25 basis points in May. Whether the Fed raises rates again in June is open to conjecture. Several Fed officials have intimated that a pause may be appropriate, although inflation continues to far exceed the Fed’s 2.0% target. The labor market remained tight with the addition of 253,000 new jobs in April, coupled with a rise in the number of job openings, which fueled rate-hike jitters.

In May, there was a clear line between winners and losers among the market sectors. Information technology (10.5%), communication services (6.3%), and consumer discretionary (4.0%) moved higher. The remaining sectors declined, led by energy (-8.9%), utilities (-7.3%), consumer staples (-6.3%), and materials (-6.0%).

Industrial production in general, and manufacturing activity in particular, expanded in May. Durable goods orders increased for the second straight month in April. The purchasing managers’ indexes for both manufacturing and services rose in May, with manufacturing exceeding 50.0 for the first time in six months (a reading of 50.0 or higher indicates expansion).

Inflationary indicators showed price pressures remained somewhat elevated. Both the Consumer Price Index and the Personal Consumption Expenditures Price Index rose 0.4% in May.

Bond prices fell lower in May, with yields increasing over the previous month. Ten-year Treasury yields rose 18 basis points from April. The 2-year Treasury yield ended May at 4.42%, up 42 basis points from a month earlier. The dollar advanced against a basket of world currencies. Gold prices ended May lower.

Crude oil prices declined in May marking the fifth monthly decrease in the last six months. Oil prices have fallen due to an unusually warm winter in the United States and Europe, ongoing monetary tightening, U.S. bank failures, and China’s slowing economic recovery. The retail price of regular gasoline was $3.656 per gallon on April 24, $0.235 higher than the price a month earlier but $0.451 lower than a year ago.

Stock Market Indexes

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 253,000 in April from March compared with an average monthly gain of 290,000 over the prior six months. In April, employment continued to trend upward in professional and business services, health care, leisure and hospitality, and social assistance. The unemployment rate edged down 0.1 percentage point to 3.4%. In April, the number of unemployed persons fell by 182,000 to 5.7 million. The employment-population ratio, at 60.4%, and the labor force participation rate, at 62.6%, were unchanged in April from the previous month. Both measures have shown little net change since early 2022. In April, average hourly earnings increased by $0.16 to $33.36. Over the past 12 months ended in April, average hourly earnings rose by 4.4%. The average workweek, at 34.4 hours, was unchanged in April.
• There were 229,000 initial claims for unemployment insurance for the week ended May 20, 2023. The total number of workers receiving unemployment insurance was 1,794,000. By comparison, over the same period last year, there were 215,000 initial claims for unemployment insurance, and the total number of claims paid was 1,432,000.
• FOMC/interest rates: The Federal Open Market Committee raised the federal funds target range rate by 25 basis points in May. The Committee noted that inflation remained elevated, while economic activity expanded at a modest pace in the first quarter. Job gains have been robust, and the unemployment rate remained low. Despite regional bank closures and takeovers, the FOMC statement indicated that the U.S. banking system was sound and resilient. Overall, the FOMC will base its decisions on available data, and “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” While future rate hikes are not off the table, the Committee intimated that a pause may be appropriate.
• GDP/budget: Economic growth is slowing, as gross domestic product increased only 1.3% in the first quarter, according to the second estimate from the Bureau of Economic Analysis. GDP rose 2.6% in the fourth quarter. The deceleration in first-quarter GDP compared to the previous quarter primarily reflected downturns in private inventory investment and residential fixed investment. Consumer spending, as measured by personal consumption expenditures, rose 3.8% in the first quarter compared to a 1.0% increase in the fourth quarter. Consumer spending on long-lasting durable goods jumped 16.4% in the first quarter after decreasing 1.3% in the prior quarter. Spending on services rose 2.5% (1.6% in the fourth quarter). Nonresidential fixed investment increased 1.4% after climbing 4.0% in the fourth quarter. Residential fixed investment fell 5.4% in the first quarter, significantly better than the 25.1% decrease in the fourth quarter. Exports increased 5.2% in the first quarter, following a decrease of 3.7% in the fourth quarter. Imports, which are a negative in the calculation of GDP, increased 4.0% in the first quarter after declining 5.5% in the previous quarter. Consumer prices increased 4.2% in the first quarter compared to a 3.7% advance in the fourth quarter. Excluding food and energy, consumer prices advanced 5.0% in the first quarter (4.4% in the fourth quarter).
• April is a month that usually sees the federal budget enjoy a surplus, primarily attributable to income tax receipts. This April was no different, as the federal budget had a $176.2 billion surplus, well short of the April 2022 surplus of $308.2 billion. The deficit for the first seven months of fiscal year 2023, at $924.5 billion, is $564.5 billion more than the comparable period of the previous fiscal year. In April, government receipts totaled $638.5 billion and $2.7 trillion for the current fiscal year. Government outlays were $462.3 billion in April and $3.6 trillion through the first seven months of fiscal year 2023. By comparison, receipts in April 2022 were $863.6 billion and $3.0 trillion through the first seven months of the previous fiscal year. Expenditures were $555.4 billion in April 2022 and $3.3 trillion through the comparable period in FY22.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, the Personal Consumption Expenditures Price Index increased 0.4% in April and 4.4% since April 2022. Prices excluding food and energy also advanced 0.4% in April, following increases of 0.3% in March and 0.4% in February. Prices for goods rose 0.3%, while prices for services increased 0.4% in April. Prices for food dipped 0.1%, while energy prices increased 0.7%. Since April 2022, consumer prices for food increased 6.9%, while energy prices declined 6.3%. Personal income rose 0.4% in April, 0.1 percentage point greater than the March increase. Disposable personal income increased 0.4% in April after advancing 0.3% in March. Consumer spending increased 0.8% in April, after inching up 0.1% in the previous month.
• The Consumer Price Index rose 0.4% in April after increasing 0.1% in March. Over the 12 months ended in April, the CPI advanced 4.9%, down from 5.0% for the year ended in March. Excluding food and energy prices, the CPI rose 0.4% in April and 5.5% over the last 12 months. Contributing to the April CPI advance were increases in prices for shelter (0.4%), used cars and trucks (4.4%), and gasoline (3.0%). In April, food prices were flat for the second straight month, although they’re up 7.7% over the last 12 months. For the 12 months ended in April, energy prices decreased 5.1%, while prices for shelter advanced 8.1%.
• Prices that producers received for goods and services increased 0.2% in April, following a 0.4% decline in the previous month. Producer prices increased 2.3% for the 12 months ended in April. The Producer Price Index saw prices for both goods (0.2%) and services (0.3%) increase. Producer prices less foods, energy, and trade services edged up 0.2% in April after increasing 0.1% in the previous month. Prices less foods, energy, and trade services advanced 3.4% for the year ended in April after increasing 3.7% from the 12 months ended in March.
• Housing: Sales of existing homes decreased 3.4% in April. Since April 2022, existing-home sales dropped 23.2%. According to the report from the National Association of Realtors®, job gains, a dearth of inventory, and fluctuating mortgage rates have contributed to the decline in sales of existing homes. The median existing-home price was $388,800 in April, up from $375,400 in March but lower than the April 2022 price of $395,500. In April, unsold inventory of existing homes represented a 2.9-month supply at the current sales pace, up from the March pace of 2.6 months. Sales of existing single-family homes dropped 3.5% in April and 22.4% from April 2022. The median existing single-family home price was $393,300 in April, up from the March price of $379,500 but well below the April 2022 price of $401,700.
• New single-family home sales advanced in April, climbing 4.1%, marking the second consecutive monthly increase. Sales were up 11.8% from a year earlier. The median sales price of new single-family houses sold in April was $420,800 ($455,800 in March). The April average sales price was $501,000 ($559,200 in March). The inventory of new single-family homes for sale in April decreased to 7.6 months, down from 7.9 months in March.
• Manufacturing: Industrial production rose 0.5% in April after moving sideways the previous two months. Manufacturing increased 1.0% in April, bolstered by a strong gain in the output of motor vehicles and parts. In April, mining rose 0.6%, while utilities dropped 3.1%, as milder temperatures in April lowered demand for heating. Total industrial production in April was 0.2% above its year-earlier level. Most major market groups recorded growth in April. The production of consumer durables was boosted by an 8.4% jump in the output of automotive products. Elsewhere, there were gains in business equipment (1.2%), defense and space equipment (1.1%), non-energy materials (0.8%), and construction supplies (0.4%). In contrast, nondurable consumer goods, business supplies, and energy materials all posted slight declines in April.
• New orders for durable goods increased 1.1% in April after increasing 3.3% in March. New orders for transportation equipment led the overall increase, advancing 3.7% in April, marking the second consecutive monthly advance. Excluding transportation, new orders decreased 0.2% in April. Excluding defense, new orders fell 0.6%. Over the past 12 months, new orders for durable goods have increased 2.6%.
• Imports and exports: April saw both import and export prices increase. Import prices rose 0.4%, following an 0.8% decline in March. The April increase in import prices was the first since December 2022. Higher fuel prices drove the April increase in import prices. Despite the April increase, prices for imports declined 4.8% over the past year, the largest 12-month drop since the index declined 6.3% for the 12 months ended in May 2020. Import fuel prices increased 4.5% in April, following a 3.9% drop in March. The April increase in import fuel prices was the first monthly advance since June 2022. Nonfuel import prices were unchanged in April after decreasing 0.5% in March. Export prices advanced 0.2% in April, after declining 0.6% in the previous month. Higher prices in April for agricultural exports and nonagricultural exports each contributed to the overall increase. Export prices decreased 5.9% for the year ended in April, the largest 12-month decline since a 6.7% drop for the 12 months ended in May 2020.
• The international trade in goods deficit rose $14.1 billion, or 17.0%, in April over March. Exports of goods for April were $9.5 billion, or 5.5%, below March exports. Imports of goods were $4.5 billion, or 1.8%, more than March imports. The April decrease in exports was attributable to several categories, including other goods (-11.9%), industrial supplies (-9.8%), consumer goods (-7.4%), and foods, feeds, and beverages (-5.2%). The increase in April imports was largely driven by a 6.0% advance in automotive vehicles.
• The latest information on international trade in goods and services, released May 4, was for March and revealed that the goods and services trade deficit was $64.2 billion, a decrease of 9.1% from the February deficit. March exports were $256.2 billion, 2.1% more than February exports. March imports were $320.4 billion, 0.3% below February imports. For the 12 months ended in March, the goods and services deficit decreased 27.6%. Exports increased 8.7%, while imports decreased 1.6%.
• International markets: China’s post-pandemic economic recovery showed signs of sputtering in May. Weak factory activity further evidenced China’s economic slowdown. Elsewhere, Europe’s largest economy has slipped into recession. Germany’s economy dropped 0.3% in the first quarter after contracting 0.5% at the end of 2022. In Germany, consumer spending declined, falling 1.2% in the first quarter, as large price increases, particularly for food and energy, slowed personal consumption expenditures. Rising inflation continued to be an issue in Europe in May. However, the European Central Bank slowed the pace of its interest-rate hikes, raising the key rate by 0.25 percentage point to 3.25%, still a near 15-year high. For May, the STOXX Europe 600 Index decreased 2.2%; the United Kingdom’s FTSE slid 4.2%; Japan’s Nikkei 225 Index gained 5.9%; and China’s Shanghai Composite Index dipped 3.6%.
• Consumer confidence: The Conference Board Consumer Confidence Index® decreased in May to 102.3, down from a revised 103.7 in April. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 148.6 in May, down from 151.8 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell to 71.5 in May from 71.7 in April. According to the Conference Board’s report, the Expectations Index has remained below 80.0, the level associated with a recession within the next year, since February 2022, with the exception of a brief uptick in December 2022.

Eye on the Month Ahead

Inflation and the Federal Reserve are likely to remain at the forefront for investors heading into June. According to the Federal Reserve, which meets in the middle of June, inflation remains accelerated, although another interest rate hike this month is not a certainty.

The Markets (as of market close May 26, 2023)

Wall Street ended last week with mixed returns. The Nasdaq and the S&P 500 were pushed higher by tech shares and artificial intelligence (AI) stocks. The Global Dow, the Dow, and the Russell 2000 closed in the red. Ten-year Treasury yields rose 11.0 basis points, as they drew closer to their 2022 year-end values. For much of last week, investors kept a close watch on negotiations involving the U.S. debt ceiling. By last Friday, it appeared progress was being made on a deal to raise the debt limit and cap federal spending for two years. Crude oil prices advanced for the second straight week. The dollar advanced against a basket of currencies, while gold prices declined for the third consecutive week.

Stocks closed last Monday generally higher, driven by advances in technology, communications, small-cap stocks, and financials. Investors focused on late-afternoon debt ceiling talks between President Biden and House Speaker McCarthy. The Russell 2000 gained 1.2% to lead the benchmark indexes listed here, followed by the Nasdaq, which climbed 0.5%. The S&P 500 and the Global Dow ended the day flat, while the Dow dipped 0.4%. Ten-year Treasury yields inched up 2.7 basis points to 3.71%. Crude oil prices gained 0.4% to $71.81 per barrel. The dollar edged higher, while gold prices fell 0.4%.

Debt ceiling worries hit Wall Street last Tuesday, sending stocks lower. The Nasdaq fell 1.3%, followed by the S&P 500 (-1.1%), the Global Dow and the Dow (-0.7%), with the Russell 2000 dipping 0.3%. Ten-year Treasury yields slipped 2.1 basis points to 3.69%. Crude oil prices advanced for the second consecutive day, climbing 1.4% to $73.06 per barrel. The dollar and gold prices increased.

Last Wednesday saw stocks slide lower for a second straight session. Once again, investors worried about a potential U.S. debt default. The Russell 2000 and the Global Dow dropped 1.2%, the Dow fell 0.8%, the S&P 500 lost 0.7%, and the Nasdaq slipped 0.6%. Ten-year Treasury yields inched higher to close at 3.71%. Crude oil prices continued to climb, jumping 1.3% to $73.86 per barrel. The dollar advanced, while gold prices fell 0.6%.

AI stocks surged last Thursday, pushing the Nasdaq and the S&P 500 higher among the benchmark indexes listed here. Communication services and information technology posted notable gains, which, along with consumer discretionary, were the only market sectors to close higher. The Nasdaq gained 1.7% and the S&P 500 rose 0.9%. The Russell 2000 fell 0.7%, the Global Dow dropped 0.3%, and the Dow slipped 0.1%. Yields on 10-year Treasuries added 9.5 basis points to close at 3.81%. The dollar advanced for the fourth straight session. Gold prices dipped 1.2%. Crude oil prices reversed course, slumping 3.3% to $71.92 per barrel.

Stocks closed higher last Friday, as traders grew more confident that a deal on the U.S. debt ceiling would be reached. For the second straight day, tech and AI stocks drove the indexes. The Nasdaq gained 2.2%, the S&P 500 rose 1.3%, the Russell 2000 climbed 1.1%, the Dow added 1.0%, and the Global Dow advanced 0.8%. Ten-year Treasury yields were flat, closing at 3.81%. Crude oil prices advanced 1.3% to $72.78 per barrel. The dollar dipped lower, while gold prices inched higher.

Stock Market Indexes

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 for the first-quarter gross domestic product was revised up 0.2 percentage point to 1.3%. GDP expanded at an annualized rate of 2.6% in the fourth quarter. Personal consumption expenditures increased 3.8%. Consumer spending on durable goods rose 6.3%, while spending on services increased 2.5%. Residential fixed investment dropped 5.4%, while nonresidential fixed investment increased 1.4%. Exports advanced 5.2%, while imports, which are a negative in the calculation of GDP, increased 4.0%. The personal consumption expenditures price index increased 4.2%.
• Inflationary pressures increased in April, giving more reason for the Federal Reserve to continue to increase interest rates. The personal consumption expenditures price index rose 0.4% in April after inching up 0.1% in March. Consumer prices less food and energy also rose 0.4% in April. Over the last 12 months, consumer prices have increased 4.4%, well above the Fed target rate of 2.0%. Personal income and disposable personal income rose 0.4% in April. Consumer spending jumped 0.8% in April after increasing 0.1% in March.
• The international trade in goods deficit widened more than expected in April, up 17.0% from March. Exports decreased 5.5%, while imports rose 1.8%. Since April of 2022, exports of goods have declined 5.8%, while imports are down 7.1%.
• New orders for durable goods increased for the second straight month in April, after increasing 1.1% from March. Transportation equipment, also up for two consecutive months, drove the increase, up 3.7% in April.
• Sales of new single-family homes increased for the second straight month in April, climbing 4.1% over the March total. Available inventory in April declined to a supply of 7.6 months, down from the March pace of 7.9 months. The median single-family home price in April was $420,800, a decline of 8.3% from March ($455,800) and 8.9% below the April 2022 median sales price of $458,200. The average sales price in April was $501,000, 11.6% under the March price of $559,200 and 12.2% below the April 2022 average sales price of $562,400.
• The national average retail price for regular gasoline was $3.534 per gallon on May 22, $0.002 per gallon lower than the prior week’s price and $1.059 less than a year ago. Also, as of May 22, the East Coast price decreased $0.016 to $3.381 per gallon; the Gulf Coast price fell $0.039 to $3.040 per gallon; the Midwest price increased $0.029 to $3.469 per gallon; the Rocky Mountain price rose $0.061 to $3.579 per gallon; and the West Coast price dipped $0.005 to $4.514 per gallon.
• For the week ended May 20, there were 229,000 new claims for unemployment insurance, an increase of 4,000 from the previous week’s level, which was revised down by 17,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 13 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 13 was 1,794,000, a decrease of 5,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended May 6 were California (2.3%), New Jersey (2.2%), Massachusetts (2.0%), Alaska (1.6%), New York (1.6%), Oregon (1.6%), Puerto Rico (1.5%), Rhode Island (1.5%), Washington (1.5%), and Illinois (1.4%). The largest increases in initial claims for unemployment insurance for the week ended May 13 were in Ohio (+1,608), Connecticut (+975), Illinois (+868), Tennessee (+640), and Colorado (+599), while the largest decreases were in Missouri (-2,234), Massachusetts (-1,660), New Jersey (-1,016), Pennsylvania (-742), and Virginia (-715).

Eye on the Week Ahead

The labor sector is front and center this week with the releases of the April Job Openings and Labor Turnover Survey (JOLTS) and the May report on employment. In March, the number of job openings decreased 384,000, while the number of hires and separations changed little. The employment situation report showed 253,000 jobs were added in April, while the number of unemployed was relatively unchanged.

The Markets (as of market close May 19, 2023)

Most of last week, investors seemed to react to negotiations concerning the debt ceiling. Despite a lackluster ending to the week, stocks closed generally higher. Tech shares climbed nearly 4.0%, while consumer discretionary stocks also posted gains. Overall, each of the benchmark indexes listed here ended last week higher, led by the Nasdaq, followed by the Russell 2000, the S&P 500, the Global Dow, and the Dow. In fact, the Nasdaq and the S&P 500 had their best week since March. Ten-year Treasury yields added 24 basis points. The dollar advanced, while gold prices slid. Crude oil prices gained about $1.70.

A jump in tech shares pushed stocks higher last Monday, as investors continued to focus on debt ceiling negotiations at the White House. The small caps of the Russell 2000 outperformed the indexes listed here, climbing 1.2%. The Nasdaq rose 0.7%, followed by the Global Dow (0.5%), the S&P 500 (0.3%), and the Dow (0.1%). Crude oil prices gained 1.8% to $71.28 per barrel, as OPEC+ prepared to cut supplies. Ten-year Treasury yields added 4.5 basis points to reach 3.50%. The dollar slipped, while gold prices inched higher.

Stocks declined last Tuesday as investors worried about the lack of progress on debt ceiling negotiations. The Russell 2000 gave back Monday’s gains after tumbling 1.4%. The Dow dipped 1.0%, followed by the S&P 500 (-0.6%), the Global Dow (-0.5%), and the Nasdaq (-0.2%). Bond prices also slipped, pushing yields higher. Ten-year Treasury yields rose 4.1 basis points to 3.54%. Crude oil prices reversed the prior day’s uptick, falling 0.9% to $70.49 per barrel. The dollar gained, while gold prices fell 1.4% to close under $2,000.00 per ounce for the first time this month.

Wall Street rallied last Wednesday, fueled by optimism that an agreement could be reached on the debt ceiling. The small caps of the Russell 2000, which is sensitive to economic developments, jumped 2.2% by the close of trading. The Nasdaq rose 1.3%, followed by the Dow and the S&P 500, which advanced 1.2%. The Global Dow climbed 0.5%. Crude oil prices reached the highest price in over a week closing at $72.75 per barrel. The dollar advanced, while gold prices fell. Ten-year Treasury yields settled at 3.58%, an increase of 3.2 basis points.

Stocks rose for a second straight session last Thursday, as investors received more encouraging news on a potential debt ceiling deal. Tech shares advanced, helping to move the benchmark indexes higher. The Nasdaq gained 1.5%, followed by the S&P 500 (0.9%), the Russell 2000 (0.6%), the Global Dow (0.4%), and the Dow (0.3%). Ten-year Treasury yields rose to the highest level in two months after gaining 6.7 basis points to 3.64%. Crude oil prices fell back, dropping 1.2% to $71.98 per barrel. The dollar increased for the third straight session, while gold prices declined for the third consecutive day.

Last Friday, an abrupt halt to debt ceiling talks sent investors scurrying away from stocks. Of the benchmark indexes listed here, only the Global Dow (0.2%) advanced by the close of trading. The Russell 2000 declined 0.6%, while the Dow, the S&P 500, and the Nasdaq slipped between 0.1% and 0.3%. Ten-year Treasury yields added 5.7 basis points to close at 3.7%. The dollar dipped, while gold prices advanced. Crude oil prices moved little, closing at around $71.83 per barrel.

Stock Market Indexes

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 rose 0.4% in April after declining 0.7% in March. For the 12 months ended in April, retail sales have increased 1.6%. Several categories contributed to the April advance in retail sales including motor vehicle and parts dealers (0.4%), building material and garden equipment and supplies dealers (0.5%), health and personal care stores (0.9%), general merchandise stores (0.9%), miscellaneous store retailers (2.4%), nonstore (online) retailers (1.2%), and food services and drinking places (0.6%). Retailers that saw sales decrease include furniture and home furnishing stores (-0.7%), electronics and appliance stores (-0.5%), food and beverage stores (-0.2%), grocery stores (-0.4%), gasoline stations (-0.8%), clothing and clothing accessories stores (-0.3%), sporting goods, hobby, musical instrument, and book stores (-3.3%), and department stores (-1.1%).
• According to the latest data from the Federal Reserve, industrial production rose 0.5% in April following two consecutive flat months. In April, manufacturing increased1.0%, bolstered by a strong gain in the output of motor vehicles and parts. Factory output, excluding motor vehicles and parts, moved up 0.4%.The index for mining rose 0.6%, while the index for utilities dropped 3.1%, as milder temperatures in April lowered demand for heating. Total industrial production in April was 0.2% above its year-earlier level.
• The number of building permits issued for residential housing construction declined 1.5% in April and was 21.1% below the April 2022 rate. However, building permits issued for single-family construction increased 3.1% last month. Housing starts rose 2.2%, while single-family housing starts advanced 1.6%. Housing completions fell 10.4% in April, while single-family housing completions were down 6.5%.
• Sales of existing homes fell 3.4% in April and were down 23.2% from April 2022. Total housing inventory sat at a 2.9-month supply. The median existing-home price in April was $388,800, 3.6% above the March price of $375,400 but 1.7% below the April 2022 price of $395,500. Single-family home sales also declined in April, falling 3.5% from March. The median existing single-family home price was $393,300 in April, 3.6% above the March price ($379,500) but 2.1% under the April 2022 price ($401,700).
• The national average retail price for regular gasoline was $3.536 per gallon on May 15, $0.003 per gallon higher than the prior week’s price but $0.955 less than a year ago. Also, as of May 15, the East Coast price decreased $0.030 to $3.397 per gallon; the Gulf Coast price rose $0.034 to $3.079 per gallon; the Midwest price increased $0.047 to $3.440 per gallon; the Rocky Mountain price declined $0.020 to $3.518 per gallon; and the West Coast price dipped $0.011 to $4.519 per gallon.
• For the week ended May 13, there were 242,000 new claims for unemployment insurance, a decrease of 22,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 6 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 6 was 1,799,000, a decrease of 8,000 from the previous week’s level, which was revised down by 6,000. States and territories with the highest insured unemployment rates for the week ended April 29 were California (2.4%), New Jersey (2.2%), Massachusetts (2.0%), Alaska (1.7%), Illinois (1.6%), New York (1.6%), Oregon (1.6%), Rhode Island (1.6%), Minnesota (1.5%), Puerto Rico (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended May 6 were in Massachusetts (+6,420), Missouri (+2,596), California (+1,997), Texas (+1,707), and New York (+1,212), while the largest decreases were in Kentucky (-3,026), Colorado (-1,526), Georgia (-916), Wisconsin (-494), and New Hampshire (-428).

Eye on the Week Ahead

This is a busy week for important economic data. New single-family home sales figures for April are released this week. March saw sales increase 9.6% for the fifth straight month. The second estimate of first-quarter gross domestic product is out this week. The first estimate showed the economy accelerated at an annualized rate of 1.1%. The personal income and outlays report for April is also available this week. Data from the last report showed consumer spending was flat in March, while consumer prices for goods and services rose 0.3%.

The Markets (as of market close May 12, 2023)

Stocks trended lower last week, with only the Nasdaq able to eke out a gain. Investors remained pensive as they await negotiations on the debt ceiling. With roughly 92% of the S&P 500 companies having reported first-quarter earnings thus far, results appear headed down 2.5% from last year. This follows a 4.6% drop in fourth-quarter earnings. Despite the downturn, FactSet reported that 78% of the companies have reported earnings that beat expectations, which is the most since the third quarter of 2021. So far in 2023, only the Russell 2000 has yet to reach its 2022 closing value. The remaining benchmark indexes listed here remain ahead of where they began this year, despite lackluster results through the first two weeks of May. Crude oil prices declined for the fourth consecutive week on concerns of weakening demand. Gold prices slipped lower but remained over $2,000.00 per ounce.

The Dow and the Russell 2000 slipped on a day of mixed returns last Monday. The Nasdaq, the S&P 500, and the Global Dow inched up minimally. In fact, the indexes moved very little throughout the day as investors contemplated ongoing banking concerns and the debt ceiling negotiations. Ten-year Treasury yields added 7.5 basis points to close at 3.52%. Crude oil prices gained 2.0% to reach $72.79 per barrel. The dollar and gold prices advanced on the day.

Last Tuesday proved to be another lackluster day of trading in the market as investors awaited the latest inflation data and the outcome of the meeting between President Biden and House Speaker McCarthy over the debt ceiling. The Nasdaq (-0.6%) and the S&P 500 (-0.5%) slid the furthest among the benchmark indexes, followed by the Global Dow and the Russell 2000, which dipped 0.3%. The Dow lost 0.2% on the day. The yield on 10-year Treasuries was flat at 3.52%. Crude oil prices continued to advance, gaining 0.5% to $73.51 per barrel. The dollar and gold prices rose higher.

Stocks rebounded last Wednesday, with the Nasdaq (1.0%), the Russell 2000 (0.6%), and the S&P 500 (0.5%) posting gains, while the Global Dow (-0.3%) and the Dow (-0.1%) dipped lower. Bond prices rose on increased demand, pulling yields lower. Ten-year Treasury yields lost 8.2 basis points to settle at 3.43%. Crude oil prices slid 1.3% to $72.79 per barrel. The dollar and gold prices also declined. Investors took some encouragement that inflation may be trending lower following the April Consumer Price Index report (see below), which showed prices increased 4.9% since April 2022, the smallest 12-month increase in two years.

The Nasdaq was the only benchmark index to close higher (0.2%) last Thursday, driven by large-cap tech stocks. The other benchmark indexes listed here ended the session lower with the small caps of the Russell 2000 falling 0.8%, followed by the Dow (-0.7%), the Global Dow (-0.6%), and the S&P 500 (-0.2%). Ten-year Treasury yields declined to 3.39%. The dollar rose higher, while gold prices fell for the second straight session.

Wall Street saw stocks falter last Friday as the Dow fell for the fifth straight session. The Nasdaq fell 0.4%, the Global Dow lost 0.3%, the Russell 2000 and the S&P 500 declined 0.2%, while the Dow slipped 0.1%. Crude oil prices fell 1.1%, the dollar advanced 0.6%, while gold prices decreased 0.2%. The yield on 10-year Treasuries added 6.6 basis points to reach 3.46%.

Stock Market Indexes

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 Consumer Price Index rose 0.4% in April after inching up 0.1% in March. Over the last 12 months, the CPI has increased 4.9%, the smallest 12-month increase since the period ended April 2021. Consumer prices less food and energy also rose 0.4% in April and 5.5% since April 2022. In April, prices increased in shelter, used cars and trucks, motor vehicle insurance, recreation, household furnishings and operations, and personal care. Airline fares and prices for new vehicles were among those that decreased over the month.
• Prices producers received for goods and services rose 0.2% in April, the first monthly advance since January. Producer prices moved up 2.3% for the 12 months ended in April. Prices less foods, energy, and trade services rose 0.2% in April after inching up 0.1% in March. For the 12 months ended in April, prices less foods, energy, and trade services increased 3.4%. In April, prices for services moved up 0.3%, the largest increase since a 0.4% rise in November 2022. Prices for goods increased 0.2% in April after falling 1.0% in March. An 8.4% advance in prices for gasoline was a major factor in the April increase in prices for goods.
• Import prices increased for the first time in 2023 after advancing 0.4% in April. Export prices rose 0.2% last month after declining 0.6% the previous month. Since April 2022, import prices have fallen 4.8%, while export prices are down 5.9%. Import fuel prices rose 4.5% in April following a 3.9% drop in March. The April advance was the first monthly increase in import fuel prices since June 2022. Despite the monthly rise, import fuel prices fell 25.9% over the past year. Import prices for foods, feeds, and beverages advanced 0.2% in April following a 0.9% decline in March. Higher prices for fruit and meat in April more than offset lower prices for vegetables. Higher prices for agricultural exports (0.4%) and nonagricultural exports (0.2%) drove the overall increase in export prices in April.
• The monthly federal Treasury statement showed the government enjoyed a surplus of $176.2 billion in April. Total receipts were $638.5 billion, while government expenditures were $462.3 billion. Through seven months of fiscal year 2023, the government deficit sits at $924.5 billion, $564.5 billion above the deficit over the same period in fiscal year 2022.
• The national average retail price for regular gasoline was $3.533 per gallon on May 8, $0.067 per gallon less than the prior week’s price and $0.795 less than a year ago. Also, as of May 8, the East Coast price decreased $0.065 to $3.427 per gallon; the Gulf Coast price fell $0.108 to $3.045 per gallon; the Midwest price declined $0.091 to $3.393 per gallon; the Rocky Mountain price rose $0.004 to $3.538 per gallon; and the West Coast price dipped $0.017 to $4.530 per gallon.
• For the week ended May 6, there were 264,000 new claims for unemployment insurance, an increase of 22,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 29 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 29 was 1,813,000, an increase of 12,000 from the previous week’s level, which was revised down by 4,000. States and territories with the highest insured unemployment rates for the week ended April 22 were California (2.4%), New Jersey (2.2%), Massachusetts (2.0%), Alaska (1.7%), Minnesota (1.7%), New York (1.6%), Oregon (1.6%), Puerto Rico (1.6%), Rhode Island (1.6%), Illinois (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended April 29 were in Massachusetts (+3,801), Kentucky (+3,659), Pennsylvania (+992), Virginia (+896), and Colorado (+726), while the largest decreases were in New York (-9,456), Illinois (-2,693), Georgia (-1,278), New Jersey (-783), and Ohio (-505).

Eye on the Week Ahead

Following the latest report on retail sales released early this week, the focus shifts to the housing sector. The April data on housing permits, starts, and completions is available this week. In March, the number of building permits issued, housing starts, and housing completions slid lower from the previous month. Existing home sales fell 2.4% in March but look to bounce back in April as inventory of homes available for sale increased and mortgage rates have stabilized somewhat.

The Markets (as of market close May 5, 2023)

Stocks closed last week generally lower, with only the Nasdaq eking out a minimal gain. A rally last Friday wasn’t enough to recoup losses experienced during the week. Investors had quite a bit to digest over the past week. The Federal Reserve hiked the federal funds rate 25 basis points and gave no clear indication as to whether and when more rate increases may be coming. Regional banks continued to struggle, however bank stocks rallied late in the week to help ease investor concerns. The April jobs report was solid, but also showed the pace of hiring was slowing. Crude oil prices continued to tumble on concerns of a slowing U.S. economy and tepid Chinese demand. Gold prices rebounded from the prior week, once again moving above the $2,000.00 per ounce mark.

Wall Street opened last week with a whimper, with stocks unable to maintain early momentum, ultimately closing lower. Monday saw each of the benchmark indexes listed here end the session marginally lower, with the exception of the Russell 2000, which ended the day flat. Ten-year Treasury yields added 12.2 basis points to close at 3.57%. Crude oil prices fell 1.3% to $75.75 per barrel. The dollar advanced 0.5%, while gold prices fell 0.4%.

Markets fell last Tuesday, pulled lower by declining financial and energy stocks. Investor concerns ticked higher following news that other regional banks were in jeopardy of failing, which came ahead of Wednesday’s anticipated 25-basis point interest rate hike by the Federal Reserve. The Russell 2000 was hit the hardest, dropping 2.1%, followed by the Global Dow and the S&P 500, which slipped 1.2%. The Dow and the Nasdaq lost 1.1%. Ten-year Treasury yields fell 13.5 basis points to 3.43% as bond prices surged on growing demand. Crude oil prices settled at about $71.64 per barrel, down 5.3% on recession concerns. The dollar slid lower, while gold prices gained 1.7%.

Last Wednesday saw investors respond to the latest interest rate hike from the Federal Reserve by selling stocks. Of the benchmark indexes listed here, only the small caps of the Russell 2000 ended the day in the black, gaining 0.4%. The remaining indexes posted losses, led by the Dow (-0.8%), followed by the S&P 500 (-0.7%), the Nasdaq (-0.5%), and the Global Dow (-0.1%). Crude oil prices dropped nearly 5.0% to $68.26 per barrel, hitting the lowest level since late March amid concerns of a U.S. recession and waning demand in China. The dollar declined for the second straight day. Gold prices advanced nearly 1.0%.

Thursday proved to be another rough day for Wall Street. Investors contemplated more troubling news on the financial front as more regional banks faced possible closures. The Russell 2000 lost 1.2%, followed by the Dow (-0.9%), the Global Dow (-0.8%), the S&P 500 (-0.7%), and the Nasdaq (-0.5%). Bond prices continued to advance, pulling yields lower, with the yield on 10-year Treasuries falling 5.2 basis points to 3.35%. Crude oil prices slipped lower, closing at roughly $68.55 per barrel. The dollar and gold prices climbed higher.

Stocks closed higher last Friday on the heels of a strong jobs report (see below). The Russell 2000 (2.4%) and the Nasdaq (2.3%) led the way, followed by the S&P 500 (1.9%), the Dow (1.7%), and the Global Dow (1.3%). Ten-year Treasury yields added 9.5 basis points to 3.44%. Crude oil prices rose 4.0%. Both the dollar and gold prices ended the session in the red.

Stock Market Indexes

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 raised the target range for the federal funds rate 25 basis points to 5.00%-5.25%. The FOMC noted that job gains have been robust and the unemployment rate has remained low, while inflation remains elevated. Despite the failure of several banks in the last few months, the Committee indicated that the banking system was sound and resilient. In attempting to moderate rising inflation, the Committee admitted that “tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.” While the extent of the effects of the Committee’s actions remains uncertain, it “would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”
• The job sector continued to show strength in April. There were 253,000 new jobs added in April, not far off from the average monthly gain of 290,000 over the prior six months. In April, employment continued to trend up in professional and business services, health care, leisure and hospitality, and social assistance. The unemployment rate dipped 0.1 percentage point to 3.4%, while the number of unemployed persons declined by 182,000 to 5.7 million. The labor force participation rate and the employment-population ratio were unchanged in April, settling at 62.6% and 60.4%, respectively. In April, average hourly earnings rose by $0.16, or 0.5%, to $33.36. Over the past 12 months, average hourly earnings have increased by 4.4%. The average workweek was unchanged at 34.4 hours in April.
• On the last day of March, the number of job openings decreased by 384,000 to 9.6 million, according to the latest Job Openings and Labor Turnover report. The March number of job openings was 1.6 million lower than at the end of December. In March, the number of hires was little changed at 6.1 million from the previous month. The number of total separations (quits, layoffs, and discharges) changed marginally at 5.9 million. The number of quits was flat at 3.9 million, although the number of layoffs and discharges increased by 248,000 to 1.8 million.
• The manufacturing sector improved slightly in April, according to the latest S&P Global survey of purchasing managers. The S&P Global US Manufacturing Purchasing Managers’ Index™ (PMI™) registered 50.2 in April, up from 49.2 in March. This is the first reading above 50.0 in six months and the highest since October 2022. A reading above 50.0 indicates acceleration in manufacturing. Survey respondents noted a rise in new domestic orders, but not foreign new orders as exports lagged. Employment and prices rose, with producer costs and selling prices accelerating.
• The services sector expanded in April as company output, new orders, and employment all accelerated. Inflationary pressures caused input costs to rise at the fastest rate in three months, while selling prices increased at the quickest pace since August 2022. Overall, the S&P Global US Services PMI Business Activity Index registered 53.6 in April, up from 52.6 in March, marking the third consecutive month of growth for service providers.
• The goods and services trade deficit was $64.2 billion in March, down $6.4 billion, or 9.1%, from the February deficit, according to the latest data from the Census Bureau. March exports were $256.2 billion, $5.3 billion, or 2.1%, more than February exports. March imports were $320.4 billion, $1.1 billion, or 0.3%, less than February imports. Year to date, the goods and services deficit decreased $77.6 billion, or 27.6%, from the same period in 2022. Exports increased $61.4 billion, or 8.7%. Imports decreased $16.2 billion, or 1.6%.
• The national average retail price for regular gasoline was $3.600 per gallon on May 1, $0.056 per gallon less than the prior week’s price and $0.582 less than a year ago. Also, as of May 1, the East Coast price decreased $0.051 to $3.492 per gallon; the Gulf Coast price fell $0.108 to $3.147 per gallon; the Midwest price declined $0.068 to $3.484 per gallon; the Rocky Mountain price dropped $0.013 to $3.534 per gallon; and the West Coast price dipped $0.001 to $4.547 per gallon.
• For the week ended April 29, there were 242,000 new claims for unemployment insurance, an increase of 13,000 from the previous week’s level, which was revised down by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 22 was 1.2%, 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 April 22 was 1,805,000, a decrease of 38,000 from the previous week’s level, which was revised down by 15,000. States and territories with the highest insured unemployment rates for the week ended April 15 were California (2.4%), New Jersey (2.4%), Rhode Island (2.1%), Massachusetts (2.0%), Minnesota (1.8%), New York (1.8%), Alaska (1.7%), Illinois (1.6%), Oregon (1.6%), Puerto Rico (1.6%), and Washington (1.6%). The largest increases in initial claims for unemployment insurance for the week ended April 22 were in Massachusetts (+8,774), Illinois (+2,482), New York (+1,487), Michigan (+625), and Colorado (+604), while the largest decreases were in California (-3,754), Ohio (-3,236), New Jersey (-2,962), Connecticut (-2,076), and Rhode Island (-1,426).

Eye on the Week Ahead

Inflation data for April is available this week with the releases of the Consumer Price Index and the Producer Price Index. March saw the CPI inch up 0.1%, while the PPI declined 0.5%.

The Markets (as of market close April 28, 2023)

Stocks ended April generally higher, despite several lackluster sessions along the way. Each of the benchmark indexes listed here gained ground over their March closing values, except for the small caps of the Russell 2000. Investors spent most of April weighing positive news on corporate earnings against concerns about the financial strength of regional banks and the Federal Reserve’s next move relative to interest rates as it continues to battle inflation. The Dow enjoyed its best month since January. The Global Dow and the large caps of the S&P 500 also gained at least 1.5%. The Nasdaq barely eked out a gain on the heels of a strong last week of April.

Solid corporate earnings in the first quarter helped provide momentum for stocks. As of the end of April, roughly 79% of the S&P 500 companies that reported earnings have exceeded estimates. According to FactSet, about half of the S&P 500 companies have recorded their best performance relative to analyst expectations since the fourth quarter of 2021. Some analysts now expect first-quarter earnings for S&P 500 companies to decline 1.9% from a year ago, which is much better than the 5.1% drop expected at the start of April.

Several market sectors posted solid gains in April, while others closed the month lower. Consumer staples, health care, communication services, utilities, energy, and financials closed higher, while consumer discretionary, industrials, materials, information technology, and real estate ended lower.

Manufacturing activity rebounded from a moribund February, as it picked up some steam in March. Durable goods orders increased in March after falling in each of the previous two months. The purchasing managers’ index rose for the third straight month in March, but remained below 50.0, which indicates contraction. Services, on the other hand, expanded into positive territory, as the services PMI™ increased to 52.6 in March.

Inflationary indicators showed price pressures may be easing. Both the Consumer Price Index and the Personal Consumption Expenditures Price Index inched up 0.1% in March.

Bond prices edged higher in April, with yields dipping lower. Ten-year Treasury yields slipped 4 basis points from March. The 2-year Treasury yield ended the month at 4.00%. The dollar declined against a basket of world currencies. Gold prices ended April higher but slid below $2,000.00 per ounce where they spent much of the month.

Crude oil prices increased in April after falling in each of the previous five months. Oil prices have fallen due to an unusually warm winter in the United States and Europe. OPEC+ has indicated that it will cut production in the coming months, which may impact prices moving into the summer months. The retail price of regular gasoline was $3.656 per gallon on April 24, $0.235 higher than the price a month earlier but $0.451 lower than a year ago.

Stock Market Indexes

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: Job growth remained strong in March with the addition of 236,000 new jobs compared with an average monthly gain of 334,000 over the prior six months. In March, notable job gains occurred in leisure and hospitality, government, professional and business services, and health care. The unemployment rate edged down 0.1 percentage point to 3.5%. In March, the number of unemployed persons fell by 97,000 to 5.8 million. The employment-population ratio, at 60.4%, increased by 0.2 percentage point, while the labor force participation rate, at 62.6%, edged up 0.1 percentage point from the previous month. Both measures have shown little net change since early 2022. In March, average hourly earnings increased by $0.09 to $33.18. Over the past 12 months ended in March, average hourly earnings rose by 4.2%, lower than the 4.6% increase for the year ended in February. The average workweek decreased by 0.1 hour to 34.4 hours in March.
• There were 230,000 initial claims for unemployment insurance for the week ended April 22, 2023. The total number of workers receiving unemployment insurance was 1,858,000. By comparison, over the same period last year, there were 207,000 initial claims for unemployment insurance, and the total number of claims paid was 1,521,000.
• FOMC/interest rates: The Federal Open Market Committee did not meet in April. However, the Committee next meets during the first week of May, when it is expected the FOMC will raise interest rates by 25 basis points.
• GDP/budget:Rising interest rates and accelerating inflation are beginning to impact the U.S. economy. The gross domestic product increased 1.1% in the first quarter, according to the initial estimate from the Bureau of Economic Analysis. GDP rose 2.6% in the fourth quarter. The deceleration in first-quarter GDP compared to the previous quarter primarily reflected downturns in private inventory investment and nonresidential fixed investment. Personal consumption expenditures rose 3.7% in the first quarter compared to a 1.0% increase in the fourth quarter. Consumer spending on long-lasting durable goods jumped 16.9% in the first quarter after decreasing 1.3% in the prior quarter. Spending on services rose 2.3% (1.6% in the fourth quarter). Nonresidential fixed investment increased 0.7% after climbing 4.0% in the fourth quarter. Residential fixed investment fell 4.2% in the first quarter, significantly better than the 25.1% decrease in the fourth quarter. Exports increased 4.8% in the first quarter, following a decrease of 3.7% in the fourth quarter. Imports, which are a negative in the calculation of GDP, increased 2.9% in the first quarter after declining 5.5% in the previous quarter. Consumer spending, which accounted for about 70.0% of GDP, rose 1.0% in the fourth quarter compared to an increase of 2.3% in the third quarter. Consumer prices increased 4.2% in the first quarter compared to a 3.7% advance in the fourth quarter. Excluding food and energy, consumer prices advanced 4.9% in the first quarter (4.4% in the fourth quarter).
• March saw the federal budget deficit come in at $378.1 billion, $115.7 billion over the February deficit and $185.5 billion above the March 2022 deficit. The deficit for the first six months of fiscal year 2023, at $1.1 trillion, is $432.5 billion more than the first six months of the previous fiscal year. In March, government receipts totaled $313.2 billion and $2.0 trillion for the current fiscal year. Government outlays were $691.3 billion in March and $3.1 trillion through the first six months of fiscal year 2023. By comparison, receipts in March 2022 were $315.2 billion and $2.1 trillion through the first six months of the previous fiscal year. Expenditures were $507.8 billion in March 2022 and $2.8 trillion through the comparable period in FY22.
• Inflation/consumer spending: Inflationary pressures finally may be slowing. According to the latest Personal Income and Outlays report, the Personal Consumption Expenditures Price Index increased 0.1% in March and 4.2% since March 2022. Prices excluding food and energy also advanced 0.3%, following increases of 0.3% in February and 0.6% in January. Prices for goods fell 0.2%, while prices for services increased 0.2% in March. Prices for food dipped 0.2%, while energy prices slid 3.7%. Since March 2022, consumer prices for food increased 8.0% and energy prices declined 9.8%. Personal income rose 0.3% in March, the same increase as in the previous month. Disposable personal income increased 0.4% in March after advancing 0.5% in February. Consumer spending was flat in March after climbing 0.1% the previous month.
• The Consumer Price Index inched up 0.1% in March after increasing 0.4% in February. Over the 12 months ended in March, the CPI advanced 5.0%, down from 6.0% for the year ended in February. Excluding food and energy prices, the CPI rose 0.4% in March and 5.6% over the last 12 months. Prices for shelter, up 0.6%, were by far the largest contributor to the March CPI increase, which was more than offset by a 3.5% decline in energy prices. In March, food prices were flat, although they’re up 8.5% over the last 12 months. For the 12 months ended in March, energy prices decreased 6.4% and prices for shelter advanced 8.2%.
• Prices that producers receive for goods and services fell 0.5% in March, the largest monthly decline since April 2020. Producer prices increased 2.7% for the 12 months ended in March, the smallest 12-month increase since the period ended January 2021. In March, the Producer Price Index saw prices for both goods (-1.0%) and services (-0.3%) decrease. Producer prices less foods, energy, and trade services edged up 0.1% in March after increasing 0.2% in the previous month. Prices less foods, energy, and trade services advanced 3.6% for the year ended in March after increasing 4.5% from the 12 months ended in February.
• Housing: Sales of existing homes decreased 2.4% in March, with monthly sales declining in three of the four major U.S. regions, while sales were steady in the Northeast. Since March 2022, existing-home sales dropped 22.0%. According to the report from the National Association of Realtors®, a dearth of inventory, increasing home prices, and rising mortgage interest rates have contributed to the decline in sales of existing homes. The median existing-home price was $375,700 in March, 3.3% higher than the February price but 0.9% lower than the March 2022 price. Unsold inventory of existing homes represents a 2.6-month supply at the current sales pace, unchanged from the February pace. Sales of existing single-family homes dropped 2.7% in March and 21.1% from March 2022. The median existing single-family home price was $380,000 in March, up 3.2% from February but 1.4% lower than the March 2022 price.
• New single-family home sales advanced in March, climbing 9.6% and marking the fifth consecutive monthly increase. However, sales are down 3.4% from a year earlier. The median sales price of new single-family houses sold in March was $449,800 ($433,200 in February). The March average sales price was $562,400 ($501,800 in February). The inventory of new single-family homes for sale in March decreased to 7.6 months, down from 8.4 months in February.
• Manufacturing: Industrial production rose 0.4% in March after being flat in February. Manufacturing and mining each decreased 0.5% in March and were 1.1% below their respective year-earlier levels. Utilities, on the other hand, rose 8.4% in March, as the return to more seasonal weather after a mild February boosted the demand for heating. In March, total industrial production was 0.5% above its year-earlier level. The major market groups posted mixed results in March. Nondurable consumer goods, business supplies, and energy materials all recorded notable gains as a result of the jump in the output of utilities. Defense and space equipment posted the only other gain, increasing 0.8%. Construction supplies recorded the largest drop (-1.8%), followed by business equipment (-1.0%), durable consumer goods (-0.9%), and non-energy materials (-0.5%).
• March saw new orders for durable goods increase 3.2% after decreasing 1.2% and 5.0% in February and January, respectively. New orders for transportation equipment led the overall increase, advancing 9.1% in March after falling in each of the previous two months. Excluding transportation, new orders inched up 0.3% in March. Excluding defense, new orders increased 3.5%. Over the past 12 months, new orders for durable goods have increased 3.3%.
• Imports and exports: March saw both import and export prices edge lower. Import prices fell 0.6%, the largest one-month decline since November 2022. Import prices have not advanced since June 2022, with the exception of a 0.1% increase in December. Prices for U.S. imports declined 4.6% over the past year, the largest 12-month drop since the index declined 6.3% in May 2020. Import fuel prices decreased 2.9% in March and have not recorded a one-month advance since June 2022. Nonfuel import prices declined 0.5% in March after advancing 0.9% in each of the three previous months. Export prices fell 0.3% in March, the first one-month drop since December 2022. Lower prices in March for agricultural exports and nonagricultural exports each contributed to the overall decrease. Export prices decreased 4.8% for the year ended in March, the largest 12-month decline since a 6.7% drop from May 2019 to May 2020.
• The international trade in goods deficit narrowed more than expected in March, with exports outpacing imports. The trade in goods deficit decreased $7.4 billion, or 8.1%, from the February deficit. Exports of goods for March were $172.7 billion, $4.9 billion, or 2.9%, more than February exports. Imports of goods were $257.3 billion in March, $2.5 billion, or 1.0%, below February. The March increase in exports reflected gains in most major categories, including autos (4.3%), consumer goods (2.0%), and industrial supplies (6.4%). Foods, feeds, and beverages fell 4.5%. In March other goods (-3.3%), capital goods (-2.9%), and industrial supplies (-2.7%), contributed to the overall decline in imports of goods.
• 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 was $70.5 billion, an increase of 2.7% from the January deficit. February exports were $251.2 billion, 2.7% lower than January exports. February imports were $321.7 billion, 1.5% below January imports. For the 12 months ended in February, the goods and services deficit decreased 20.3%. Exports increased 10.8%, while imports increased 2.2%.
• International markets: The combined economic output of the 20 Eurozone countries rose 0.3% over the first quarter of 2023, following a 0.2% decline in the final quarter of last year. Europe’s economy has shown resilience, despite the ongoing war in Ukraine, inflation that is outpacing the European Central Bank’s 2.0% target, and rising interest rates. A mild winter and natural gas imports from the U.S. and other countries helped lower energy prices. China also enjoyed an economic rebound during the first quarter of the year. China’s economy expanded at an annualized rate of 4.5%, bolstered by China’s relaxing of Covid-related restrictions. For April, the STOXX Europe 600 Index increased 1.9%; the United Kingdom’s FTSE advanced 3.1%; Japan’s Nikkei 225 Index gained 2.9%; and China’s Shanghai Composite Index rose 1.5%.
• Consumer confidence: The Conference Board Consumer Confidence Index® decreased in April to 101.3, down from 104.0 in March. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased to 151.1 in April, up from 148.9 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell to 68.1 in April from 74.0 in March. According to the Conference Board’s report, the Expectations Index has remained below 80.0, the level associated with a recession within the next year, since February 2022.

Eye on the Month Ahead

The Federal Open Market Committee (FOMC) meets at the beginning of May. Most predict the Committee will raise interest rates by 25 basis points. The April job figures are released in early May. The job market has yet to show signs of cooling, although most predict job growth will wane this year, possibly beginning in April.