Author: dredheadz

The Markets (as of market close June 3, 2022)

Investors swallowed modest losses last week as the stock market served up another disappointing performance. Each of the benchmark indexes listed here lost value, with the S&P 500 declining 1.2%, the Nasdaq pulling back 1.0%, and the Dow falling 0.9%. The Global Dow fell 0.8% and the Russell 2000 dipped 0.3%. Strong employment data seems to support the Fed’s plan to raise the federal funds rate quickly to help fight inflation, leaving investors to fret about the impact on economic growth.

Last Tuesday, rising crude oil prices and bond yields pulled stocks lower to start the holiday-shortened week. The Dow slid 0.7%, the S&P 500 lost 0.6%, and the Nasdaq slipped 0.4%. The small caps of the Russell 2000 advanced 0.6%. Ten-year Treasury yields added 12 basis points to close at 2.82%. Crude oil prices fell marginally. The dollar inched higher, while gold prices continued to tumble.

Wall Street began June on a sour note with each of the benchmark indexes listed here declining. Last Wednesday, the Global Dow, the Nasdaq, and the S&P 500 lost nearly 0.8%, while the Dow and the Russell 2000 dropped 0.5%. Yields on 10-year Treasuries rose 9 basis points to 2.93%. Crude oil prices changed little from the prior day. The dollar and gold prices advanced.

Equities rebounded last Thursday, with dip buyers targeting reduced megacap stocks. The Nasdaq jumped 2.7%, followed by the Russell 2000 (2.3%), the S&P 500 (1.8%), the Dow (1.3%), and the Global Dow (0.9%). Crude oil prices advanced $2.12, rising to $117.38 per barrel. However, OPEC+ agreed to increase crude output in July and August to compensate for the drop in production due to sanctions placed on Russia. Ten-year Treasury yields dipped about 2 basis points to 2.91%. The dollar declined, while gold prices climbed higher for the second straight day.

Yet another decline in tech shares dragged down the equity market last Friday, with the Nasdaq falling 2.5% and the S&P 500 dropping 1.6%. The Dow (-1.0%), the Russell 2000 (-0.8%), and the Global Dow (-0.6%) also ended the day in the red. Ten-year Treasury yields ticked up to 2.95%. Crude oil prices and the dollar advanced, while gold prices retreated.

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

• There were 390,000 new jobs added in May, and the unemployment rate remained at 3.6% for the third straight month, according to the latest report from the Bureau of Labor Statistics. The number of unemployed persons was essentially unchanged at 6.0 million. Both the total number of unemployed and the unemployment rate are little different from their values in February 2020 (5.7 million and 3.5%, respectively), prior to the COVID-19 pandemic. Both the labor force participation rate, at 62.3%, and the employment-population ratio, at 60.1%, were little changed over the month. Average hourly earnings rose by $0.10, or 0.3%, to $31.95 in May. Over the past 12 months, average hourly earnings have increased by 5.2%. In May, the average work week was 34.6 hours for the third month in a row.
• Manufacturing accelerated in May, but at a slower pace than in April. According to the S&P Global US Manufacturing Purchasing Managers’ Index™ report, while operating conditions continued to improve, the rate of growth in the manufacturing sector eased to the softest since January as expansions in output, new orders, and stocks of purchases slowed. However, demand remained robust, with firms increasing their hiring activity and backlogs of work expanding. Nevertheless, business confidence slipped to the lowest level since October 2020, as supply constraints and inflationary pressures hampered growth. Price growth increased at its fastest rate in six months, with manufacturers passing on higher expenses to customers.
• The services sector also expanded in May, but at the slowest rate in four months, amid the slowest increase in new business since last September, as well as ongoing labor and supply constraints. Meanwhile, pressure on capacity continued to build as backlogs of work rose steeply again. In response, firms expanded their workforce numbers sharply.
• According to the latest Job Openings and Labor Turnover report, the number of job openings fell 455,000 in April to 11.4 million. The largest decreases in job openings were in health care and social assistance (-266,000), retail trade (-162,000), and accommodation and food services (-113,000). The largest increases were in transportation, warehousing, and utilities (+97,000); nondurable goods manufacturing (+67,000); and durable goods manufacturing (+53,000). The number of hires in April, at 6.6 million, was little changed from March. The number of layoffs and discharges edged down to a series low of 1.2 million. Over the 12 months ended in April, hires totaled 78.0 million and separations totaled 71.6 million, yielding a net employment gain of 6.4 million.
• The national average retail price for regular gasoline was $4.624 per gallon on May 30, $0.031 per gallon above the prior week’s price and $1.597 higher than a year ago. Also as of May 30, the East Coast price increased $0.02 to $4.55 per gallon; the Gulf Coast price fell $0.04 to $4.22 per gallon; the Midwest price climbed $0.06 to $4.46 per gallon; the West Coast price increased $0.07 to $5.56 per gallon; and the Rocky Mountain price increased $0.12 to $4.45 per gallon. Residential heating oil prices averaged $4.00 per gallon on May 27, about $0.26 per gallon more than the prior week’s price. According to the U.S. Energy Information Administration June 2 report on petroleum and other liquids, international oil and natural gas companies reported increased cash flow and higher reserves in 2021. These companies directed more of their financial resources toward debt reduction, dividend increases, and merger and acquisition opportunities than toward capital expenditures for production growth.
• For the week ended May 28, there were 200,000 new claims for unemployment insurance, a decrease of 11,000 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 21 was 0.9%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 21 was 1,309,000, a decrease of 34,000 from the previous week’s level, which was revised down by 3,000. This is the lowest level for insured unemployment since December 27, 1969, when it was 1,304,000. States and territories with the highest insured unemployment rates for the week ended May 14 were California (2.0%), New Jersey (1.9%), Alaska (1.7%), New York (1.4%), Puerto Rico (1.4%), Illinois (1.2%), Massachusetts (1.2%), Pennsylvania (1.2%), Rhode Island (1.2%), and the Virgin Islands (1.2%). The largest increases in initial claims for the week ended May 21 were in Missouri (+1,178), Georgia (+606), Mississippi (+481), Texas (+426), and North Carolina (+322), while the largest decreases were in California (-6,119), Illinois (-4,082), Kentucky (-3,578), New York (-1,450), and Michigan (-524).

Eye on the Week Ahead

The Consumer Price Index for May is available this week. Consumer prices rose 0.3% in April and were up 8.3% from April 2021. However, price inflation may be slowing, as the April increase was much lower than March’s 1.2% jump.

The Markets (as of market close May 31, 2022)

May was a volatile month for Wall Street. Stocks began May where April ended, with losses. In fact, it wasn’t until the last week of May that stocks posted gains. Throughout the month, investors had to face the prospects of an economic slowdown impacted by accelerating inflation, rising interest rates, the ongoing war in Ukraine, and lukewarm corporate earnings reports. Despite suggestions from Federal Reserve Chair Jerome Powell that the central bank is not likely to raise interest rates by 75 basis points, stubbornly high inflation has set the Fed on a path of quantitative tightening and interest-rate advances that presents a risk to economic growth.

Crude oil prices gradually rose throughout the month, only to surge on the last day of May after the European Union imposed an immediate ban on two-thirds of all Russian oil imports in a further response to its invasion of Ukraine. Crude oil prices advanced over 10.0% to nearly $115.00 per barrel. Gas prices also continued to increase in May, reaching record highs along the way. The national average retail price for regular gasoline was $4.59 per gallon on May 23, up from $4.12 on April 25 and $1.57 over a year ago. Analysts suggest that gas prices are likely to continue to increase with rising crude oil prices, the impact of the ongoing Russia/Ukraine war, and demand exceeding refinery output.

First-quarter gross domestic product contracted at an annualized rate of 1.5% (see below) after increasing nearly 7.0% to end 2021. Nevertheless, there were some positive signs in May. Consumer spending continued to increase and some high-end retail earnings reports gave investors a reason to believe the economy could weather the storm.

A late-month rally helped push some of the benchmark indexes higher to close May in the black. The Dow, the S&P 500, the Russell 2000, and the Global Dow each finished ahead of their respective April closing values. While tech shares rebounded somewhat at the end of the month, the Nasdaq still closed May in the red.

Ten-year Treasury yields ended the month about where they began. Gold prices decreased nearly 3.0% in May. The U.S. dollar road the ebbs and flows of the stock market and bond prices, ultimately ending the month lower than it started.

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 428,000 in April, about the same increase as in March. Notable job gains occurred in leisure and hospitality, in manufacturing, and in transportation and warehousing. However, employment is down by 1.2 million, or 0.8%, from its pre-pandemic level in February 2020. In April, the unemployment rate remained at 3.6%. The number of unemployed persons remained relatively unchanged at 5.9 million. These measures are little different from their pre-pandemic values in February 2020 (3.5% and 5.7 million, respectively). Among the unemployed, the number of workers who permanently lost their jobs remained at 1.4 million in April. Also in April, the number of persons who were unable to work because their employer closed or lost business due to the pandemic fell to 1.7 million — down from 2.5 million in the previous month. The labor-force participation rate decreased 0.2 percentage point to 62.2% in April. The employment-population ratio fell by 0.1 percentage point to 60.0%. In April, average hourly earnings rose by $0.10, or 0.3%, to $31.85. Over the last 12 months, average hourly earnings rose by 5.5%. The average work week was unchanged at 34.6 hours in April.
• There were 210,000 initial claims for unemployment insurance for the week ended May 21, up from a month earlier when there were approximately 180,000 new claims filed. As of May 14, there were 1,346,000 total claims for unemployment benefits. A year ago, there were 3,618,000 total claims for unemployment insurance benefits.
• FOMC/interest rates: The Federal Open Market Committee met at the beginning of May, and in a move specifically directed at tempering rising inflationary pressures, the Committee increased the federal funds target range by 50 basis points. The FOMC also decided to begin reducing its balance sheet starting June 1 until the size can “maintain securities holdings in amounts needed to implement monetary policy efficiently and effectively in its ample reserves regime.”
• GDP/budget: Gross domestic product contracted at an annualized rate of -1.5% in the first quarter of 2022 compared with a 6.9% advance in the fourth quarter of 2021. The decrease in GDP primarily reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending; while imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures (3.1%), nonresidential fixed investment (9.2%), and residential fixed investment (0.4%) increased. Spending on goods was unchanged, while spending on services climbed 4.8%. The personal consumption price index, a measure of inflation, increased 7.0% in the first quarter after advancing 6.4% in the fourth quarter. Imports increased 18.3% in the first quarter, while exports fell 5.4%.
• There was a surplus of $308.2 billion in the April Treasury budget deficit, in sharp contrast to the $225.6 billion deficit in April 2021. Through the first seven months of fiscal year 2022, the deficit sits at $360.0 billion, 81.0% lower than the deficit over the same period in fiscal year 2021. So far in this fiscal year, government expenditures are down 18.0%, while receipts are up 39.0%. Individual income tax receipts have risen 69.0% and corporate income tax receipts have increased 22.0% compared to April 2021.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report for April, personal income increased 0.4% and disposable personal income rose 0.3% after rising 0.5% and 0.4%, respectively, in March. Consumer spending increased 0.9% following a 1.4% jump in March. Consumer prices rose 0.2% in April after advancing 0.9% the previous month. Consumer prices have risen 6.3% since April 2021. Year over year, energy prices vaulted 30.4%, while food prices increased 10.0%.
• The Consumer Price Index increased 0.3% in April after climbing 1.2% the previous month. Increases in the indexes for shelter, food, airline fares, and new vehicles were the largest contributors to the April CPI increase. Food prices rose 0.9% in April after advancing 1.0% in March, for a 12-month increase of 9.4%, the largest year-over-year gain since April 1981. The gasoline index fell 6.1% in April but is up 43.6% since April 2021. The CPI has risen 8.3% over the last 12 months, a slight decrease from the 8.5% March figure.

• Prices that producers receive for goods and services jumped 0.5% in April following a 1.6% increase in March. Producer prices have increased 11.0% since April 2021. Prices less foods, energy, and trade services increased 0.6% in April after climbing 0.9% the previous month. For the year, prices less foods, energy, and trade services moved up 6.9%. In April, prices for goods jumped 1.3%, while prices for services were unchanged after increasing 1.2% in March. In April, producer prices for foods rose 1.5% and energy prices increased 1.7%.

• Housing: Sales of existing homes declined for the third consecutive month, falling 2.4% in April after dropping 2.7% in March. Year over year, existing home sales were 5.9% under the April 2021 estimate. According to the latest survey from the National Association of Realtors®, home shoppers are feeling the effects of rising mortgage rates and higher home prices. The median existing-home price was $391,200 in April, up from $374,800 in March and 14.8% more than April 2021 ($347,100). Unsold inventory of existing homes represents a 2.2-month supply at the current sales pace. Sales of existing single-family homes also fell in April, down 2.5% after dropping 2.7% in March. Since April 2021, sales of existing single-family homes have fallen 4.8%. The median existing single-family home price was $397,600 in April, up from $381,300 in March.
• Sales of new single-family homes fell 16.6% in April after decreasing 11.7% (revised) in March. The median sales price of new single-family houses sold in April was $450,600 ($435,000 in March). The April average sales price was $570,300 ($522,500 in March). The inventory of new single-family homes for sale in April represented a supply of 8.3 months at the current sales pace, up from March’s 5.9-month supply. Sales of new single-family homes in April were 26.9% below the April 2021 estimate.
• Manufacturing: Industrial production increased 1.1% in April following a 0.9% jump in March. The April increase marks the fourth consecutive month of gains of at least 0.8%. All three major industry groups advanced in April. Manufacturing rose 0.8%, mining increased 1.6%, and utilities climbed 2.4%. Total industrial production in April was 6.4% higher than it was a year earlier. Since April 2021, manufacturing has risen 5.8%, mining has jumped 8.6%, and utilities increased 7.5%.
• April saw new orders for durable goods increase 0.4% following a 0.6% March increase. A 0.6% increase in transportation equipment led the April increase in new orders. Excluding transportation, new orders rose 0.3% in April. Excluding defense, new orders increased 0.3%. In addition to the increase in transportation equipment, areas that contributed to the overall April increase in new durable goods orders included primary metals (0.6%), machinery (1.0%), and nondefense aircraft and parts (4.3%). New orders for nondefense capital goods increased 0.4% in April, while new orders for defense capital goods rose 2.5%. Since April 2021, new orders for durable goods have increased 10.5%.
• Imports and exports: Both import and export price inflation slowed in April. Import prices were unchanged in April after increasing 2.9% in March, according to the U.S. Bureau of Labor Statistics. Import prices have advanced 12.0% since April 2021. Import fuel prices declined 2.4% in April, the first monthly decrease since December 2021. Prices for nonfuel imports increased 0.4% in April and have not recorded a monthly decrease since November 2020. Prices for exports advanced 0.6% in April following a 4.1% increase the previous month. Export prices rose 18.0% over the past year.
• The international trade in goods deficit was $105.9 billion in April, down $20.0 billion, or 15.9%, from March. Exports of goods for April were $173.9 billion, $5.2 billion more than March exports. Imports of goods for April were $279.9 billion, $14.8 billion less than March imports. The decrease in imports was largely driven by a drop in industrial supplies, capital goods, consumer goods, and other goods, while the increase in exports was tied to a 13.3% increase in foods, feeds, and beverages.
• The latest information on international trade in goods and services, released May 4, is for March and shows that the goods and services trade deficit increased $20.0 billion, or 22.3%, from $89.8 billion the previous month. March exports were $241.7 billion, 5.6% above the February estimate. March imports were $351.5 billion, 10.3% more than February imports. Year over year, the goods and services deficit increased $84.8 billion, or 41.5%, from the same period in 2021. Exports increased 17.7%. Imports increased 23.8%.
• International markets: Several European Union leaders pledged to cut oil purchases from Russia, which sent crude oil prices higher. Eurozone inflation reached an annualized rate of 8.1% in May, impacted by the Russia/Ukraine war and corresponding sanctions imposed by European governments. The potential of an economic slowdown in China and supply-chain disruptions due to the pandemic and the aforementioned war weighed on investors. China’s economy declined for the third consecutive month in May, although at a slower pace than in April, as COVID restrictions began to ease. Overall, for the markets in May, the STOXX Europe 600 Index dipped 0.4%. The United Kingdom’s FTSE rose 0.8%. Japan’s Nikkei 225 Index climbed 1.7%, while China’s Shanghai Composite Index increased 4.6%.
• Consumer confidence: The Conference Board Consumer Confidence Index® decreased slightly in May. The index stands at 106.4 in May, down from 108.6 in April. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased to 149.6 in May, down from 152.9 in April. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, inched lower to 77.5 in May from 79.0 in April.

Eye on the Month Ahead

The Federal Open Market Committee meets in June and will almost certainly increase the federal funds target interest rate another 50 basis points, following a similar measure the last time the Committee met in May. Several economic indicators in April began to show that the economy may be slowing. The May data, available in June, will likely continue this trend.

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

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

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

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

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

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

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

Stock Market Indexes

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

Last Week’s Economic News

• The second estimate of first-quarter gross domestic product showed that the economy contracted at an annualized rate of -1.5%. The decrease in GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending; imports, which are a subtraction in the calculation of GDP, increased. However, consumer spending, as measured by personal consumption expenditures, increased 3.1% in the first quarter. On the other hand, exports fell 5.4%, while imports increased 18.3%. The personal consumption expenditures price index (a measure of price inflation) increased 7.0% in the first quarter. Excluding food and energy prices, the PCE price index increased 5.1% (revised).
• According to the latest report on personal income and outlays, inflationary pressures waned in April as the personal consumption expenditures price index rose 0.2% after increasing 0.9% in March. Since April 2021, consumer prices have risen 6.3%. Personal consumption expenditures, a measure of consumer spending, increased 0.9% following a 1.4% advance in March. Personal income increased 0.4% in April, and disposable (after-tax) personal income rose 0.3%.
• The international trade in goods deficit was $105.9 billion in April, a decrease of 15.9% from March. Exports rose 3.1%, while imports fell 5.0%.
• The housing sector has slowed considerably from the pace set last year as rising home prices and mortgage rates have impacted the market. New single-family home sales fell 16.6% in April. Since April 2021, sales of new single-family homes are down 26.9%. The median sales price of new houses sold in April 2022 was $450,600 ($435,000 in March). The average sales price was $570,300 ($522,500 in March). Inventory of new single-family homes for sale sits at a supply of 9.0 months at the current sales rate, well off the April 2021 pace of 4.7 months.
• New durable goods orders increased 0.4% in April following a 0.6% advance in March. Durable goods orders have increased in six of the last seven months. Excluding transportation, new orders increased 0.3%. Excluding defense, new orders increased 0.3%. Transportation equipment, up following two consecutive monthly decreases, led the April increase after advancing 0.6%. Since April 2021, new orders for durable goods have risen 10.5%. New orders for nondefense capital goods used in the production of final products rose 0.4% in April. New orders for defense capital goods jumped 2.5% last month.
• The national average retail price for regular gasoline was $4.593 per gallon on May 23, $0.102 per gallon above the prior week’s price and $1.573 higher than a year ago. Also as of May 25, the East Coast price increased $0.10 to $4.53 per gallon; the Gulf Coast price rose $0.10 to $4.26 per gallon; the Midwest price climbed $0.10 to $4.40 per gallon; the West Coast price increased $0.13 to $5.49 per gallon; and the Rocky Mountain price increased $0.05 to $4.33 per gallon. Residential heating oil prices averaged $3.74 per gallon on May 20, about $0.18 per gallon less than the prior week’s price. According to the U.S. Energy Information Administration, the average retail price of regular gasoline is the highest inflation-adjusted price since 2012 and the fourth highest price on record. The high price of gasoline is currently driven by several factors, including the price of crude oil, the effects of Russia’s full-scale invasion of Ukraine, and U.S. gasoline demand growth outpacing refinery runs, resulting in large gasoline inventory draws.
• For the week ended May 21, there were 210,000 new claims for unemployment insurance, a decrease of 8,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 14 was 1.0%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 14 was 1,346,000, an increase of 31,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended May 7 were California (2.0%), New Jersey (1.9%), Alaska (1.7%), New York (1.4%), Puerto Rico (1.4%), Rhode Island (1.3%), Massachusetts (1.3%), Minnesota (1.2%), Illinois (1.2%), Pennsylvania (1.2%), and the Virgin Islands (1.2%). The largest increases in initial claims for the week ended May 14 were in Kentucky (+6,712), California (+1,968), Illinois (+1,742), Ohio (+1,189), and Florida (+629), while the largest decreases were in Michigan (-384), Georgia (-325), Colorado (-301), Arizona (-278), and the District of Columbia (-251).

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

Last Week’s Economic News

• Retail sales in April rose 0.9% after increasing 1.4% in March. Retail sales advanced 8.2% since April 2021. Retail trade sales in April were up 0.7% from March and increased 6.7% over last year. Gasoline station sales dropped 2.7% last month but were up 36.9% from April 2021, while sales at food services and drinking places climbed 2.0% in April and were up 19.8% from last year.
• Industrial production increased for the fourth consecutive month following a 1.1% advance in April. Manufacturing output rose 0.8%, utilities moved up 2.4%, and mining gained 1.6%. Total industrial production in April was 6.4% above its year-earlier level.
• The housing market is showing definite signs of slowing. In April, building permits (-3.2%), housing starts (-0.2%), and housing completions (-5.1%) decreased from their respective March totals. In particular, single-family new home construction is beginning to wane. The number of single-family building permits issued in April was 4.6% below the March figure, while single-family housing starts (-7.3%), and housing completions (-4.9%) also declined.
• Sales of existing homes fell for the third consecutive month after declining 2.4% in April. Existing-home sales are down 5.9% since April 2021. According to the National Association of Realtors®, higher home prices and rising mortgage rates have limited buyer activity. The median existing-home price in April was $391,200, up from the March price of $374,800 and well ahead of the April 2021 price of $340,700. Unsold inventory sits at a 2.2 month supply at the current sales pace, slightly ahead of the March rate of 1.9 months. Sales of existing single-family homes also declined in April after dropping 2.5% from March. Single-family existing-home sales are off 4.8% from a year ago. The median existing single-family home price was $397,600 in April, higher than the $381,300 March price.
• The national average retail price for regular gasoline was $4.491 per gallon on May 16, $0.163 per gallon above the prior week’s price and $1.463 higher than a year ago. Also as of May 16, the East Coast price increased $0.20 to $4.43 per gallon; the Gulf Coast price rose $0.14 to $4.16 per gallon; the Midwest price climbed $0.15 to $4.30 per gallon; the West Coast price increased $0.14 to $5.36 per gallon; and the Rocky Mountain price increased $0.05 to $4.28 per gallon. Residential heating oil prices averaged $3.92 per gallon on May 13, about $0.03 per gallon less than the prior week’s price. U.S. crude oil refinery inputs averaged 15.9 million barrels per day during the week ended May 13, which was 239,000 barrels per day more than the previous week’s average. During the week ended May 13, refineries operated at 91.8% of their operable capacity, while gasoline production decreased, averaging 9.6 million barrels per day.
• For the week ended May 14, there were 218,000 new claims for unemployment insurance, an increase of 21,000 from the previous week’s level, which was revised down by 6,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended May 7 was 0.9%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended May 7 was 1,317,000, a decrease of 25,000 from the previous week’s level, which was revised down by 1,000. This is the lowest level for insured unemployment since December 27, 1969, when it was 1,304,000. States and territories with the highest insured unemployment rates for the week ended April 30 were California (2.1%), New Jersey (2.0%), Alaska (1.8%), New York (1.5%), Puerto Rico (1.4%), Rhode Island (1.4%), Massachusetts (1.3%), Minnesota (1.3%), and Illinois (1.2%). The largest increases in initial claims for the week ended May 7 were in California (+3,046), Ohio (+772), Texas (+452), Arkansas (+393), and Iowa (+337), while the largest decreases were in New York (-9,899), Kentucky (-1,479), Indiana (-1,341), Florida (-746), and Massachusetts (-615).

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

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

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

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

Stock Market Indexes

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

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

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

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

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

Stock Market Indexes

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

Latest Economic Reports

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

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

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

Eye on the Month Ahead

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

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

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

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

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

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

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

Stock Market Indexes

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

The Markets (as of market close April 22, 2022)

Wall Street closed lower last week as investors weighed mixed earnings data against increased certainty of aggressive interest rate hikes by the Federal Reserve. It was the third straight week of losses for the S&P 500 and the Nasdaq, while the Dow declined for the fourth consecutive week. The hawkish stance taken by the Fed has equities, particularly tech and growth shares, retreating. The small caps of the Russell 2000 fell the furthest last week, followed by the Nasdaq, the Global Dow, the S&P 500, and the Dow. Among the market sectors, only real estate and consumer staples posted weekly gains. Ten-year Treasury yields rose by 8 basis points as bond prices slid lower. Crude oil and gold prices declined, while the dollar advanced.

Stocks edged lower while bond yields rose to begin the week last Monday. The small caps of the Russell 2000 slid 0.7%, pulled lower by underperforming health care and industrials sectors. The remaining benchmark indexes listed here closed the day relatively flat, as the Dow, the Nasdaq, and the S&P 500 wavered between small gains and losses throughout the day. Ten-year Treasury yields rose 3.4 basis points to 2.86%. Crude oil prices added nearly $1.00 to reach $107.89 per barrel. The dollar and gold prices also advanced.

Wall Street rallied last Tuesday, buoyed by strong, first-quarter earnings data from several companies. Of the 48 companies in the S&P 500 that reported first-quarter earnings, 79% posted strong returns. The Nasdaq and the Russell 2000 each gained about 2.0%, followed by the S&P 500 (1.6%), the Dow (1.5%), and the Global Dow (0.4%). Crude oil prices waned on demand concerns, dropping nearly $6.00 to $102.5 per barrel. Bond prices continued to slide, pushing the yield on 10-year Treasuries up 5.1 basis points to 2.91%. The dollar edged higher, while gold prices dipped nearly $37.00 to $1,949.40 per ounce.

Equities ended last Wednesday mixed, with the Dow (0.7%), the Global Dow (0.6%), and the Russell 2000 (0.4%) advancing, while the Nasdaq (-1.2%) and the S&P 500 (-0.1%) lost value. First-quarter earnings data continued to be generally upbeat. Prices on 10-year Treasuries advanced, pulling yields down 7.3 basis points to 2.84%. Crude oil prices were flat, while the dollar and gold prices slid.

Despite an early-day surge on the heels of positive earnings data, stocks closed last Thursday lower after Federal Reserve Chair Jerome Powell said a 50-basis point rate hike is “on the table” when the central bank meets on May 3-4. The Russell 2000 dropped 2.3%, followed by the Nasdaq (-2.1%), the S&P 500 (-1.5%), the Dow (-1.1%), and the Global Dow (-0.8%). Crude oil prices climbed to $103.97 per barrel. The dollar inched higher, while gold prices slid. The yield on 10-year Treasuries rose 7.7 basis points to 2.91%.

Stocks closed last Friday lower to end a week that saw the market seesaw. Each of the benchmark indexes listed here fell more than 2.25%, with the Dow and the S&P 500 declining 2.8%, followed by the Russell 2000 and the Nasdaq, which slid 2.6%. Ten-year Treasury yields dipped slightly to end the day at 2.90%. Crude oil prices declined $2.14 to $101.65 per barrel. The dollar inched higher, while gold prices waned.

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

• March saw the number of building permits for residential construction increase by 0.4%. However, single-family permits slid 4.8%. The number of privately owned housing starts rose 0.3% in March, driven higher by a 7.5% increase in multi-unit starts, which was offset by a 1.7% dip in single-family housing starts. Overall housing completions dipped 4.5% last month, and single-family housing completions dropped 6.4%.
• Existing home sales fell 2.7% in March, declining for the second straight month. Sales of existing homes are down 4.5% since March 2021. Total housing inventory at the end of March increased 11.8% from February but fell 9.5% from one year ago. Unsold inventory sits at a 2.0-month supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021. The median existing-home price for all housing types in March was $375,300, up from $357,300 in February and ahead of the March 2021 price of $326,300. Sales of existing single-family homes also fell in March, down 2.7% from the February estimate and off 3.8% from March 2021. The median existing single-family home price in March was $382,000, an increase over the February median existing single-family home price of $363,800.
• The national average retail price for regular gasoline was $4.066 per gallon on April 18, $0.025 per gallon less than the prior week’s price but $1.211 higher than a year ago. Also as of April 18, the East Coast price decreased $0.04 to $3.93 per gallon; the Gulf Coast price was flat at $3.73 per gallon; the Midwest price slid $0.02 to $3.88 per gallon; the West Coast price decreased $0.04 to $5.10 per gallon; and the Rocky Mountain price edged up $0.01 to $4.15 per gallon. Residential heating oil prices averaged $3.86 per gallon, about $0.54 per gallon more than the prior week’s price. U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ended April 15, which was 194,000 barrels per day more than the previous week’s average. During the week ended April 15, refineries operated at 91.0% of their operable capacity, and gasoline production increased, averaging 9.8 million barrels per day.
• For the week ended April 16, there were 184,000 new claims for unemployment insurance, a decrease 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 April 9 was 1.0%, 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 9 was 1,417,000, a decrease of 58,000 from the previous week’s level. This is the lowest level for insured unemployment since February 21, 1970, when it was 1,412,000. States and territories with the highest insured unemployment rates for the week ended April 2 were New Jersey (2.3%), California (2.2%), Alaska (2.0%), Minnesota (2.0%), Illinois (1.7%), Massachusetts (1.7%), New York (1.7%), Rhode Island (1.7%), Pennsylvania (1.5%), and the Virgin Islands (1.5%). The largest increases in initial claims for the week ended April 9 were in Missouri (+7,194), Michigan (+5,950), California (+3,215), Indiana (+3,193), and Texas (+2,617), while the largest decreases were in Ohio (-3,886), Wisconsin (-1,159), Oklahoma (-776), Utah (-270), and Hawaii (-219).

Eye on the Week Ahead

There’s plenty of important economic data out this week, headlined by the initial estimate for the first-quarter gross domestic product. The March report on personal income and outlays is also available at the end of the week. Personal income rose 0.5% in February, while consumer spending increased 0.2%. Consumer prices advanced 0.6% in February and were up 6.4% since February 2021.

The Markets (as of market close April 14, 2022)

Stocks ended last week mostly lower. Each of the benchmark indexes listed here closed down during the holiday-shortened week, as Wall Street was closed in observance of Good Friday. Tech shares slid lower, pulling the Nasdaq down 2.6%. The S&P 500 also fell more than 2.0% for the week. Only the Russell 2000 pushed higher. Ten-year Treasury yields, the dollar, and gold prices advanced. Crude oil prices, which had fallen in recent weeks, reversed course, climbing more than $8.00 per barrel. Inflationary indicators showed no slowdown in March, with consumer prices climbing 1.2%, pushed higher by rising oil prices resulting from the Russia-Ukraine war. Among the market sectors, energy and utilities were the only areas to gain for the week, while information technology and communication services were the worst performers.

Treasury yields rose and stock prices fell to begin the week last Monday. Tech shares and energy stocks led the decline. The Nasdaq lost 2.2% on the day after falling nearly 4.0% the previous week, marking the worst performance since late January for the tech-heavy index. The S&P 500 dipped 1.7%, the Dow fell 1.2%, the Russell 2000 slipped 0.7%, and the Global Dow fell 0.5%. Bond prices also dropped, sending yields higher. Ten-year Treasury yields jumped 6.7 basis points to 2.78%. The dollar and gold prices advanced. Crude oil prices declined $3.30 to $94.97 per barrel.

Despite gains earlier in the day, stocks closed last Tuesday down. Investors pulled away from equities, resuming worries that the Fed will accelerate interest-rate increases following the latest data from the Consumer Price Index (see below). The Dow, the S&P 500, and the Nasdaq fell about 0.3%, while the Global Dow dipped 0.5%. The small caps of the Russell 2000 increased 0.3%. Ten-year Treasury yields fell 5.5 basis points to 2.72% as rising bond prices pulled yields lower. Energy shares rose 1.7% as crude oil prices surged 6.8% to $100.70 per barrel. The dollar and gold prices increased.

Wall Street bounced back last Wednesday, with each of the benchmark indexes listed here posting solid gains. The Nasdaq led the increase, climbing 2.0%, followed by the Russell 2000 (1.9%), the S&P 500 (1.1%), the Dow (1.0%), and the Global Dow (0.7%). Ten-year Treasury yields slipped 3.8 basis points to 2.68%. The dollar also fell, while crude oil prices continued to advance, adding $3.72 per barrel to reach $104.32 per barrel. Consumer discretionary led the market sectors, advancing 2.5%.

Stocks ended the holiday-shortened week lower last Thursday. Each of the benchmark indexes ended the day in the red, led by the Nasdaq (-2.1%) and the S&P 500 (-1.2%). The Russell 2000 slid 1.0%, the Dow fell 0.3%, and the Global Dow dipped 0.1%. Energy was the only sector to gain ground, while information technology dropped 2.5%. The yield on 10-year Treasuries rose 14 basis points to 2.82%. Crude oil prices reached $106.24 per barrel, an increase of nearly $2.00 per barrel. The dollar advanced, while gold prices fell.

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

• Consumer prices vaulted 1.2% higher in March and have risen 8.5% over the past 12 months. Increases in the indexes for gasoline (18.3%), shelter (0.5%), and food (1.0%) were the largest contributors to the overall CPI increase. The shelter index was by far the biggest factor in the increase, with a broad set of other indexes also contributing, including those for airline fares, household furnishings and operations, medical care, and motor vehicle insurance. In contrast, the index for used cars and trucks fell 3.8%. It should be noted that a major contributing factor in the March CPI increase was the surge in fuel prices following Russia’s invasion of Ukraine. The 12-month increase was the largest since the period ended December 1981. This latest data will likely support a more aggressive response from the Federal Reserve with interest-rate hikes and a faster reduction in bond holdings.
• Prices at the producer level increased 1.4% in March. Over the past 12 months, producer prices have moved up 11.2%, the largest increase since data was first calculated in November 2010. In March, goods prices advanced 2.3%, while prices for services increased 0.9%. Since March 2021, producer prices less foods, energy, and trade services increased 7.0%. As with consumer prices, much of the increase in producer prices in March is attributable to a jump in energy prices, spurred higher by the Russia-Ukraine war.
• March saw inflationary pressures continue in international trade. Import prices advanced 2.6% last month, while export prices rose 4.5%. The March increase in imports was the largest monthly increase since April 2011. Import prices have risen 12.5% since March 2021. Import fuel prices advanced 14.6% in March — the largest one-month increase since July 2020. Regarding export prices, the March advance was the largest monthly increase since January 1989 when data was first calculated. Export prices have increased 18.8% over the 12 months ended in March.
• Retail sales rose 0.5% in March and 6.9% since March 2021. Retail trade sales were up 0.4% last month from February and increased 5.5% year over year. Gasoline station sales jumped 8.9% in March, general merchandise store sales rose 5.4%, sales at food services and drinking places increased 1.0%, and food and beverage store sales climbed 1.0%. Conversely, sales from motor vehicle and parts dealers fell 1.9%, and online sales slid 6.4%.
• The federal budget deficit in March was $192.7 billion, $467.0 billion lower than the March 2021 deficit. Through the first six months of the fiscal year, the deficit sits at $668.3 billion, over 61.0% lower than the deficit over the same period in the previous fiscal year. Compared to fiscal year 2021, government expenditures are down 18.0% so far this fiscal year, while receipts are up 25.0%. Contributing to the increase in government receipts is a 36.0% increase in individual income tax receipts and a 22.0% jump in corporate tax receipts.
• Total industrial production advanced 0.9% in March and rose at an annual rate of 8.1% for the first quarter. Total industrial production in March was 5.5% above its year-earlier level. Manufacturing output gained 0.9% in March, pushed higher by a 7.8% jump in the output of motor vehicles and parts, while factory output elsewhere moved up 0.4%. The index for utilities increased 0.4%, and the index for mining advanced 1.7%.
• The national average retail price for regular gasoline was $4.091 per gallon on April 11, $0.079 per gallon less than the prior week’s price but $1.242 higher than a year ago. Also as of April 11, the East Coast price decreased $0.08 to $4.00 per gallon; the Gulf Coast price fell $0.08 to $3.73 per gallon; the Midwest price slid $0.08 to $3.90 per gallon; the West Coast price decreased $0.08 to $5.14 per gallon; and the Rocky Mountain price was unchanged at $4.14 per gallon. Residential heating oil prices averaged $3.32 per gallon, about $0.11 per gallon less than the prior week’s price. U.S. crude oil refinery inputs averaged 15.5 million barrels per day during the week ended April 8, which was 424,000 barrels per day less than the previous week’s average. During the week ended April 8, refineries operated at 90.0% of their operable capacity. Gasoline production increased last week, averaging 9.5 million barrels per day.
• For the week ended April 9, there were 185,000 new claims for unemployment insurance, an increase of 18,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended April 2 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended April 2 was 1,475,000, a decrease of 48,000 from the previous week’s level. States and territories with the highest insured unemployment rates for the week ended March 26 were California (2.4%), New Jersey (2.3%), Alaska (2.1%), Minnesota (2.0%), Massachusetts (1.9%), Rhode Island (1.9%), New York (1.8%), Georgia (1.7%), Illinois (1.7%), and Puerto Rico (1.7%).The largest increases in initial claims for the week ended April 2 were in Ohio (+1,509), Pennsylvania (+1,478), California (+1,082), Illinois (+509), and Florida (+466), while the largest decreases were in Michigan (-2,491), Texas (-2,487), New Jersey (-1,105), Kentucky (-1,046), and New York (-866).

Eye on the Week Ahead

This week, economic news focuses on the housing sector with the release of the housing starts report and the latest existing home sales data for March. Building permits and existing home sales fell in February but are expected to rebound in March.