What I’m Watching This Week – 24 May 2021

The Markets (as of market close May 21, 2021)

Stocks began last week mostly lower, pulled down by tech and consumer shares. Of the benchmark indexes listed here, only the Russell 2000 (0.1%) and the Global Dow (0.2%) were able to eke out gains. The Nasdaq dipped 0.4%, followed by the S&P 500, which lost 0.3%, and the Dow, which fell 0.2%. Treasury yields rose modestly, while crude oil prices rose 1.5%. The dollar was mixed to lower. Energy prices advanced 2.3% and materials climbed 0.9%. Tech shares dropped 0.7%, communication services declined 0.9%, and utilities fell 0.9%.

Stocks fell for the second consecutive day last Tuesday. The S&P 500 fell 0.9%, followed by the Dow, (-0.8%), the Russell 2000 (-0.7%), and the Nasdaq (-0.6%). The Global Dow inched ahead 0.1%. The yield on 10-year Treasuries was little changed, while crude oil prices and the dollar declined. The market sectors fared poorly, with energy (-2.6%), industrials (-1.5%), financials (-1.4%), communication services (-1.2%), and materials (-1.1%) the hardest hit.

Last Wednesday saw equities fall for the third consecutive day. Energy shares continued to decline, falling 2.5%. Among the remaining sectors, only information technology (0.3%) and communication services (0.1%) advanced. The Global Dow fell 1.3%, followed by the Russell 2000 (-0.8%), the Dow (-0.5%), and the S&P 500 (-0.3%). The tech-heavy Nasdaq closed the day effectively unchanged. Crude oil prices dropped for the second day in a row, while the dollar and Treasury yields rose.

Growth and tech stocks reversed course last Thursday, following three consecutive days of losses. Treasury yields, crude oil prices, and the dollar fell, while the major stock indexes gained, led by the Nasdaq, which advanced 1.8%. The S&P 500 climbed 1.1%, both the Russell 2000 and the Dow gained 0.6%, and the Global Dow added 0.4%. Among the market sectors, information technology (1.9%), communication services (1.7%), real estate (1.3%), and health care (1.0%) increased by at least 1.0%, while energy dipped 0.1%.

Crude oil prices rose for the first time in four sessions last Friday, a day in which stocks were mixed. Tech shares fell, dragging the Nasdaq down following the prior day’s rally. The S&P 500 also closed the day lower, while the Dow (0.4%) and the Russell 2000 (0.3%) advanced. Treasury yields were mixed and the dollar rose. Friday also saw the market sectors offer mixed returns, with financials, utilities, industrials, materials, and energy advancing, while communication services, consumer discretionary, consumer staples, health care, information technology, and real estate declined.

Stocks closed the week generally lower, with only the Nasdaq eking out a gain, in what proved to be a volatile week of trading. The Dow dropped 0.5%, followed by the S&P 500, the Russell 2000, and the Global Dow. The yield on 10-year Treasuries closed unchanged from the prior week. The dollar and crude oil prices fell, while the price of gold rose by 2.0%. Inflation fears, cryptocurrency volatility, and concerns that the Fed could tighten monetary policy appear to be driving much of the market lately. Despite this movement, the benchmark indexes remain well ahead of their respective prior-year values, led by the Global Dow, the Russell 2000, the Dow, the S&P 500, and the Nasdaq. Since the beginning of the year, crude oil prices are up more than 31.0%, which has driven gas prices up by more than $1.00 per gallon.

The national average retail price for regular gasoline was $3.028 per gallon on May 17, $0.067 per gallon more than the prior week’s price and $1.150 higher than a year ago. U.S. crude oil refinery inputs averaged 15.1 million barrels per day during the week ended May 14, which was 96,000 barrels per day more than the previous week’s average. Refineries operated at 86.3% of their operable capacity last week. Gasoline production increased last week, averaging 9.8 million barrels per day, up from the prior week’s average of 9.6 million barrels per day.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 5/21Weekly ChangeYTD Change
DJIA30,606.4834,382.1334,207.84-0.51%11.77%
Nasdaq12,888.2813,429.9813,470.990.31%4.52%
S&P 5003,756.074,173.854,155.86-0.43%10.64%
Russell 20001,974.862,224.632,215.27-0.42%12.17%
Global Dow3,487.524,030.554,022.28-0.21%15.33%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.63%1.63%0 bps72 bps
US Dollar-DXY89.8490.3090.00-0.33%0.18%
Crude Oil-CL=F$48.52$65.51$63.84-2.55%31.57%
Gold-GC=F$1,893.10$1,844.00$1,880.701.99%-0.66%

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

Last Week’s Economic News

  • The number of building permits issued in April increased by 0.3%, according to the latest information from the Census Bureau. Building permits rose 8.4% in the northeast and 3.9% in the south. Issued building permits fell in the west and the midwest. Building permits for single-family housing decreased 3.8% in April. Housing starts fell 9.5% last month, and housing completions dipped 4.4%.
  • Sales of existing homes fell for the third consecutive month, dipping 2.7% in April. Year over year, sales of existing homes are up 33.9%. According to the National Association of Realtors®, the supply of existing homes for sale has not kept pace with the demand, although inventory is expected to increase as further COVID-19 vaccinations are administered and potential home sellers become more comfortable listing and showing their homes. The median existing-home price for all housing types in April was $341,600, a notable increase from the March price of $329,100 and 19.1% over the April 2020 median price of $286,800. Inventory rose 10.5% in April from March, but is down 20.5% from a year ago. Unsold inventory sits at a 2.4-month supply at the current sales pace. Sales of existing single-family homes fell 3.2% in April from the prior month, but are up 28.9% from a year ago. The median existing single-family home price was $347,400 in April, 3.9% over the March price ($334,500) and 20.3% above the April 2020 price.
  • For the week ended May 15, there were 444,000 new claims for unemployment insurance, a decrease of 34,000 from the previous week’s level, which was revised up by 9,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.7% for the week ended May 8, an increase of 0.1 percentage point from the previous week’s revised rate. The advance number of those receiving unemployment insurance benefits during the week ended May 8 was 3,751,000, an increase of 111,000 from the prior week’s level, which was revised down by 15,000. For comparison, during the same period last year, there were 2,149,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 15.9%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates in the week ended May 1 were in Nevada (6.1%), Connecticut (4.6%), Puerto Rico (4.6%), Alaska (4.3%), Rhode Island (4.3%), Vermont (4.3%), New York (4.1%), Pennsylvania (4.0%), the Virgin Islands (4.0%), and Illinois (3.9%). The largest increases in initial claims for the week ended May 8 were in Georgia (+7,404), Washington (+6,111), Illinois (+3,221), Pennsylvania (+2,156), and Ohio (+1,371), while the largest decreases were in Michigan (-13,990), New York (-8,106), Vermont (-5,835), Nevada (-2,835), and Florida (-2,210).

Eye on the Week Ahead

The second estimate of the first-quarter gross domestic product is out this week. According to the first estimate, the economy accelerated at a rate of 6.4%. The next two estimates will be based on more economic data, although the annual rate of growth isn’t expected to change much from the first iteration. Another important report out this week is the personal income and outlays estimate. The Federal Reserve pays particular attention to the price index as an indication of inflationary trends. The personal consumption expenditures price index increased 0.5% in April and is up 2.3% year over year.

What I’m Watching This Week – 17 May 2021

The Markets (as of market close May 14, 2021)

Tech and growth shares fell last Monday, as inflation worries drove stocks lower and commodity prices higher. The Dow (0.2%) and the Global Dow (0.5%) advanced, while the Russell 2000 and the Nasdaq each fell 2.6%. The S&P 500 lost 0.7%. Treasury yields and the dollar gained. Crude oil prices dipped. Among the market sectors, information technology was the hardest hit, decreasing 2.5%, followed by consumer discretionary (-2.0%) and communication services (-1.9%). Utilities (1.0%) and consumer staples (0.8%) fared best.

Stocks slid for a second consecutive day last Tuesday, pulled lower by falling energy, financial, and industrial shares. The Global Dow lost 1.6%, the Dow fell 1.4%, the S&P 500 dipped 0.9%, and the Russell 2000 dropped 0.3%. The Nasdaq finished essentially unchanged. Treasury yields climbed 1.4%, crude oil prices rose 0.8%, and the dollar was mixed. Only materials gained ground among the sectors. Much of the market movement of late seems to be driven by wavering sentiment over whether inflationary pressures are about to ratchet up. Another concern centers around labor shortages as the economy reopens, which could cause supply-chain disruptions.

Equities sank last Wednesday as a higher-than-expected Consumer Price Index for April (see below) again raised concerns of mounting inflationary pressure. The Russell 2000 lost 3.4%, the Nasdaq dropped 2.7%, the S&P 500 fell 2.1%, the Dow lost 2.0%, and the Global Dow decreased 1.2%. Treasury yields rose, with the yields on 10-year Treasuries advancing 4.4%. Crude oil prices and the dollar increased. Energy was unchanged, while the remaining sectors declined, with communication services, consumer discretionary, industrials, information technology, materials, real estate, and utilities each falling at least 2.0%.

Last Thursday saw stocks rebound, ending a three-day decline. The Russell 2000 led the advance, climbing 1.7%, followed by the Dow (1.3%), the S&P 500 (1.2%), the Nasdaq (0.7%), and the Global Dow (0.1%). Treasury yields, crude oil prices, and the dollar fell. Industrials and financials each advanced 1.9%, closely followed by utilities (1.8%), as each of the market sectors rose except energy, which fell 1.4%.

Last Thursday’s rebound carried over to Friday on a surge in energy and information technology shares. The Nasdaq jumped 2.3%, followed by the Russell 2000 (2.5%), the Global Dow (1.5%), the S&P 500 (1.5%), and the Dow (1.1%). The yield on 10-year Treasuries dropped, the dollar slipped, and crude oil prices advanced.

Despite a late-week rally, stocks weren’t able to recover from the losses suffered earlier in the week. Each of the benchmark indexes listed here fell, led by the Nasdaq, which dropped 2.3%, and the Russell 2000, which slid 2.1%. Investor confidence on a continued economic recovery supported by Federal Reserve stimulus has been shaken recently. April saw both consumer and producer prices continue to climb higher than forecast, and jobless claims are declining. While some investors opine that the surge in inflation is a reaction to the reopening of the economy, many others are concerned that inflationary pressures may persist. Among the market sectors, only consumer staples, materials, and financials added value. Crude oil prices continued to climb, advancing 1.0% last week and 35.0% since the beginning of January.

The national average retail price for regular gasoline was $2.961 per gallon on May 10, $0.071 per gallon more than the prior week’s price and $1.110 higher than a year ago. U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ended May 7, which was 223,000 barrels per day more than the previous week’s average. Refineries operated at 86.1% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day, up from the prior week’s average of 9.1 million barrels per day.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 5/14Weekly ChangeYTD Change
DJIA30,606.4834,777.7634,382.13-1.14%12.34%
Nasdaq12,888.2813,752.2413,429.98-2.34%4.20%
S&P 5003,756.074,232.604,173.85-1.39%11.12%
Russell 20001,974.862,271.632,224.63-2.07%12.65%
Global Dow3,487.524,061.264,030.55-0.76%15.57%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.57%1.63%6 bps72 bps
US Dollar-DXY89.8490.2290.300.09%0.51%
Crude Oil-CL=F$48.52$64.89$65.510.96%35.02%
Gold-GC=F$1,893.10$1,831.50$1,844.000.68%-2.59%

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 latest Consumer Price Index report for April probably won’t help to quiet fears of rising inflation. The CPI increased 0.8% in April following a 0.6% rise in March. Over the last 12 months, the index increased 4.2%. This is the largest 12-month increase since a 4.9% increase for the period ended September 2008. The index for used cars and trucks rose 10.0% in April. This was the largest one-month increase since the series began in 1953, and it accounted for over a third of the overall CPI increase. The index for all items less food and energy rose 0.9% in April, its largest monthly increase since April 1982. Along with the increase in used car and truck prices, all the other major components of the CPI rose except for energy prices, which dipped 0.1% as gas prices decreased in April but are still 25.1% higher than a year ago.
  • Producer prices climbed 0.6% in April, advancing for the fifth consecutive month. Producer prices have increased 6.2% for the 12 months ended in April, the largest advance since November 2010, the first month that 12-month data was collected. Services and goods each 0.6% in April. Producer prices less foods, energy, and trade services rose 0.7% in April following an increase of 0.6% in March. For the 12 months ended in April, prices less foods, energy, and trade services moved up 4.6%, the largest advance since 12-month data was first calculated in August 2014.
  • Sales at the retail level were virtually unchanged in April from the previous month. However, retail sales in April were 51.2% above sales in April 2020. Retail trade sales in April 2021 were down 0.3% from March 2021, but up 46.1% from April 2020. Clothing and clothing accessories stores were up 726.8% from April 2020, while food services and drinking places were up 116.8% from last year.
  • The federal budget deficit was $225.6 billion in April, well below the March deficit of $659.6 billion. Through the first seven months of the fiscal year, the total government deficit sits at $1,931.8 trillion, 30% higher than the budget deficit over the same period last fiscal year.
  • U.S. import prices advanced 0.7% in April following a 1.4% increase in March, while prices for U.S. exports increased 0.8% in April after rising 2.4% the previous month. In April, a 0.7% rise in nonfuel import prices and a 0.5% increase in fuel prices both contributed to the overall advance. U.S. import prices rose 10.6% from April 2020 to April 2021, the largest over-the-year increase since an 11.1% advance for the year ended October 2011. Higher prices for nonfuel industrial supplies and materials; foods, feeds, and beverages; capital goods; and automotive vehicles all contributed to the April rise in nonfuel import prices. Import petroleum rose 1.2% in April. Import fuel prices advanced 126.5% over the past year, the largest 12-month increase since a 145.1% rise for the year ended in February 2000. Prices for petroleum and natural gas also advanced for the year ended in April, rising 133.7% and 59.6%, respectively. Prices for agricultural exports advanced 0.6% in April and 25.2% for the year ended in April, the largest 12-month advance since a 26.4% in July 2011. Prices for nonagricultural exports advanced 0.9% in April, led by higher prices for nonagricultural industrial supplies and materials, capital goods, and automotive vehicles, which more than offset lower prices for consumer goods.
  • In April, manufacturing rose 0.4%, mining advanced 0.7%, and utilities increased 2.6%, each of which helped to drive total industrial production up 0.7%. Total industrial production has moved up 16.5% from its level in April 2020, but it is 2.7% below its February 2020 pre-pandemic level.
  • The latest Job Openings and Labor Turnover report for March revealed the largest number of job openings, at 8.1 million, in the history of the survey, which began in December 2000. The number of hires rose by 3.7% to 6.0 million. Total separations fell from 5.4 million in February to 5.3 million in March. Within separations, the quits rate was unchanged at 2.4%, while the layoffs and discharges rate decreased to a series low of 1.0%. Over the 12 months ended in March, hires totaled 73.2 million and separations totaled 69.9 million, yielding a net employment gain of 3.3 million.
  • For the week ended May 8, there were 473,000 new claims for unemployment insurance, a decrease of 34,000 from the previous week’s level, which was revised up by 9,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.6% for the week ended May 1, a decrease of 0.1 percentage point from the previous week’s revised rate. The advance number of those receiving unemployment insurance benefits during the week ended May 1 was 3,655,000, a decrease of 45,000 from the prior week’s level, which was revised up by 10,000. For comparison, during the same period last year, there were 2,315,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 14.3%. During the last week of February 2020 (pre-pandemic), there were 219,000 initial claims for unemployment insurance, and the number of those receiving unemployment insurance benefits was 1,724,000. States and territories with the highest insured unemployment rates in the week ended April 24 were in Nevada (6.4%), Connecticut (4.9%), Rhode Island (4.6%), Alaska (4.5%), Vermont (4.5%), Illinois (4.4%), Puerto Rico (4.4%), New York (4.2%), Pennsylvania (4.0%), and the District of Columbia (3.6%). The largest increases in initial claims for the week ended May 1 were in Kentucky (+4,714), New Jersey (+2,002), Delaware (+1,294), Vermont (+1,142), and Puerto Rico (+824), while the largest decreases were in Virginia (-25,125), New York (-9,533), Florida (-8,252), California (-7,840), and Oklahoma (-6,392).

Eye on the Week Ahead

Housing data for April is available this week. Building permits and housing starts shot higher in March, however the April figures may not be quite as robust. April figures for sales of existing homes are also out this week. Existing-home sales dipped in March for the second consecutive month. Relatively low inventory coupled with an uptick in new-home construction may be the primary reasons for the lag in sales of existing homes.

What I’m Watching This Week – 10 May 2021

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

Monthly Market Review – April 2021

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

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

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

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

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

Stock Market Indexes

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

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

Latest Economic Reports

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

Eye on the Month Ahead

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

What I’m Watching This Week – 3 May 2021

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

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

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

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

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

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

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

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

Stock Market Indexes

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

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

Last Week’s Economic News

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

Eye on the Week Ahead

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

What I’m Watching This Week – 26 April 2021

The Markets (as of market close April 23, 2021)

Stocks retreated from record highs last Monday. The S&P 500 fell 0.5% — its largest single-day drop in nearly four weeks. Small caps and tech shares dove lower, pulling down the Russell 2000 (-1.4%) and the Nasdaq (-1.0%). The Dow slipped 0.4% and the Global Dow was unchanged. Crude oil prices rose and Treasuries advanced, while the dollar fell. Among the market sectors, only real estate was able to post a modest (0.3%) gain. Consumer discretionary plunged 1.1% and information technology declined 0.9%.

Last Tuesday, stocks fell for the second consecutive day, despite an initial round of solid corporate earnings reports. Investors may be concerned that the growing number of virus cases at home and around the world may stunt economic recovery. The small caps of the Russell 2000 dropped 2.0%, followed by the Global Dow (-1.6%), the Nasdaq (-0.9%), the Dow (-0.8%), and the S&P 500 (-0.7%). Among the market sectors, energy plunged 2.7% as crude oil prices sank. Financials declined 1.8%, consumer discretionary dipped 1.2%, and industrials lost 1.1%. Utilities (1.3%) and real estate (1.1%) advanced. The dollar rose slightly, while the yields on 10-year Treasuries fell 2.4%.

Stocks gained last Wednesday for the first time in three days. More favorable earnings reports may have influenced investors, but the greater likelihood for the stock surge can be traced to dip buyers. In any case, the Russell 2000 led the advance, gaining 2.2%, followed by the Nasdaq, which climbed 1.2%. Both the Dow and the S&P 500 increased 0.9%, while the Global Dow moved up 0.3%. Communication services and utilities were the only market sectors to fall. Materials (1.9%), energy (1.5%), industrials (1.4%), and consumer discretionary (1.3%) advanced. Yields on 10-year Treasuries inched up, while crude oil prices and the dollar fell.

Equities tumbled last Thursday following a report that President Biden may propose a substantial increase in the capital gains tax for the wealthy. Each of the benchmark indexes plunged, with the Dow, the S&P 500, and the Nasdaq each falling 0.9%, followed by the Russell 2000 (-0.3%), and the Global Dow (-0.2%). Each of the market sectors also sank, with materials, energy, information technology, consumer discretionary, and financials each declining more than 1.0%. Treasury yields fell, while the dollar and crude oil prices advanced.

Dip buyers pushed stocks higher last Friday following Thursday’s plunge. The Russell 2000 and the Nasdaq climbed the highest, adding 1.8% and 1.4%, respectively. The S&P 500 reached another record high after advancing 1.1%. The Dow climbed 0.7% and the Global Dow gained 0.6%. Treasury yields and crude oil prices rose, while the dollar fell. Nearly all of the market sectors increased, led by financials, materials, information technology, and communication services. Consumer staples and utilities fell.

The possibility of a capital gains tax hike proposed by President Biden sent stocks reeling last week. However, bargain hunters plucked enough low-hanging stocks to push several of the benchmark indexes higher by week’s end. The market sectors closed the week mixed, with real estate and health care leading the way. Energy and consumer discretionary each dropped more than 1.0%. The Dow, the S&P 500, and the Russell 2000 eked out gains last week, while the Nasdaq and the Global Dow lost value. The yields on 10-year Treasuries inched higher. Crude oil prices dropped nearly 2.0%, yet remained over $62.00 per barrel. The dollar fell, while gold prices advanced. Year to date, the small caps of the Russell 2000 remain well ahead of last year’s pace, with the Dow, the S&P 500, and the Global Dow more than 11.0% over their respective 2020 closing marks. The tech-heavy Nasdaq, which was the highest-gaining index in 2020, trails the other benchmarks this year, but still has added nearly 9.0% to its year-end value.

The national average retail price for regular gasoline was $2.855 per gallon on April 19, $0.006 per gallon more than the prior week’s price and $1.043 higher than a year ago. U.S. crude oil refinery inputs averaged 14.8 million barrels per day during the week ended April 16, which was 286,000 barrels per day less than the previous week’s average. Refineries operated at 85.0% of their operable capacity last week. Gasoline production decreased last week, averaging 9.4 million barrels per day.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 4/23Weekly ChangeYTD Change
DJIA30,606.4834,035.9934,043.490.02%11.23%
Nasdaq12,888.2814,052.3414,016.81-0.25%8.76%
S&P 5003,756.074,170.424,180.170.23%11.29%
Russell 20001,974.862,257.072,271.860.66%15.04%
Global Dow3,487.523,943.803,909.72-0.86%12.11%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.53%1.56%3 bps65 bps
US Dollar-DXY89.8491.5490.83-0.78%1.10%
Crude Oil-CL=F$48.52$63.37$62.14-1.94%28.07%
Gold-GC=F$1,893.10$1,764.90$1,776.400.65%-6.16%

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

  • Sales of existing homes, which had been one of the few areas of the economy to progress during the pandemic, are now showing definite signs of slowing. According to the National Association of Realtors®, existing-home sales declined in March for the second consecutive month. Total existing-home sales fell 3.7% last month following a 6.6% drop in February. Overall, sales are 12.3% higher than a year ago. Relatively low inventory may be the primary reason for the slippage in sales volume. According to the report, unsold inventory of existing homes sits at a 2.1-month supply at the current sales pace, marginally up from February’s 2.0-month supply and down from the 3.3-month supply recorded in March 2020. The median existing-home price in March was $329,100, 5.1% above the February price and up 17.2% from March 2020. Sales of existing single-family homes also fell in March, declining 4.3% from the prior month but up 10.4% from a year ago. The median existing single-family home price was $334,500 in March ($317,100 in February), up 18.4% from March 2020.
  • Unlike existing homes, sales of new, single-family homes continued to surge in March. According to the latest information from the Census Bureau, sales of new single-family homes increased 20.7% over February’s total and are 66.8% above the March 2020 estimate. The median sales price of new houses sold in March 2021 was $330,800 ($345,900 in February). The average sales price was $397,800 ($394,300 in February). In March, inventory sat at a supply of 3.6 months at the current sales rate, down from 4.4 months in February.
  • For the week ended April 17, there were 547,000 new claims for unemployment insurance, a decrease of 39,000 from the previous week’s level, which was revised up by 10,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.6% for the week ended April 10, a decrease of 0.1 percentage point from the previous week’s rate. For comparison, during the same period last year, there were 4,202,000 initial claims for unemployment insurance, and the insured unemployment claims rate surged to 11.0% as the effects of the pandemic continued to impact the labor market. The advance number of those receiving unemployment insurance benefits during the week ended April 10 was 3,674,000, a decrease of 34,000 from the prior week’s level, which was revised down by 23,000. This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000. States and territories with the highest insured unemployment rates in the week ended April 3 were in Nevada (5.6%), Connecticut (5.2%), Alaska (5.1%), New York (4.4%), Illinois (4.2%), Pennsylvania (4.2%), the District of Columbia (4.1%), Rhode Island (4.0%), Vermont (4.0%), and California (3.7%). The largest increases in initial claims for the week ended April 10 were in New York (+16,028), Florida (+9,377), Alabama (+5,517), Washington (+5,380), and Georgia (+4,759), while the largest decreases were in California (-76,082), Virginia (-23,492), Ohio (-21,831), Texas (-17,436), and Kentucky (-15,424).

Eye on the Week Ahead

Several important economic reports are available this week. The Federal Open Market Committee meets this week. Interest rates are certain to remain at their present range based on statements from Federal Reserve Chair Jerome Powell. The latest information on durable goods orders is out on Monday. New orders for durable goods fell in February, but are expected to reverse course in March. The estimate of the first-quarter gross domestic product is available on Thursday. The 2020 fourth-quarter GDP advanced at an annualized rate of 4.3%. It is expected that growth in the first quarter economic will exceed the prior quarter’s figure.

What I’m Watching This Week – 19 April 2021

The Markets (as of market close April 16, 2021)

Stocks ended the first day of trading last week in the red, falling from their record highs of the prior week, as investors await the start of corporate earnings season. Among the indexes, both the Russell 2000 and the Nasdaq (-0.4%) led the decline, followed by the Dow (-0.2%), the Global Dow (-0.1%), and the S&P 500, which broke even on the day. Treasury yields inched higher, while the dollar dipped. Crude oil prices rose, but remained below $60.00 per barrel. Market sectors were mixed, with consumer discretionary, real estate, and consumer staples pushing higher, while energy, communication services, and information technology fell.

Tech shares pushed the Nasdaq up 1.1% last Tuesday. The S&P 500 gained 0.3% and the Global Dow inched up 0.1%. The Russell 2000 and the Dow dipped lower. Yields on 10-year Treasuries dropped more than 3.0%, the dollar sank for the second consecutive day, while crude oil prices rose to over $60.00 per barrel. Information technology, consumer discretionary, utilities, real estate, and health care gained, while industrials, energy, materials, consumer staples, and communication services declined.

Last Wednesday saw tech stocks retreat from their surge the prior day. Stocks were otherwise mixed, with the Nasdaq (1.0%) and the S&P 500 (0.4%) lagging, while the Russell 2000 (0.8%), the Global Dow (0.7%), and the Dow (0.2%) posted gains. Treasury yields and crude oil prices advanced. the dollar dipped. Energy led the sectors, gaining 2.9%, with financials, materials, and utilities climbing modestly. Consumer discretionary and information technology each fell 1.2%.

Stocks reached record highs last Thursday, while Treasury yields fell by the most since February. Strong economic reports, headlined by record retail sales in March coupled with a significant drop in weekly unemployment claims, offered signs that economic recovery from the pandemic is accelerating. The Nasdaq (1.3%), the S&P 500 (1.1%), and the Dow (0.9%) each reached all-time highs. Yields on 10-year Treasuries plunged 6.6%. Crude oil prices continued to increase, while the dollar was mixed. Only energy failed to close the day in the black as each of the remaining market sectors advanced, led by real estate (1.95%), information technology (1.8%), and health care (1.7%).

Equities closed last week on an upswing, with each of the benchmark indexes gaining ground. The S&P 500 led the way, climbing 1.1% to reach yet another record high. The Dow gained 0.9% and the Global Dow advanced 0.6%. The Russell 2000 added 0.4%, while the Nasdaq inched up 0.1%. The yield on 10-year Treasuries plunged 6.6%, while the dollar and crude oil prices dipped. Most of the market sectors advanced last Friday, led by materials, utilities, consumer discretionary, and health care. Energy underperformed, falling nearly 1.0%.

Last week, investors were confronted with a pause in the distribution of the Johnson & Johnson COVID-19 vaccine, the potential for rising inflation, and the likelihood of higher taxes to offset the burgeoning government budget deficit. Nevertheless, strong first-quarter corporate earnings reports coupled with positive economic reports provided enough encouragement for investors to continue to trade. Each of the benchmark indexes advanced last week. A strong performance by Chinese stocks helped push the Global Dow up 1.5%, followed by the Nasdaq, the S&P 500, the Dow, and the Russell 2000. Prices for Treasuries climbed, driving yields lower. Crude oil prices pushed well past $60.00 per barrel, gold prices rose, while the dollar fell. Utilities, materials, health care, real estate, and consumer discretionary each gained at least 2.0% on the week to lead the market sectors. The Russell 2000 continues to lead the indexes, year to date, followed by the Global Dow, the Dow, the S&P 500, and the Nasdaq.

The national average retail price for regular gasoline was $2.849 per gallon on April 12, $0.008 per gallon less than the prior week’s price but $0.996 higher than a year ago. U.S. crude oil refinery inputs averaged 15.1 million barrels per day during the week ended April 9, which was 7,000 barrels per day more than the previous week’s average. Refineries operated at 85.0% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 4/16Weekly ChangeYTD Change
DJIA30,606.4833,800.6034,035.990.70%11.21%
Nasdaq12,888.2813,900.1914,052.341.09%9.03%
S&P 5003,756.074,128.804,170.421.01%11.03%
Russell 20001,974.862,243.472,257.070.61%14.29%
Global Dow3,487.523,886.053,943.801.49%13.08%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.66%1.53%-13 bps62 bps
US Dollar-DXY89.8492.1691.54-0.67%1.89%
Crude Oil-CL=F$48.52$59.36$63.376.76%30.61%
Gold-GC=F$1,893.10$1,743.50$1,764.901.23%-6.77%

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

  • Inflationary pressures are definitely mounting. The Consumer Price Index for March rose 0.6% after climbing 0.4% in February. The March increase was the largest one-month rise since August 2012. Over the last 12 months, the CPI has risen 2.6%. Gas prices rose 9.1% last month, accounting for nearly half of the overall CPI advance. In March, energy prices climbed 5.0%, transportation services rose 1.8%, while food and shelter prices advanced marginally (0.1% and 0.3%, respectively).
  • In a clear sign of economic recovery from the impact of the pandemic, retail sales surged in March, climbing 9.8% from February’s estimates. Retail sales are up 27.7% above March 2020. Retail trade sales advanced 9.4% in March. Most businesses experienced a rise in sales last month, with noteworthy advances in sporting goods, hobby, musical instrument, and book stores (23.5%); clothing and clothing accessories stores (18.3%); motor vehicle and parts dealers (15.1%); and food services and drinking places (13.4%). Since March 2020, sales at clothing and clothing accessories stores rose 101.1%; sporting goods, hobby, musical instrument, and book store sales climbed 73.5%; and motor vehicle and parts dealers sales advanced 71.1%.
  • Trade prices continued to rise in March. Import prices advanced 1.2% last month. Imports increased 6.9% from March 2020 to March 2021, the largest over-the-year advance since a 6.9% rise for the year ended January 2012. Import fuel prices rose 6.3% in March and have risen 54.3% for the year ended in March, the largest 12-month advance since a 68.9% increase in February 2017. Prices for nonfuel imports rose 0.8% in March and are up 3.8% for the 12 months ended in March, the largest such increase since nonfuel prices increased 4.8% for the 12 months ended in October 2011. Export prices increased 2.1% in March and have advanced 9.1% from March 2020, the largest 12-month increase since prices rose 9.4% for the comparable period ended in September 2011. Agricultural export prices rose 2.4% in March, while nonagricultural export prices climbed 2.0%.
  • Through six months of fiscal year 2021, the federal government deficit sits at $1.7 trillion, $963.0 billion, or 130%, higher than the deficit over the same period in fiscal year 2020. The budget deficit in March was $659.6 billion, $348.7 billion greater than the February deficit. Government expenditures in March included $339.0 billion in economic impact payments authorized by the American Rescue Plan Act of 2021. Outlays for income security (e.g., retirement and disability insurance, unemployment compensation) increased to $1.0 trillion for the 2021 fiscal year, 243% above the outlays for the comparable period during the prior fiscal year.
  • Industrial production recovered from a February dip to advance 1.4% in March. For the first quarter of 2021, total industrial production rose 2.5%. In March, total industrial production was 1.0% higher than its year-earlier level, but it was 3.4% below its pre-pandemic (February 2020) level. Last month, manufacturing production and mining output increased 2.7% and 5.7%, respectively. The output of utilities dropped 11.4%, as the demand for heating fell because of a swing in temperatures from an unseasonably cold February to an unseasonably warm March.
  • New home construction picked up the pace in March after lagging in February. Building permits jumped 2.7% last month and were 30.2% higher than the March 2020 rate. Building permits for single-family homes increased 4.6% in March. Housing starts surged 19.4% over their February rate and were 37.0% above last year’s estimates. Single-family housing starts increased 15.3% in March. Housing completions jumped 16.6% last month and were 23.4% over their March 2020 pace. Completions of single-family homes rose 5.3% over their February totals.
  • For the week ended April 10, there were 576,000 new claims for unemployment insurance, a significant decrease of 193,000 from the previous week’s level, which was revised up by 25,000. This is the lowest level for initial claims since March 14, 2020, when it was 256,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.7% for the week ended April 3, an increase of 0.1 percentage point from the previous week’s rate. For comparison, during the same period last year, there were 4,869,000 initial claims for unemployment insurance, and the insured unemployment claims rate surged to 8.4% as the effects of the pandemic continued to impact the labor market. The advance number of those receiving unemployment insurance benefits during the week ended April 3 was 3,731,000, an increase of 4,000 from the prior week’s level, which was revised down by 7,000. States and territories with the highest insured unemployment rates in the week ended March 27 were in Nevada (5.2%), Connecticut (5.0%), Alaska (4.7%), Pennsylvania (4.6%), Illinois (4.3%), New York (4.1%), Rhode Island (4.0%), District of Columbia (3.9%), Massachusetts (3.8%), and California (3.7%). The largest increases in initial claims for the week ended April 3 were in California (+39,136), New York (+16,771), Oklahoma (+4,615), Michigan (+3,364), and Tennessee (+3,257), while the largest decreases were in Alabama (-13,318), Ohio (-9,358), Georgia (-5,659), Kentucky (-3,415), and Texas (-3,325).

Eye on the Week Ahead

The housing sector is front and center this week with the release of the March figures for sales of both new and existing homes. The housing market took a notable dip in February following several months of burgeoning results. Existing home sales plunged 6.6% in February and new home sales sank 18.2%. As inventory of available homes for sale increases, the pace of sales is expected to ramp up again.

What I’m Watching This Week – 12 April 2021

The Markets (as of market close April 9, 2021)

Strong economic data and a growing number of vaccinated Americans helped fuel significant market gains last Monday. The prior week’s favorable jobs report, coupled with purchasing managers’ encouraging news in both the manufacturing and services sectors, provided encouragement for investors. The Nasdaq rose 1.7%, followed by the S&P 500 (1.4%), the Dow (1.1%), the Global Dow (0.8%), and the Russell 2000 (0.5%). The yield on 10-year Treasuries climbed 2.4%, while the dollar and crude oil prices fell. Among the sectors, a major oil sell-off pushed energy prices lower. Otherwise, the major market sectors jumped higher, led by consumer discretionary, communication services, and information technology, each of which gained more than 2.0%.

Stocks ended last Tuesday in the red after reaching all-time highs earlier in the day. Information technology, health care, and energy pulled equities lower, offsetting gains in consumer discretionary, consumer staples, and utilities. Other than the Global Dow, which inched up 0.2% on the day, each of the benchmark indexes closed lower, with the Dow and the Russell 2000 falling the most (-0.3%). Treasury yields reversed course from the previous day by dropping 3.7%. Crude oil prices advanced, while the dollar slipped.

Stocks were mixed last Wednesday following a slow day of trading. The large caps of the Dow and the S&P 500 posted modest gains, while the Nasdaq slipped and the Russell 2000 plunged. Communication services, energy, financials, and information technology led the sectors. Materials sank. Crude oil prices and the dollar rose, while Treasury yields dipped.

Equities rebounded last Thursday, with the S&P 500 reaching a record high. Technology shares drove much of the overall market increase, while pushing the Nasdaq up 1.0% on the day. The Russell 2000 climbed 0.9%, the S&P 500 gained 0.4%, the Dow advanced 0.2%, and the Global Dow broke even. Treasury yields fell for the third consecutive day. The dollar weakened, while crude oil prices inched ahead.

Stocks ended last week on a positive note, despite worries that inflation is ramping up. Both the Dow and the S&P 500 reached record highs. Consumer discretionary, health care, and information technology led the sectors. Yields on 10-year Treasuries rose and the dollar inched higher. Crude oil prices dipped.

Investors remained confident that the Federal Reserve would continue to support the economy, even as signs of inflationary pressures were evident. Overall, stocks advanced last week, with the Nasdaq climbing more than 3.0%, followed by the S&P 500 and the Dow. Information technology and consumer discretionary led the sectors, each advancing more than 4.2%. Treasury yields, the dollar, and crude oil prices fell, while gold prices advanced. So far in 2021, the small caps of the Russell 2000 remain well ahead of their 2020 closing values, despite losing value last week, followed by the Global Dow, the Dow, the S&P 500, and the Nasdaq.

The national average retail price for regular gasoline was $2.857 per gallon on April 5, $0.005 per gallon more than the prior week’s price and $0.933 higher than a year ago. Over the same period, the national average retail price for diesel fuel was $3.144 per gallon, $0.017 per gallon below last week’s level but $0.596 higher than a year ago.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 4/9Weekly ChangeYTD Change
DJIA30,606.4833,153.2133,800.601.95%10.44%
Nasdaq12,888.2813,480.1113,900.193.12%7.85%
S&P 5003,756.074,019.874,128.802.71%9.92%
Russell 20001,974.862,253.902,243.47-0.46%13.60%
Global Dow3,487.523,837.343,886.051.27%11.43%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.68%1.66%-2 bps75 bps
US Dollar-DXY89.8492.9392.16-0.83%2.58%
Crude Oil-CL=F$48.52$61.23$59.36-3.05%22.34%
Gold-GC=F$1,893.10$1,730.70$1,743.500.74%-7.90%

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 final IHS Markit US Services PMI Business Activity Index registered 60.4 in March, up from 59.8 in February. This is the fastest rate of growth in the services sector since July 2014. Survey respondents attributed the expansion to greater client demand and easing of pandemic-related restrictions. Of note, input costs soared in March, as the rate of inflation accelerated at its fastest pace since data collection for the services survey began in October 2009. Subsequently, service providers sought to pass on higher costs to clients through a sharper rise in selling prices.
  • The first inflationary indicator for March showed mounting price pressures. Producer prices advanced 1.0% in March and have risen 4.2% for the 12 months ended in March — the largest increase since rising 4.5% for the 12 months ended September 2011. Prices producers received for goods jumped 1.7% last month, the largest increase since December 2009. Energy prices climbed 5.9%, accounting for nearly 60.0% of the overall increase in goods prices. Within energy, gasoline prices surged 8.8% in March. Producer prices for services rose 0.7% last month, and are up 3.0% over the 12 months ended in March.
  • According to the latest Job Openings and Labor Turnover Summary, the number of job openings edged up by 268,000 to 7.4 million on the last day of February. The number of hires increased by roughly 273,000 to 5.7 million, and the number of separations rose by 133,000 to 5.5 million. Over the 12 months ended in February, hires totaled 72.3 million and separations totaled 80.9 million, yielding a net employment loss of 8.6 million.
  • The international trade in goods and services deficit rose 4.8% to $71.1 billion in February, according to the latest report from the Bureau of Economic Analysis. Exports fell 2.6%, while imports inched down 0.7%. Year to date, the goods and services deficit increased $56.5 billion, or 68.6%, from the same period in 2020. Exports decreased $36.2 billion, or 8.7%, while imports increased $20.3 billion, or 4.1%.
  • For the week ended April 3, there were 744,000 new claims for unemployment insurance, an increase of 16,000 from the previous week’s level, which was revised up by 9,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.6% for the week ended March 27, unchanged from the previous week’s rate. For comparison, during the same period last year, there were 6,149,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 5.4%, as the effects of the pandemic continued to impact the labor market. The advance number of those receiving unemployment insurance benefits during the week ended March 27 was 3,734,000, a decrease of 16,000 from the prior week’s level, which was revised down by 44,000. This is the lowest level for insured unemployment since March 21, 2020, when it was 3,094,000. States and territories with the highest insured unemployment rates in the week ended March 20 were in Puerto Rico (6.0%), the Virgin Islands (5.6%), Nevada (5.3%), Alaska (5.0%), Pennsylvania (5.0%), Connecticut (4.6%), New York (4.1%), Rhode Island (3.9%), Illinois (3.8%), and California (3.7%). The largest increases in initial claims for the week ended March 27 were in Kentucky (+16,100), Georgia (+14,493), Virginia (+10,684), California (+10,408), and New York (+8,557), while the largest decreases were in Ohio (-14,879), Massachusetts (-12,001), Indiana (-3,785), Florida (-1,633), and Michigan (-1,622).

Eye on the Week Ahead

Inflationary pressures are beginning to be evident as more economic data for March is released. The Consumer Price Index advanced 0.4% in February and is expected to increase by at least that much in March. In another sign of rising prices, import and export prices are expected to escalate further in March after surging in February.

What I’m Watching This Week – 5 April 2021

The Markets (as of market close April 1, 2021)

Stocks opened last week generally down, with only the Dow posting a marginal 0.3% gain. The Russell 2000 plunged 2.8%, the Nasdaq dropped 0.6%, while the Global Dow and the S&P 500 each slipped 0.1%. The sectors were mixed, with utilities, consumer staples, communication services, and health care pushing ahead, while energy, financials, information technology, consumer discretionary, materials, and real estate fell. The yield on 10-year Treasuries, crude oil prices, and the dollar advanced.

The Dow retreated from a three-day surge, falling 0.3% last Tuesday. The S&P 500 also dropped 0.3%, and the Nasdaq lost 0.1%. The Russell 2000 recovered from a notable tailspin after gaining 1.7%. The Global Dow inched ahead 0.2%. Treasury yields and the dollar advanced, while crude oil prices dropped nearly 2.0%. Consumer discretionary, financials, and industrials were the only sectors to post gains. Each of the remaining sectors declined, led by consumer staples, which sank 1.1%.

Tech stocks and cyclicals surged last Wednesday, driving equities higher. The Nasdaq (1.5%) and the Russell 2000 (1.4%) led the way, with the S&P 500 posting a moderate (0.4%) gain. The Dow fell 0.3% and the Global Dow dropped 0.5%. Consumer discretionary, information technology, utilities, communication services, and health care gained ground, while energy and financials faded. Crude oil prices and the dollar fell. The yield on 10-year Treasuries jumped higher.

The market closed for the week following last Thursday’s trading in observance of Good Friday. Stocks ended the first day of the second quarter in fine fashion. The S&P 500 topped 4,000 for the first time as investors were encouraged by President Biden’s $2.25 trillion spending plan. Tech shares led the surge, followed by value stocks. Each of the benchmark indexes closed last Thursday well in the black, led by the Nasdaq (1.8%), followed by the Russell 2000 (1.3%) and the S&P 500 (1.2%), with the Global Dow and the Dow each gaining 0.5%. Only consumer staples, health care, and utilities closed the day in the red. Communication services, energy, and information technology all rose above 2.0%. Yields on 10-year Treasuries declined 3.8% and the dollar fell 0.4%. Crude oil jumped 3.5%.

A late-week surge pushed stocks higher overall last week. The Nasdaq, which had been weakening as investors retreated from tech shares, climbed 2.6%. The small caps of the Russell 2000 continued to climb. The S&P 500 reached an all time high, while the Dow and the Global Dow posted modest weekly gains. Information technology posted a 4.7% gain for the week, making it the top-performing sector, followed by communication services, consumer discretionary, and real estate, each of which advanced about 3.0%. Treasury yields closed the week up slightly. Crude oil prices closed last week above $61.00 per barrel. The dollar advanced, while gold continued to slide. The Russell 2000 continues to lead the pack, year to date, followed by the Global Dow, the Dow, the S&P 500, and the Nasdaq.

The national average retail price for regular gasoline was $2.852 per gallon on March 29, $0.013 per gallon less than the prior week’s price but $0.847 higher than a year ago. Over the same period, the national average retail price for diesel fuel was $3.161 per gallon, $0.033 per gallon below the prior week’s level but $0.575 higher than a year ago.

Stock Market Indexes

Market/Index2020 ClosePrior WeekAs of 4/1Weekly ChangeYTD Change
DJIA30,606.4833,072.8833,153.210.24%8.32%
Nasdaq12,888.2813,138.7213,480.112.60%4.59%
S&P 5003,756.073,974.544,019.871.14%7.02%
Russell 20001,974.862,221.482,253.901.46%14.13%
Global Dow3,487.523,831.663,837.340.15%10.03%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries0.91%1.66%1.68%2 bps77 bps
US Dollar-DXY89.8492.7292.930.23%3.44%
Crude Oil-CL=F$48.52$60.83$61.230.66%26.20%
Gold-GC=F$1,893.10$1,731.30$1,730.70-0.03%-8.58%

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 a whopping 916,000 new jobs added in March, reflecting the continued resumption of economic activity that had been curtailed by the COVID-19 pandemic. Nevertheless, total employment is down 8.4 million, or 5.5%, from its pre-pandemic peak in February 2020. Job growth in March was widespread, with the largest gains occurring in leisure and hospitality, public and private education, and construction. The unemployment rate edged down 0.2 percentage point to 6.0%, well below its April 2020 high of 14.7%, but still 2.5 percentage points higher than its pre-pandemic level in February 2020. The number of unemployed persons, at 9.7 million, continued to trend down in March but is 4.0 million higher than in February 2020. The number of persons on temporary layoff declined by 203,000 in March to 2.0 million. This measure is down considerably from the recent high of 18.0 million in April 2020 but is 1.3 million higher than in February 2020. The number of permanent job losers, at 3.4 million, was little changed in March but is 2.1 million higher than February 2020. The labor force participation rate changed little at 61.5% in March. This measure is 1.8 percentage points lower than in February 2020. The employment-population ratio, at 57.8%, was up by 0.2 percentage point over the month but is 3.3 percentage points lower than in February 2020. In March, 21.0% of employed persons teleworked because of the pandemic, down from 22.7% in the prior month. In March, 11.4 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic — down from 13.3 million from the previous month. In March, average hourly earnings fell by $0.04 to $29.96. Average hourly earnings have increased 4.2% since March 2020. The average workweek increased by 0.3 hour to 34.9 hours in March.
  • According to the latest report, the IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 59.1 in March, the second-strongest improvement in the manufacturing sector since May 2007. New orders enjoyed their steepest rise since June 2014, despite production being curtailed due to supply shortages. Increased customer demand is fueling a buildup in backlog orders, but also driving selling prices higher.
  • For the week ended March 27, there were 719,000 new claims for unemployment insurance, an increase of 61,000 from the previous week’s level, which was revised down by 26,000. According to the Department of Labor, the advance rate for insured unemployment claims was 2.7% for the week ended March 20, unchanged from the previous week’s rate. For comparison, during the same period last year, there were 5,985,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 2.1%, as the effects of the pandemic continued to impact the labor market. The advance number of those receiving unemployment insurance benefits during the week ended March 20 was 3,794,000, a decrease of 46,000 from the prior week’s level, which was revised down by 30,000. States and territories with the highest insured unemployment rates in the week ended March 13 were in Pennsylvania (5.5%), Nevada (5.4%), Alaska (5.0%), Puerto Rico (4.9%), Connecticut (4.7%), New York (4.4%), California (4.0%), Rhode Island (4.0%), the Virgin Islands (4.0%), and Illinois (3.9%). The largest increases in initial claims for the week ended March 20 were in Massachusetts (+11,386), Texas (+7,599), Connecticut (+4,170), Maryland (+2,605), and Virginia (+2,035), while the largest decreases were in Illinois (-55,580), Ohio (-45,808), California (-13,331), New York (-4,251), and Florida (-2,991).

Eye on the Week Ahead

The Producer Price Index for March is available this week. The prices that producers charge for goods and services jumped 0.5% in February and were up 2.8% for the year.

Quarterly Market Review – 1Q 2021

The Markets (first quarter through March 31, 2021)

As we closed out 2020, the overwhelming sentiment entering January was that it couldn’t get much worse. Unfortunately, January did not start out on a high note. During the first week of the month, protesters stormed the United States Capitol, leading to violence, the disruption of the presidential election certification, and several deaths. Nevertheless, the inauguration of Joe Biden as our 46th president took place as scheduled. January also saw the emergence of virus mutations, the uneven distribution of COVID-19 vaccines, and the gradual relaxation of pandemic-related restrictions. Also during January, a new phenomenon in stock price manipulation emerged involving several companies, including a video-game company. Ultimately, stocks closed the month mixed, with the Russell 2000 and the Nasdaq gaining, while the Dow and the S&P 500 fell. Treasury yields, the dollar, and crude oil prices advanced.

Major equity indexes reached record highs in February, only to pull back by the end of the month. Fearful that inflationary pressures would mount, investors favored value stocks over growth, pushing small-cap and mid-cap stocks higher. Investors were encouraged by President Joe Biden’s $1.9 trillion stimulus proposal, accelerated vaccine distribution, and better-than-expected fourth-quarter corporate earnings. By the end of February, each of the benchmark indexes listed here posted gains led by the Russell 2000, which advanced more than 6.0%. The yield on 10-year Treasuries continued to grow, crude oil prices pushed past $61 per barrel, and the dollar rose. Only 50,000 new jobs were added in February, although unemployment claims decreased.

Stocks continued to push higher in March. Several of the benchmark indexes posted noteworthy gains including the Dow (6.6%), the S&P 500 (4.2%), and the Global Dow (4.0%). The Russell 2000 (0.9%) and the Nasdaq (0.4%) advanced moderately. Among the sectors, industrials (8.1%), utilities (7.4%), consumer staples (6.5%), and materials (6.4%) led the way. Treasury yields and the dollar advanced, while crude oil prices and gold fell.

Overall, the first quarter was definitely eventful. Additional federal stimulus payments lined many pocketbooks; a group of amateur traders banded together through social media to drive shares of a video gaming company to astronomical heights; interest rates jumped, stoking fears that inflationary pressures were rapidly building; and equities ultimately enjoyed robust returns. The small caps of the Russell 2000 gained nearly 12.5%, the Global Dow climbed 9.4% and the large caps of the Dow (7.8%) and the S&P 500 (5.8%) posted solid gains. Tech shares, which had driven the market for much of 2020, slumped during the quarter, but still gained enough ground to push the Nasdaq up by almost 3.0%. Energy shares posted some of the biggest gains in the quarter, with that market sector surging over 30.6%. Financials jumped 18.0%, followed by industrials (12.0%), materials (10.8%), and real estate (10.0%). Only information technology failed to advance by the end of the quarter. The yield on 10-year Treasuries climbed more than 80 basis points. Crude oil prices increased and the dollar rose. Gold prices fell nearly 10.0% in the first quarter. Year to date, the Russell 2000 is well ahead of its 2020 year-end closing value, followed by the Global Dow, the Dow, the S&P 500, and the Nasdaq.

The price of crude oil (CL=F) closed at $59.32 per barrel on March 31, lower than the February 26 price of $61.50 per barrel but well above the December 31 price of $48.52. The national average price of retail regular gasoline was $2.852 per gallon on March 29, up from the February 22 price of $2.633 and 27.0% higher than the December 28 selling price of $2.243. The price of gold finished March at $1,708.40 per ounce, lower than the February 26 price of $1,728.10 per ounce and significantly below its December 31 closing value of $1,893.10 per ounce.

Stock Market Indexes

Market/Index2020 CloseAs of March 31Monthly ChangeQuarterly ChangeYTD Change
DJIA30,606.4832,981.556.62%7.76%7.76%
Nasdaq12,888.2813,246.870.41%2.78%2.78%
S&P 5003,756.073,972.894.24%5.77%5.77%
Russell 20001,974.862,220.520.88%12.44%12.44%
Global Dow3,487.523,813.593.98%9.35%9.35%
Fed. Funds0.00%-0.25%0.00%-0.25%0 bps0 bps0 bps
10-year Treasuries0.91%1.74%28 bps83 bps83 bps
US Dollar-DXY89.8493.232.55%3.77%3.77%
Crude Oil-CL=F$48.52$59.32-3.75%22.26%22.26%
Gold-GC=F$1,893.10$1,708.40-1.31%-9.76%-9.76%

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

Last Month’s Economic News

  • Employment: There were 379,000 new jobs added in February after only 49,999 new jobs were added in January. In February, the unemployment rate fell by 0.1 percentage point to 6.2%, and the number of unemployed persons decreased by 150,000 to 10.0 million. Although both measures are much lower than their April 2020 highs, they remain well above their pre-pandemic levels in February 2020 (3.5% and 5.7 million, respectively). Among the unemployed, the number of persons on temporary layoff decreased in February by 517,000 to 2.2 million. This measure is down considerably from the recent high of 18.0 million in April but is 1.5 million higher than its February 2020 level. In February, the number of persons not in the labor force who currently want a job, at 6.9 million, was little changed over the month but is 1.9 million higher than in February 2020. The number of employed persons who teleworked in February because of the coronavirus pandemic edged down to 22.7%, 0.5 percentage point lower than January. In February, 13.3 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. This measure is 1.5 million lower than in January. February saw notable job growth in leisure and hospitality (355,000), although employment in that area is down by 3.5 million over the year. Job growth also occurred in food services and drinking places (286,000); trade, transportation; and utilities (49,000); health care and social assistance (45,600); and professional and business services (63,000). The labor force participation rate was unchanged at 61.4%, and the employment-population ratio inched up 0.1 percentage point to 57.6%. Average hourly earnings increased by $0.07 to $30.01 in February and are up 5.3% from a year ago. The average work week declined by 0.3 hour to 34.6 hours in February.
  • Claims for unemployment insurance continued to drop. According to the latest weekly totals, as of March 13, there were 3,870,000 workers receiving unemployment insurance benefits, down from the February 20 total of 4,419,000. The insured unemployment rate fell 0.4 percentage point to 2.7%. During the week ended March 6, Extended Benefits were available in 16 states (18 states during the week of February 6); 51 states and territories reported 7,735,491 continued weekly claims for Pandemic Unemployment Assistance benefits (7,518,951 in February), and 51 states and territories reported 5,551,215 continued claims for Pandemic Emergency Unemployment Compensation benefits (5,065,890 in February).
  • FOMC/interest rates: The Federal Open Market Committee met in March. According to the Committee statement, employment has turned up recently and, despite investor concerns, inflation continues to run well below 2.0%. The Committee continues to hold interest rates at their current 0.00%-0.25% target range and expects no change through 2023.
  • GDP/budget: The gross domestic product advanced at an annual rate of 4.3% in the fourth quarter of 2020. The GDP increased 33.4% in the third quarter after contracting 31.4% in the second quarter. Consumer spending, as measured by personal consumption expenditures, increased 2.2% in the fourth quarter after surging 41.0% in the third quarter. Nonresidential (business) fixed investment climbed 13.1% following a 22.9% increase in the third quarter; residential fixed investment continued to advance, increasing 36.6% in the fourth quarter after soaring 63.0% in the prior quarter. Exports advanced 22.3% in the fourth quarter (59.6% in the third quarter), and imports (which are a negative in the calculation of GDP) increased 29.8% in the fourth quarter (93.1% in the third quarter). Federal nondefense government expenditures decreased 8.9% in the fourth quarter following a third-quarter decline of 18.3% as federal stimulus payments and aid lessened. The GDP fell 3.5% in 2020 after increasing 2.2% in 2019. Personal consumption expenditures dropped 2.63%; nonresidential fixed investment declined 0.54%; residential fixed investment rose 0.23%; exports dropped 1.47%; imports rose 1.33%; and nondefense government spending advanced 0.15%.
  • The federal budget deficit was a larger-than-expected $310.9 billion in February, following January’s $162.8 billion deficit. The deficit is 32.0% higher than the February 2020 deficit of $235.3 billion. The deficit for the first five months of fiscal year 2021, at $1.047 trillion, is 68% higher than the first five months of the previous fiscal year. Through February, government outlays, at $559.2 billion, were 32.0% above the February 2020 figure, while receipts, at $248.3 billion, also increased 32.0%. The increase in government expenditures can be traced to a 125.0% jump in outlays for income security, an 859.0% increase in commerce and housing credits, and a 26.0% rise in health outlays.
  • Inflation/consumer spending: Inflationary pressures eased in February. According to the latest Personal Income and Outlays report, consumer prices edged up 0.2% in February after advancing 0.3% in January. Prices have increased 1.6% from February 2020. Excluding food and energy, consumer prices increased 1.4% over the last 12 months. Both figures are well below the Fed’s 2.0% target inflation rate. Personal income fell 7.1% in February after climbing 10.0% in January, and disposable personal income dropped 0.8% following January’s 11.4% jump. The decrease in personal income in February is more a reflection of stimulus payments received in January, which accounted for that month’s soaring income estimates. Consumer spending declined 1.0% in February after advancing 3.4% (revised) in January. Over the last 12 months, personal consumption expenditures (consumer spending) dipped 2.7%.
  • The Consumer Price Index climbed 0.4% in February following a 0.3% rise in January. Over the 12 months ended in January, the CPI rose 1.7%. Gasoline prices continued to increase, rising 6.4% in February and accounting for over half of the CPI increase. Consumer prices less food and energy rose 0.1% in February. The CPI less food and energy prices is up 1.3% over the past 12 months. Food prices rose 0.2% in February after edging up just 0.1% in January. In February, prices for apparel fell 0.7% after climbing 2.2% the prior month. Prices for new vehicles were unchanged in February, while prices for used cars and trucks dropped 0.9% for the second consecutive month.
  • Prices that producers receive for goods and services continued to climb in February, increasing 0.5% after advancing 1.3% in January. Producer prices increased 2.8% for the 12 months ended in February, which is the largest yearly gain since climbing 3.1% for the 12 months ended in October 2020. Producer prices less foods, energy, and trade services rose for the tenth consecutive month after advancing 0.2% in February. Food prices increased 1.3% in February after increasing 0.2% in January, while energy prices followed a 5.1% January increase by jumping 6.0% in February.
  • Housing: The housing sector retreated in February, likely due to dwindling inventory. Nevertheless, sales of existing homes fell 6.6% in February after rising 0.6% in January. Over the past 12 months, existing home sales increased 9.1%. The median existing-home price was $313,000 in February ($309,900 in January), up 15.8% from February 2020. Unsold inventory of existing homes fell 29.5% from February 2020 and represents a 2.0-month supply at the current sales pace, slightly better than January’s 1.9-month supply. Sales of existing single-family homes also dropped 6.6% in February after advancing 0.2% in January. Year over year, sales of existing single-family homes rose 18.6%. The median existing single-family home price was $317,100 in February, up from $308,300 in January.
  • New single-family home sales plunged in February. New home sales dropped 18.2% after climbing 4.3% in January. Sales of new single-family homes have increased 8.2% since February 2020. The median sales price of new single-family houses sold in February was $349,400 ($346,400 in January). The February average sales price was $416,000 ($408,800 in January). The inventory of new single-family homes for sale in February represents a supply of 4.8 months at the current sales pace, up from the January estimate of 4.2 months.
  • Manufacturing: The manufacturing sector took a step backward last February as industrial production decreased 2.2%, the first such decline since last October. According to the Federal Reserve’s report, industrial production advanced 1.1% in January. Manufacturing output fell 3.1% in February following January’s 1.0% increase. Mining production dropped 5.4% in February after advancing 2.3% in January. February saw the output of utilities increase 7.4% after declining 1.2% the prior month. Total industrial production in February was 4.2% lower than its year-earlier level. According to the report, the severe winter weather in the south central region of the country in mid-February accounted for the bulk of the decline in output for the month.
  • For the first time in 10 months, new orders for durable goods decreased, falling 1.1% in February after climbing 3.5% in January. Transportation, down following five consecutive monthly increases, led the decrease, sliding 1.6%. New orders for nondefense capital goods rose 5.6% in February after increasing 6.2% the previous month. A 103.3% increase in nondefense (commercial) aircraft and parts drove the jump in nondefense capital goods. Defense capital goods followed a 0.9% January decline by nosediving 10.6% in February.
  • Imports and exports: Both import and export prices rose higher in February for the third consecutive month. Import prices climbed 1.3% in February following a 1.4% increase in January. Import prices rose 3.0% over the past year, the largest 12-month advance since increasing 3.4% from October 2017 to October 2018. Import fuel prices rose 11.1% in February following a 9.0% increase in January. The February rise was the largest advance since import fuel prices increased 15.2% in July 2020. Import fuel prices rose 6.5% over the past year, the first 12-month advance since a 13.2% increase in January 2020. Nonfuel import prices rose 0.4% in February following a 0.9% advance in January. Export prices increased 1.6% in February after climbing 2.5% in January. For the year ended in February, the price index for exports rose 5.2%, the largest 12-month increase since the index advanced 5.3% in June 2018. Agricultural export prices increased 2.9% in February following a 6.0% jump in January. Nonagricultural exports rose 1.5% in February after increasing 2.2% in January.
  • In February, the international trade in goods deficit was $86.7 billion, up 2.5% over January’s deficit. Exports fell 3.8% and imports declined 1.4%. For the 12 months ended in February, exports have fallen 5.4%, while imports have jumped 10.1%.
  • The latest information on international trade in goods and services, out March 5, is for January and shows that the goods and services trade deficit was $68.2 billion, 1.9% over the December deficit. January exports were $191.9 billion, or 1.0%, more than December exports. January imports were $260.2 billion, or 1.2%, more than December imports. Year over year, the goods and services deficit increased $23.8 billion, or 53.7%, from January 2020. Exports decreased $15.7 billion, or 7.6%. Imports increased $8.1 billion, or 3.2%.
  • International markets: Inflationary pressures may be ramping up globally. February saw consumer prices increase in several nations, including France, Germany, Italy, Canada, China, and Japan. In the markets, the EURO STOXX Europe 600 Index gained about 4.1% in March; the United Kingdom’s FTSE inched up 1.1%; Japan’s Nikkei 225 fell 1.3%; and China’s Shanghai Composite Index plunged nearly 4.0%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® surged in March to its highest reading in a year. The index stands at 109.7, up from 90.4 in February. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased from February’s 89.6 to 110.0 in March. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, fell from 90.9 in February to 109.6 in March.

Eye on the Month Ahead

The economy in general, and the stock market in particular, should continue to progress as more vaccines are rolled out and more jobs are made available. Investors will continue to watch for signs of escalating inflation, despite the Federal Reserve’s forecasts to maintain interest rates at their present levels through 2023.