Taking a look at how the major stock market indices performed last week – the Dow Jones Industrial Average declined .5% to 34,208 – the Standard & Poor’s 500 Index dipped .4% to 4,156 – while the NASDAQ Composite moved the other direction and snapped its 4-week losing streak, posting a weekly gain of .3% to close at 13,471.
Economic data released last week was mixed. A widely followed measure of manufacturing activity – the IHS Markit Flash U.S. Manufacturing Purchasing Mangers’ Index – rose to an all-time high of 61.5 for May, versus consensus estimates for the index to remain steady at the 60.5 level from last month. Initial Claims for unemployment also came in ahead of expectations, with the 444k reading beating estimates by about 11,000 and representing a new pandemic low in jobless claims, as the labor market continues to recover.
Housing data came in soft, as both Housing Starts and Existing Home Sales came in shy of expectations. Housing starts declined 9.5% last month, with the drop likely due to increasing costs for land, labor, and materials. Existing home sales fell 2.7% in April, to a seasonally adjusted annual rate of 5.85 million, as rising home prices along with tight inventories have been a constraint.
The minutes released last week, from the Federal Reserve’s April meeting, caught the markets attention. A number of participants suggested that “if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in the upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.” This was one of the clearest indications yet that some in the Fed are considering reducing monetary stimulus, and it left the financial markets wondering if the Fed would reduce its bond buying (tapering) earlier than expected.
Looking to the week ahead, we’ll get another fresh batch of earnings reports and economic data. Companies scheduled to report in the week ahead include AutoZone, Nordstrom, Toll Brothers, NVIDIA, Best Buy, Costco Wholesale, Dollar General, Salesforce.com, Ulta Beauty, Snowflake, Gap, and Big Lots.
Economic data out this week includes New Home Sales, Durable Orders, Consumer Confidence, and Personal Income. As always, please feel free to call us with any questions or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC