A
fresh closing high on the Dow on Friday finally enabled it to edge back
into positive territory for the year, while the S&P 500 ended the
week basically flat. However, after the prior week's respite from
selling pressure, the Nasdaq and the small caps of the Russell 2000
returned to their recent losing ways.
Last Week's Headlines
- Growth in the U.S. services sector accelerated in April. The
Institute for Supply Management's gauge rose 2.1% to 55.2%. It was the
51st straight month of growth.
- Greater demand overseas for U.S. exports of natural gas and oil as
well as aircraft helped cut the U.S. trade deficit by 3.6% in March,
according to the Commerce Department. Exports were up 2.2%, while
imports also rose 1.7% to their highest level in two years.
- Federal Reserve Chair Janet Yellen told a congressional committee
that the Fed sees a rebound in the economy from winter's weather-induced
slump, but that low inflation and slack in the housing and labor
markets will most likely continue to permit interest rates to remain
near zero for some time.
- Yet another data point from the Federal Reserve confirmed winter's
impact on the economy during Q1. Business productivity slumped at an
annualized rate of 1.7%, a far cry from the previous quarter's 2.3%
increase. However, productivity was 1.4% ahead of Q1 2013. Even though
workers put in more hours during the quarter, reduced output helped push
unit labor costs up 4.2% for the quarter.
- The European Central Bank once again left its key interest rate
unchanged at 0.25% and said that ongoing low inflation might lead to
stimulus measures next month, especially if the situation in Ukraine
worsens.
Eye on the Week Ahead
With the bulk of Q1 earnings reports now in the rear-view mirror,
investors will have to look to manufacturing and retail reports in both
the United States and China for guidance. Inflation at both the consumer
and wholesale levels is expected to remain subdued, while housing
starts could show whether the housing market is emerging from its winter
doldrums.
Data sources: Economic: Based on
data from U.S. Bureau of Labor Statistics (unemployment, inflation);
U.S. Department of Commerce (GDP, corporate profits, retail sales,
housing); S&P/Case-Shiller 20-City Composite Index (home prices);
Institute for Supply Management (manufacturing/services). Performance:
Based on data reported in WSJ Market Data Center (indexes); U.S.
Treasury (Treasury yields); U.S. Energy Information
Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing,
OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency
exchange rates). All information is based on sources deemed reliable,
but no warranty or guarantee is made as to its accuracy or completeness.
Neither the information nor any opinion expressed herein constitutes a
solicitation for the purchase or sale of any securities, and should not
be relied on as financial advice. Past performance is no guarantee of
future results.
The Dow Jones Industrial Average
(DJIA) is a price-weighted index composed of 30 widely traded blue-chip
U.S. common stocks. The S&P 500 is a market-cap weighted index
composed of the common stocks of 500 leading companies in leading
industries of the U.S. economy. The NASDAQ Composite Index is a
market-value weighted index of all common stocks listed on the NASDAQ
stock exchange. The Russell 2000 is a market-cap weighted index composed
of 2,000 U.S. small-cap common stocks. The Global Dow is an equally
weighted index of 150 widely traded blue-chip common stocks worldwide.
Market indices listed are unmanaged and are not available for direct
investment.
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