The Markets
Despite gains earlier in
the week, each of the indexes listed here closed last week down from
their prior week's closing values. The Dow and S&P 500 extended
their losing streaks to three weeks, with the Dow suffering the largest
weekly regression, falling over 205 points. Year-to-date, only the Dow
and S&P 500 remain ahead of their 2015 closing values as the
tech-heavy Nasdaq, the Russell 2000, and the Global Dow remain behind
their respective year-end values.
Crude oil (WTI) jumped
last week, closing at $46.37 a barrel, up $1.81 over the prior week's
closing price. The price of gold (COMEX) dropped by last week's end,
selling at $1,274.30 by late Friday afternoon, down from the prior
week's closing price of $1,289.70. The national average retail regular
gasoline price decreased to $2.220 per gallon on May 9, 2016, $0.020
below the prior week's price and $0.471 under a year ago.
Last Week's Headlines
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- Following a slow start in 2016,
consumers picked up the retail spending pace in April. The Census
Bureau's advance estimate for retail and food services sales for April
were at $453.4 billion, an increase of 1.3% over March, and 3.0% above
April 2015. Retail trade sales were up 1.4% from March 2016, and up 2.7%
from last year. Nonstore retailers (such as online shopping sites) were
up 10.2% from April 2015, while gasoline stations were up 2.2% for the
month, although gas stations are down 9.4% from last year. Since about
two-thirds of economic output consists of consumer spending, this report
is good news on the economic front.
- The prices producers received for
goods and services increased 0.2% in April following a 0.1% fall in
March. For April, services edged up 0.1% and goods advanced 0.2%.
Excluding volatile food and energy, prices for goods and services rose a
scant 0.1% for April, and are up 0.9% on the year. Prices are unchanged
for 12 months ended in April. As an indicator of inflationary trends,
this report does not indicate significant movement toward the Fed's
target rate of 2.0%.
- The latest Treasury budget report for
April shows a surplus of $106.5 billion--significantly lower than the
April 2015 surplus of $156.7 billion. For the month, total receipts were
$438.4 billion--up $210.6 billion over the March total, while outlays
were $332.0 billion--$3.9 billion lower than March's outlays. Not
surprisingly, April's surge in receipts is attributable to the
collection of individual income taxes, which are up 1.2% over the first
seven months of the fiscal year. Outlays, which are up 4.4%, include
increased Medicare payments (+11.3%) and defense spending (+0.4%). The
year-to-date deficit is $355.0 billion, which is more than 25% higher
than the deficit over the same period last year.
- Higher fuel prices and a weaker dollar
kicked up the price indexes for both imports and exports in April,
according to the latest report from the Bureau of Labor Statistics.
Import prices paid for goods manufactured abroad and purchased here rose
0.3% for the month following a 0.3% increase in March. April's import
price gain marked the largest increase since a 1.1% rise in May 2015.
Overall, import prices declined 5.7% over the past year. Export prices
paid for goods manufactured here but sold abroad increased 0.5% in
April, after recording no change in March. Export prices registered the
first monthly advance since a 0.5% increase last May, which also
represents the largest 1-month index increase since the 0.9% rise in
March 2014. The price index for exports fell 5.0% for the year ended in
April, the smallest 12-month decline since the index decreased 5.0% from
January 2014 to January 2015.
- Although a bit dated, the most recent
Job Openings and Labor Turnover (JOLTS) report from the Bureau of Labor
Statistics provides useful information on the number of job openings
available on the last business day of the reported month. For March,
there were 5.757 million job openings on the last business day of March,
up from 5.608 million in February. Hires edged down to 5.3 million,
while separations were little changed at 5.0 million. This report
provides continued good news on the labor front as job openings
increased to 3.9%. Also, workers are staying on the job as the quits
rate remained the same at 2.1%, while layoffs fell 0.1 percentage point
to 1.2%.
- The University of Michigan's Surveys
of Consumers report for May showed a bit more optimism compared to
April. The Index of Consumer Sentiment rose to 95.8 from 89.0 in April.
The Current Economic Conditions index increased from 106.7 in April to
108.6 in May, and the Index of Consumer Expectations jumped almost 10
points, from April's 77.6 to 87.5 in May. According to the report,
"consumer sentiment rebounded in early May due to more frequent income
gains, an improved jobs outlook, and the expectation of lower inflation
and interest rates."
- For the week ended May 7, there were
294,000 claims for unemployment insurance, an increase of 20,000 from
the previous week's revised level. The advance seasonally adjusted
insured unemployment rate remained at 1.6% from the prior week's revised
level. The advance number for continuing unemployment insurance claims
for the week ended April 30 was 2,161,000, an increase of 37,000 from
the previous week's revised level.
Eye on the Week Ahead
Information this week focuses on inflation data and retail sales. The
week also brings the latest figures on import and export prices, which
could get a boost from surging oil prices.
Data sources: News items are based
on reports from multiple commonly available international news sources
(i.e. wire services) and are independently verified when necessary with
secondary sources such as government agencies, corporate press releases,
or trade organizations. Market data: 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. All investing involves
risk, including the potential loss of principal, and there can be no
guarantee that any investing strategy will be successful.
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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