Major stock indices ended the week substantially lower with the smallest decline in the Nasdaq 100 index. Consumer and producer prices rose more than expected in March damping hopes for FED rate cuts any time soon.
The European Central Bank met and left its benchmark interest rates unchanged at 4.0% but left the possibility of a June rate cut on the table. Argentina’s central bank cut its benchmark interest rate from 80% to 70% where inflation year over year has been 276%.
Also affecting the markets was fear over a likely Iranian strike on Israel escalating fighting in the Middle East.
Treasury bond yields rose with the 30-year bond yield at 4.613% and the 10-Year note at 4.510%. Freddie Mac reported that the average 30-year mortgage rate rose to 6.88%. Crude oil fell to $85.44 a barrel and natural gas fell to $1.771 per MMBTUs. The U.S. dollar index rose to 106.40 and gold rose to $2352.80 an ounce.
In economic reports this week:
- The Commerce Department reported:
- Wholesale inventories rose 0.5% in February after falling 0.2% in January.
- Wholesale inventories rose 0.5% in February after falling 0.2% in January.
- The Labor Department reported:
- The consumer price index rose a seasonally adjusted 0.4% in March and is up 3.5% from a year ago.
- This was up from the 3.2% year over year increase in February.
- Excluding volatile food and energy, prices also rose 0.4% in March and 3.8% from a year ago.
- The biggest monthly increase was in gasoline.
- Fuel oil and used car and truck prices fell in March.
- From a year ago, the biggest increases were in transportation services 10.7% and shelter 5.7%.
- The producer price index rose 0.2% in March down from 0.6% in February.
- Excluding volatile food and energy producer prices rose 0.2%.
- From a year earlier, producer prices rose 2.1% up from 1.6% year over year in February.
- Seasonally adjusted first-time claims for unemployment were 211,000, a decrease of 11,000 from the previous week’s revised level.
- The 4-week moving average of claims, designed to smooth out volatility, was 214,250, a decrease of 250 from the previous week’s revised level.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- The consumer price index rose a seasonally adjusted 0.4% in March and is up 3.5% from a year ago.
- The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf . Also, the EIA reported in the prior week:
- Field production of crude oil was unchanged at 13.1MM BPD.
- Natural gas storage rose 42BN cubic feet and was above the highest level during the past five years at this time of year.
- Baker Hughes reported the number of oil rigs were 506 and the number of natural gas rigs were 112.
Please call us if you have any questions.
Loren Rex – Emeritus
Erik A Smith, AIF® – President & C.E.O.
These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).
Sources:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W
https://ir.eia.gov/ngs/ngs.html
https://www.freddiemac.com/pmms
https://www.wsj.com/market-data?mod=nav_top_subsection
https://bakerhughesrigcount.gcs-web.com/na-rig-count
https://www.census.gov/economic-indicators
