Major stock indices end a volatile week mixed as signs of a deal to raise the debt limit emerge.  The Nasdaq index had the biggest gains as a large semiconductor manufacturer beat earnings estimates and forecast a major increase in demand due to artificial intelligence.  The Dow Industrials and developed foreign markets indices ended lower.

The FED released the minutes from the last meeting which showed members of the FED were divided on whether to pause hiking rates at the June meeting.  Once we get past the debt limit drama, the FED will likely focus on incoming data.  The April Personal Consumption Expenditure (PCE) report released Friday shows an uptick in inflation increasing the likelihood of another hike in June.

Treasury bond yields rose with the 30-year bond yield at 3.963% and the 10-Year note at 3.806%.  Freddie Mac reported that 30-year mortgage rates rose to 6.57%.  Crude oil rose to $72.82 a barrel and natural gas rose to $2.416 per MMBTUs.  The U.S. dollar index rose to 104.22 and gold fell to $1946.40 an ounce.

• The Commerce Department reported:
  • Revised 1^st quarter gross domestic product from an annualized growth rate from 1.1% to 1.3%.
    • Consumer spending, exports, and government spending were revised upwards.
    • Private inventory investment, residential fixed investment and rising imports offset some of the increases.
  • Personal consumption expenditures rose 0.8% in April.  Adjusted for inflation, expenditures rose 0.5%.
  • The personal consumption expenditure, PCE, price index rose 0.4% in April up from 0.1% in March.
    • From a year ago, the PCE index rose 4.4% in April, up from 4.2% in March.
    • Excluding volatile food and energy, core PCE price index rose 0.4% in April up from 0.3% in March.  This is the FED’s preferred measure of inflation.
    • From a year ago, core prices rose 4.7% up from 4.4% in March.
  • Personal incomes rose 0.4% in April up from 0.1% in March.
    • Adjusted for inflation, personal incomes were flat.
  • Durable goods orders rose 1.1% in April, down from a 3.3% rise in March.
    • Excluding transportation, durable goods orders fell 0.2%.
    • Excluding defense, durable goods orders fell 0.6%.

• The Labor Department reported:
  • Seasonally adjusted first-time claims for unemployment were 229,000 an increase of 4,000 from the previous week’s revised level which was revised down from 242,000 to 225,000.
    • The 4-week moving average of claims, designed to smooth out volatility, was 231,750 unchanged from the revised level last week.  The revised average last week was lowered from 244,250.

• • • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• 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 rose from 12.2MM BPD to 12.3MM BPD.
  • Natural gas storage rose 96BN cubic feet and is above the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs fell 5 to 570.  The number of active natural gas rigs fell 4 to 137.
• Factset reported that with 97% of S&P 500 companies reporting earnings, the blended earnings decrease was 2.1% from a year ago.

Please call us if you have any questions.

Loren C. Rex, CFP^®, MA                                                                      Erik A Smith, AIF®

Founder / Emeritus                                                                            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.

 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.factset.com/earningsinsight

https://www.wsj.com/market-data?mod=nav_top_subsection

https://bakerhughesrigcount.gcs-web.com/na-rig-count

https://www.bea.gov/news/2023/personal-income-and-outlays-april-2023

https://www.census.gov/manufacturing/m3/adv/current/index.html