Major stock indices rose again this week with the largest gain in the Dow 30 Industrials. Traders focused on earnings and on signs of slower growth and employment which may help bring down inflation and allow the FED to cut rates sooner.
The U.S. Treasury reported that the trust funds for Medicare and Social Security have experienced higher than expected revenue collections due to higher payrolls from the strong economy. The Medicare Hospital Insurance Trust Fund is now expected to last five years longer to 2036. The Social Security trust fund is now projected to last one more year to 2035. If Congress does not act to shore up the trust funds, automatic benefit reductions may take place when the trust funds are depleted.
The Bank of England met and chose to keep its benchmark interest rate at 5.25%. The BOE governor said that they will likely need to cut rates over the coming quarters more so than what is priced into market rates.
Treasury bond yields fell with the 30-year bond yield at 4.644% and the 10-Year note at 4.501%. Freddie Mac reported that the average 30-year mortgage rate fell to 7.09%. Crude oil rose to $79.45 a barrel and natural gas rose to $2.293 per MMBTUs. The U.S. dollar index rose to 105.36 and gold rose to $2371.10 an ounce.
In economic reports this week:
- S&P Global released the remainder of its purchasing manager’s indices for April. Keep in mind that anything over 50 represents expansion and anything under 50 represents contraction.
- U.S. services PMI fell from 51.7 to 51.3.
- China manufacturing PMI rose from 51.1 to 51.4.
- China services PMI fell from 52.7 to 52.5.
- Canada services PMI rose from 46.4 to 49.3.
- Japan services rose from 54.1 to 54.3.
- Eurozone services rose from 51.5 to 53.3.
- The Federal Reserve reported that consumer credit increased at a seasonally adjusted annual rate of 1.5% in March and 3.2% in the first quarter.
- Revolving credit rose at a 0.1% annual rate in March and 5.7% annualized for Q1.
- Non-revolving credit rose at a 2.0% annual rate in March and 2.2% annualized for Q1.
- The Treasury Department reported that in the month of April the federal government ran a surplus of $210BN due to tax deposits. However, for the fiscal year starting in October through April the federal deficit was $855BN.
- The Commerce Department reported:
- Wholesale inventories fell a seasonally adjusted 0.4% in March after rising 0.2% in February.
- Wholesale inventories fell a seasonally adjusted 0.4% in March after rising 0.2% in February.
- The Labor Department reported:
- Seasonally adjusted first-time claims for unemployment were 231,000, an increase of 22,000 from the previous week’s revised level and the highest since August.
- The increase in claims was partly caused by New York teachers that filed for unemployment for the summer months.
- The 4-week moving average of claims, designed to smooth out volatility, was 215,000, a increase of 4750 from the previous week’s revised level.
- For the full unemployment report go here: https://www.dol.gov/ui/data.pdf .
- Seasonally adjusted first-time claims for unemployment were 231,000, an increase of 22,000 from the previous week’s revised level and the highest since August.
- 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 79BN 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 fell 3 to 496 and the number of natural gas rigs rose 1 to 103.
- Factset reported that with 92% of S&P 500 companies reporting, the blended earnings increase so far is 5.4% from a year ago.
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
https://www.ssa.gov/news/press/releases/2024/#5-2024-1
