Stocks sold off sharply last week with all major indices experiencing substantial losses.  Worst performing was the Russell 2000 small cap index with most U.S. indices now in bear market territory.  Developed international and emerging markets indices were still down substantially, but less than major U.S. indices.  Thursday and Friday saw the biggest drop since the Covid drop in March of 2020.  FED chair Jerome Powell stated Friday that he expects tariffs to increase inflation and slow growth.  However, the extent of the impact is uncertain, so the FED is pausing rate decisions awaiting further clarity.  The markets had expected a rate cut in May but that appears to be off the table for now.

Auto sales jumped in March as buyers rushed to beat the automotive tariffs.

Eight OPEC+ producers surprised with a decision to accelerate crude oil production by 411,000 barrels per day.  The full 22 member OPEC+ had been curbing 2.2MM BPD and was expected to make the 411,000 increase over three months, but these eight producers have decided to move now.

Treasury bond yields fell with the 30-year bond yield at 4.432% and the 10-Year note at 4.015%.  Freddie Mac reported that the average 30-year mortgage rate fell to 6.64%.  Crude oil fell sharply to $62.72 a barrel and natural gas fell to $3.829 per MMBTUs.  The U.S. dollar index fell to 103.04 and gold fell to $3,057.5 an ounce.

In economic reports this week:

• Canada reported loosing 33,000 jobs in March and the unemployment rate increased to 6.7%.
• S&P Global released its purchasing manager’s indices for March.  Keep in mind that anything over 50 represents expansion and anything under 50 represents contraction.
  • U.S. manufacturing PMI fell from 52.7 to 52.0.
  • U.S. services PMI rose from 51.0 to 54.4.
  • China manufacturing PMI rose from 50.8 to 51.2.
  • China services PMI rose from 51.4 to 51.9.
  • Mexico manufacturing PMI fell from 47.6 to 46.5.
  • Canada manufacturing PMI fell from 47.8 to 46.3.
  • Canada services PMI fell from 46.6 to 41.2.
  • Japan manufacturing PMI fell from 49.0 to 48.4.
  • Japan services PMI fell from 53.7 to 50.0.
  • Eurozone manufacturing PMI rose from 47.6 to 48.6.
  • Eurozone services PMI rose from 50.6 to 51.2.
• Marklines reported that auto sales rose 8.8% in March from a year earlier.
• The Commerce Department reported:
  • Construction spending rose 0.7% in February and was up 2.9% from last year.

• • New orders for factory goods rose 0.6% in February, following a 1.8% increase in January.

• • The U.S. trade deficit fell 6.1% in February as exports rose and imports were unchanged.
• The Labor Department reported:
  • Job openings fell from 7.7MM to 7.6MM.
    • Hires and separations were unchanged.
    • The quits rate was unchanged at 2.0%
  • The U.S. added a robust 228,000 jobs in March, but the unemployment rate increased slightly to 4.2%, as the participation rate increased slightly to 62.5% of the working age population.
  • The average hourly wage rose 0.3% in March to $36.00.  from a year ago wages have grown 3.8%.
  • Seasonally adjusted first-time claims for unemployment were 219,000, a decrease of 6,000 from the previous week’s revised level.  
    • The 4-week moving average of claims, designed to smooth out volatility, was 223,000, a decrease of 1,250 from the previous week’s revised level.
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf
• The EIA weekly oil report is here: Weekly Petroleum Status Report.  Also, the EIA reported in the prior week:
  • Field production of crude oil rose from 13.574MM BPD to 13.580MM BPD.
  • Natural gas storage rose 29BN cubic feet and was below its average level during the past five years at this time of year.
• Baker Hughes reported the number of oil rigs rose 5 to 489 and the number of natural gas rigs fell 7 to 96.

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.bls.gov/news.release/jolts.nr0.htm

https://www.marklines.com/en/statistics/flash_sales/automotive-sales-in-usa-by-month

https://www.pmi.spglobal.com/Public/Release/PressReleases

https://www.bls.gov/news.release/empsit.nr0.htm

https://www150.statcan.gc.ca/n1/daily-quotidien/250404/dq250404a-eng.htm