U.S. stocks ended lower this week with the first 1% drop in over 100 days on Tuesday. The declines were mainly due to fading optimism over the new presidency as the repeal and replacement of the ACA failed due to divisions with the Republican House. While the healthcare replacement wasn’t crucial to fiscal stimulus but it showed a weakness and division that may hamper infrastructure spending and corporate tax reform. Also, the lack of optimism caused Treasury yields to fall. The 10-year Treasury ended the week at 2.41% down from 2.50% last Friday.
Global stocks generally performed better. Crude oil sold off due to continued high U.S. inventory and uncertainty over further OPEC restraint. The current production reduction agreement between OPEC and non-OPEC producers ends in June and it remains uncertain if it will be extended or modified. The dollar declined modestly against a basket of foreign currencies and gold rose.
In the numbers this week:
- The European Union’s statistics agency reported that wages in the fourth quarter were 1.6% higher than a year earlier. Wages are a big component of inflation and are still running below the ECB’s target of 2.0%.
- The U.K. Office of National Statistics reported that consumer prices in the U.K. were up 2.3% from the prior year in February versus only 1.8% in January. This exceeds to the U.K. central bank target of 2.0%.
- The National Association of Realtors reported at 3.7% drop in home sales in February mainly due to short supply and rising prices. Sales rose 3.3% in January.
- The Commerce Department reported:
- New U.S. home sales rose 6.1% in February from the prior month. This was much higher than expectations.
- Durable goods orders rose 1.7% in February from the prior month. January saw an 83.3% gain in civilian aircraft orders. February saw a 47.6% gain in this volatile category. Excluding transportation, orders rose 0.4% in February.
- The Energy Information Administration’s Weekly Petroleum Data report is here wpsrsummary.
- The Energy Information Administration reported
- Weekly field production of crude oil increase 20,000 barrels per day in the prior week.
- Natural gas in storage fell 150 Bcf from the prior week but is still above the five-year average.
- Baker Hughes reported that oil drilling rigs rose 21 to 652. Gas drilling rigs fell 2 to 155.
- The Labor Department reported initial claims for unemployment rose 15,000 to a seasonally adjusted 258,000. The prior week was revised from 241,000 to 243,000. The four-week moving average of claims, designed to smooth out weekly fluctuations, rose 1000 to 240,000.
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Loren C. Rex, CFP®, AIF®, MA Erik Smith
President Managing Partner
Generations Financial Planning & Wealth Management 269-441-4143
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Battle Creek, MI 49017
Carrie Fuce, Assistant 269-441-4091
Toll Free: 800-513-8180
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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. Indices mentioned are unmanaged and cannot be invested into directly. Past performance is not a guarantee of future results.