This was another interesting week for market participants as several news items were released. The first major news item came out on Tuesday as pending home sales data for April was made public. During that time, there was a 1.4 percent increase in sales compared to an expected increase of 1 percent.
Typically, those who buy a home will furnish it with new goods, pay for repairs and otherwise spend money to make the property their own. The increase also indicates that buyers are feeling more optimistic about owning property even as prices and interest rates stay somewhat elevated.
On Wednesday, the FOMC released the minutes from their most recent meeting. The main takeaway is that there is a significant split between those who believe that the Fed should continue to ease and those who think that a rate hike may be appropriate in the next few months. This split comes as data continues to support the risk for elevated inflation over a longer period.
If prices continue to rise, the Fed will likely want to consider a rate hike. Of course, raising rates may also hinder the job market, which is showing signs of softness. As has become customary over the past couple of years, the Fed must decide whether to prioritize prices over employment despite their mandate to keep both in check.
On Thursday, unemployment claims data for the past seven days was released. It found that there were 209,000 requests for unemployment benefits over the last week. This compares to an expected 210,000 requests prior to the release and 212,000 claims last week.
Also on Thursday, housing start data was made public. It found that 1.47 million new homes were built compared to an expected 1.44 million. This is important because a lack of housing inventory has largely been responsible for a slowdown in sales and an increase in prices. If more new homes are built, it may increase supply and make existing homes more affordable in the long-term.
Finally, on Friday, the University of Michigan released its revised consumer sentiment report. It found that sentiment was at 44.8 compared to an expected 48.2. This would be the lowest level in the survey’s history, and it would be the third time this year that it has broken a previous record low.
The S&P 500 was up 71 points to close the week at 7,470. This was an increase of 0.97 percent over the past five trading days. For the week, the market made a low of 7,341 on Tuesday and a high of 7,505 on Friday.
The Dow was up 1,044 points this week to finish at 50,579. That represented an increase of more than 2 percent since the open on Monday. On Wednesday, the market made its weekly low of 49,326 before reversing and hitting its weekly high of 50,763 on Friday afternoon.
The Nasdaq was up 188 points to close the week at 26,343. This was an increase of 0.72 percent over the past five trading days. On Tuesday, the index made its weekly low of 25,738 before reversing and hitting its high of 26,453 on Friday afternoon.
In international news, Canada announced on Friday that retail sales were up 0.9 percent while Great Britain stated retail sales there were down 1.3 percent. Canada announced earlier in the week that inflation was up 0.4 percent in April compared to an expected increase of 0.7 percent. Finally, Australia publicized on Wednesday that its economy lost 18,600 jobs this month and that the unemployment rate there ticked up to 4.5 percent.
Next week will be another interesting one as economic data will continue to pour in. It’s worth noting that Monday is the Memorial Day holiday, which means that markets will be closed. However, after that, you can expect the CB Consumer Confidence report to come out Tuesday while the PCE Price Index for April comes out on Thursday. In addition, preliminary GDP data for the first quarter comes out on Thursday.