Market Perspective for April 21, 2024

Market Perspective for April 21, 2024

The third full week of April saw a lot of important data released to the public that will likely shape the discourse surrounding future monetary policy. The action started on Monday morning when both core and overall retail sales figures were released. It was determined that core retail sales had increased 1.1 percent during the previous month, which was more than double the expected .5 percent increase.

It was also almost double the reading posted last month when core retail sales increased by .5 percent. Overall retail sales were up .7 percent, which was almost double the projected .4 percent increase and only slightly below the revised figure of .9 percent from last month.

An increase in gasoline prices and volume of goods sold at gas stations were cited as one of the primary reasons for the increase. However, the March report also noted that several categories saw a decrease in sales volume including sporting goods and automobiles.

As expected, members of the Fed took a largely neutral stance toward the news saying that decisions about monetary policy were going to remain dependent on data. However, there were predictions by some that interest rates could go as high as 6.5 percent by the middle of next year. Jamie Dimon was quoted by the New York Post as claiming that interest rates could soar to 8 percent because of domestic debt levels and international conflicts leading to more inflation.

Also on Monday, the Empire State Manufacturing Index came out and posted a figure of negative 14.2. This was the fourth time in the last five months that the survey indicated a contraction in business activity in New York state.

On Tuesday, Fed Chair Jerome Powell stated that progress against inflation had stalled and that rate cuts may not happen soon. This has led some to adjust their outlook from a possible two or three rate cuts in 2024 to none at all. Powell did say that he was comfortable keeping interest rates at a restrictive level for as long as possible before taking action.

On Thursday, unemployment claims data indicated that there were 212,000 requests for benefits over the past seven days. This was lower than the expected 215,000 claims and equal to last week’s number.

The Dow Jones finished the week down 415 points to close at 37,986. On Monday, the market opened at its weekly high of 38,341 before tumbling to a weekly low of 37,657 on Wednesday morning. During the second half of the week, the market stayed in a trading range as there was little to stir up volatility between Wednesday morning and Friday afternoon.

The S&P 500 was down 201 points this week, which represented a loss of 3.9 percent over the previous five trading days. Like the Dow, the S&P would begin the week at its high of 5,166 before tumbling rapidly. It would continue to plummet throughout the next five days and would close at 4,967.23, for a loss of 3.54 percent on the week.

As with the S&P 500, the Nasdaq would also begin the week at its high before sliding all week to close at its lowest point. For the week, the Nasdaq lost 998 points to close at 15,282, which is a loss of 6.11 percent.

In international news, Canada announced that its inflation rate on a monthly basis doubled to .6 percent from .3 percent a month ago. However, it was still lower than the expected .7 percent. On an annual basis, the inflation rate in the nation dropped to 2.8 percent from 3.0 percent a month ago.

Australia announced that the economy shed 6,600 jobs over the past month. The overall unemployment rate went up to 3.8 percent compared to 3.7 percent a month ago, which was lower than the projected figure of 3.9 percent.

The upcoming week will feature a variety of major news releases. Key American news releases include the release of advanced gross domestic product (GDP) figures for the previous quarter as well as the Core PCE Price Index for the previous month. Australia will be releasing its inflation figures on Wednesday while the Bank of Japan (BOJ) will be making its latest monetary policy decision early Friday morning.

The Investor Guide to Vanguard Funds for April 2024

The Investor Guide to Vanguard Funds for April 2024

The Investor Guide to Vanguard Funds for April is AVAILABLE NOW! Links to the April data files are posted below. Market Perspective: Inflation Hampers Rate Cut Possibilities Accelerating inflation kept […]

Market Perspective for April 14, 2024

Market Perspective for April 14, 2024

The past week was an eventful one as several news reports came out that likely upended the conventional wisdom regarding rate hikes. There also seems to be a disconnect between what the Fed is doing compared to what the European Central Bank (ECB) is planning in terms of future rate cuts.

The week got off to a relatively slow start news wise as markets had their eyes of inflation data released on Wednesday. On Wednesday, it was revealed that inflation had gone up .4 percent on a monthly basis and increased to 3.5 percent on a yearly basis. It was expected that inflation had accelerated by .3 percent on a monthly basis and 3.4 percent on an annual basis.

This led to some members of the Fed speculating that there wouldn’t be any rate cuts at all during 2024. However, many still believe that there is going to be at least one rate cut in the second half of the year. It is unlikely that any movement will take place until at least June as Fed Chair Powell has stated that he is in no hurry to move. Instead, he will wait for the data to confirm that inflation is moving closer to the 2 percent benchmark before easing monetary policy.

On Thursday, price and unemployment reports were released to the public. The Price Producer Index (PPI) revealed that the cost of core goods increased by .2 percent. In addition, prices for all goods were up by .2 percent on a monthly basis. Overall prices were expected to increase by .3 percent on a monthly basis, and both the core and overall PPI were down from last month when they came in at .3 percent and .6 percent, respectively.

Unemployment data revealed that 211,000 people filed for benefits in the past week, which was down from 222,000 last week. Analysts had projected a total of 216,000 claims over the past seven days.

On Friday, the University of Michigan revealed its preliminary consumer sentiment and inflation expectation reports. Consumer sentiment came in at 77.9 percent while respondents believed that the inflation rate would be at 3.1 percent a year from now.

The Nasdaq was down 77.76 points this week to close at 16,175. During the first half of the week, the Nasdaq tumbled before hitting a low of 16,111 on Wednesday morning. It would then rebound to hit a weekly high of 16,450 on Thursday afternoon before easing back to its closing price.

The Dow was down 990 points this week to close at 37,983. It would open at its highest point of the week Monday morning at 38,974 before tumbling the next five trading days. On Friday morning, the Dow would reach its weekly low of 37,894.

Finally, the S&P 500 fell almost 86 points to close the week at 5,123. As with the Dow, the index would start the week at its highest point opening at 5,215 before spending the rest of the week in a freefall. Like the Dow, the S&P made its weekly low on Friday when it dipped to 5,111.

There were a few important announcements outside of the United States as the Bank of Canada (BOC) announced that its key interest rate would remain at 5 percent. The ECB announced that its key interest rate was holding steady at 4.5 percent on Thursday morning. Interestingly, it announced plans for a rate cut in June, which is where it would diverge from the Fed and other central banks. On Tuesday night, New Zealand announced that it was also holding steady on interest rates by keeping its base rate at 5.5 percent.

The upcoming week should be another consequential one for investors. Retail sales data will be released on Monday morning, and it’s expected that core retail sales were up .4 percent while overall retail sales were up .5 percent on a monthly basis. Thursday sees the release of unemployment claims data, and it’s expected that 214,000 people applied for benefits. Finally, Jerome Powell is expected to speak on Tuesday afternoon, and it’s likely that his words will provide some insight into the future of monetary policy.