Stocks closed down on Friday following new record-highs on Thursday. The S&P 500 dropped 0.72 percent, the Dow 0.54 percent and the Nasdaq 0.85 percent on Friday. The Russell 2000 small-cap index took the biggest hit, with a loss of 1.26 percent.
For the week, the S&P 500 Index gained 0.02 percent, while the Russell 2000 Index, Nasdaq and Dow Jones Industrial Average decreased 0.36 percent, 0.39 percent and 0.50 percent, respectively.
SPDR Energy (XLE) climbed 3.89 percent this week, SPDR Financial (XLF) 2.49 percent and SPDR Communication Services (XLC) 2.13 percent. Crude oil powered energy this week as it hit $65 per barrel again before pulling back. Natural gas touched $3 per mmBTU for the first time since February. First Trust ISE Revere Natural Gas (FCG) rose 6.03 percent on the week.
Twitter (TWTR) shares took a plunge on Friday with a loss of 15.16 percent due to lagging first-quarter earnings for its advertising division.
First quarter economic growth hit 6.4 percent according to the government’s first estimate. Consumer spending on cars, travel and restaurants helped drive growth. Business investment also jumped, as did government spending. Personal consumption generated 7.0 percent of headline GDP growth. Offsetting growth was falling inventories at retailers. When inventories increase, it is recoded as GDP growth, but when inventories decline, it subtracts from GDP. Since retailers will have to rebuild inventory going forward, that is positive for growth in the coming quarters.
The Conference Board recorded sharply higher consumer confidence in April. The “current conditions” subindex hit its highest level since the lockdowns began in March 2020. Consumers are also more optimistic about the future than they have been in the past two years, a sign that the reopening has lifted outlooks.
The Bloomberg Dollar Spot Index increased by 0.75 percent on Friday. The 10-year Treasury Note yield on Friday remained fairly stagnant at 1.63 percent for the day. Over the week, the yield was only up slightly by 0.1 percent.
Foreign shares were hit hard by the dollar rally. Both iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM) were up for the week as of Thursday, but Friday’s losses left them down 1.23 percent and 1.17 percent, respectively, for the week.
On Friday, West Texas Intermediate crude oil prices dipped 2.3 percent over the day to $64 a barrel.
Gold futures (GC=F) bumped up only narrowly by 0.03 percent to $1,768.80 per ounce on Friday. On the other hand, silver futures (SI=F) increased slightly on Friday by 0.53 percent to close at $25.92 an ounce.
U.S. economic data was encouraging. GDP for the first quarter was up 4.3 percent over the previous quarter and was 6.4 percent higher than a year ago. In addition, due to infusions of direct federal stimulus payments, consumer spending spiked by 10.7 percent, accounting for around 70 percent of the overall economic growth. Consumer Discretionary Select Sector SPDR Fund (XLY) was up by 0.39 percent on Friday.
Personal income, on the heels of direct stimulus checks, was the major winner on Friday with a monthly spike of a 21.1 percent increase from February to March, which was above the 20.3 percent rise projected. The personal savings rate for March also increased to 27.6 percent, the second-highest savings rate in history following the 33.7 percent record set in April of last year.
Unemployment data released earlier in the week revealed that first-time unemployment claims decreased by 13,000 claims to come in at 553,000, which is the lowest-level since the start of the pandemic. The third week in a row of reduced first-time claims filed indicates an uptick in the labor market recovery, which is still around 200,000 more initial jobless claims higher than before the pandemic hit.