Market Perspective for May 5, 2024

The markets rose over the past week as the Fed made its most recent interest rate decision on Wednesday and the nonfarm payroll figures were released on Friday.

Although the Fed and the nonfarm payroll numbers were the top stories of the week, the first major news release came out on Tuesday. On that day, the quarterly Employment Cost Index came out and found that employment costs rose 1.2 percent over the first three months of 2024. This was higher than the expected 1 percent and the .9 percent figure seen in the final quarter of 2023.

On Wednesday, the ADP version of the nonfarm payroll report was made public and found that the economy added 192,000 news jobs in the past month. Also on Wednesday, the JOLTS report came out and revealed that there were 8.49 million jobs available in the United States. The ISM Manufacturing PMI came in at 49.2 percent, which indicates that the sector is experiencing a period of contraction.

The Fed Funds Rate was kept steady at a range of 5.25 percent to 5.5 percent during their meeting on Wednesday afternoon. In a statement, Fed Chair Jerome Powell said rates were going to remain higher for longer until there was confidence that inflation was heading back toward the 2 percent target.

Although there is some speculation that interest rate hikes might be on the table, Powell said that this is unlikely to happen. On Thursday, unemployment claims were released, and over the past seven days, there were 208,000 requests for benefits compared to an expected 212,000.

On Friday, it was revealed that average monthly hourly earnings rose .2 percent compared to an expected .3 percent. The unemployment rate rose to 3.9 percent compared to an expected 3.8 percent. The economy added 175,000 jobs over the past month, which was well below the expected 238,000 and slightly more than half of the 315,000 created last month. Also on Friday, the ISM Services PMI was released and came in at 49.4 percent.

The Dow was up .93 percent this week to finish at 38,675. The low of the week was hit on Tuesday afternoon when the index dipped to 37,822, and the high of the week was reached on Friday morning when the index soared to 38,770.

Like the Dow, the Nasdaq also gained ground this week as it closed up 1.47 percent at 16,156. It would stay in a relatively tight range reaching a low of 15,578 on Wednesday before reaching a high of 16,158 on Friday.

Finally, the S&P 500 finished the week higher by .44 percent to close at 5,127. The market made its low of the week of 5,015 on Wednesday morning and made its high of the week on Friday afternoon when it hit 5,132 before sliding back.

In other international news, Canada announced on Tuesday that its GDP increased by .2 percent on a monthly basis. On Wednesday morning, the Swiss central bank announced that inflation increased by .3 percent on a monthly basis compared to an expected increase of .1 percent.

The upcoming week is going to feature another round of key news releases both domestically and internationally. On Thursday, unemployment claim data will be released as usual while Friday features the University of Michigan releases preliminary consumer sentiment and inflation expectation information. Internationally, Australia is scheduled to release its cash rate decision on Tuesday morning while Canada announces its employment change and unemployment data on Friday.

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