HIGHLIGHTS:
- A brief update summarizing a good week for the markets.
- Happy Mother’s Day!
- Coming Week: Consumer spending will be the focus within a broad swath of economic reports.
A brief update summarizing a good week for the markets.
At Via Nova, we have described the risks facing the economy and the stock market as a “wall of worry;” events that might happen to potentially offset the positives of a healthy economy and an acceleration in corporate earnings growth.
In the latest week, investors began climbing that wall of worry, adding 2½% to the S&P 500. The yield on the 10-year Treasury closed below the psychologically and technically important 3% level, and oil prices rose above $70 per barrel, good for oil company profits, but not so good for drivers.
Several pieces of news accounted for the rise in investor optimism. First, the consumer price index rose less than expected in April, suggesting that the Federal Reserve will not have to raise interest rates faster than currently planned. The second bit of news was the announcement that China will be sending a high-ranking official to continue trade negotiations. Finally, President Trump pulled out of the Iran nuclear deal and announced new sanctions. The sanctions will likely reduce Iran’s oil exports and the global oil supply - increasing oil prices and boosting oil stocks 4% for the week.
Happy Mother’s Day!
We offer a heartfelt thank you to the countless moms who sacrificed in countless way to support us.
Coming Week: Consumer spending will be the focus within a broad swath of economic reports.
Retail sales are expected to have increased in April by a solid 0.4% and 0.6% excluding autos pointing to continued strength in consumer spending. We will also get updates on home building and industrial output in April, and the consensus forecast for both is additional gains.
China's vice premier and top economic adviser, Liu He, will visit Washington, rekindling cautious optimism that China and the US can negotiate their way out of a trade impasse.