Review of Last Week
RECORD-BREAKING… Friday, new records were set for the Dow and S&P 500 stock indexes, as Wall Street went giddy over a better than expected (though still mediocre) April Employment Report. The Dow passed 15,000 during the day and ended at a record close just under that threshold. The S&P 500 nailed its record close just over 1600. The catalysts were a surprise gain of 165,000 nonfarm payrolls last month, an upwardly revised 138,000 jobs hike for March, and a drop in the unemployment rate to 7.5%, its lowest reading since December 2008. Better-than-expected Q1 corporate earnings also inspired investors.
Disappointing news did come with Personal Income, Q1 Productivity, ISM Manufacturing, and ISM Services all lower than forecast, though the manufacturing and services sectors of the economy are still showing growth. The Chicago PMI did have manufacturing contracting in that region. But Consumer Confidence and Pending Home Sales were both better than predicted, and PCE Prices, the Fed’s favorite measure of inflation, stayed well within the target range. Finally, weekly Initial Unemployment Claims fell to 324,000, their lowest level since January 2008.
The week ended with the Dow up 1.8%, to 14974; the S&P 500 up 2.0%, to 1614; and the Nasdaq up 3.0%, to 3379.
Over in the bond market, Treasuries gained following lower than expected Q1 GDP growth, then lost ground after Friday’s better jobs numbers. The FNMA 3.5% bond we watch ended the week down .12, at $106.04. National average mortgage rates slid for the fifth straight week in Freddie Mac’s weekly Primary Mortgage Market Survey. Their chief economist commented: “Near record low mortgage rates should further drive the housing market recovery over the near term.”