A volatile week with the major indices ending down, despite a rally on Friday. The SP 500 closed at 4174, down – 1.4%, Dow down – 1.1%, at 34382 up 2.7% and NASDAQ down -2.3% at 13,430.
The mid-cap SP400 was down - 1.7% at 2722 and the small cap SP 600 was down – 1.4% at 1355.
For the past 3 months, SP500 is up 6.1%, Dow up 12.6%, NASDAQ down – 4.7%, SP400 up 7.0% and SP600 up 5.3%
Over the last 6 months, SP500 up 15.1%, Dow up 17.6%, NASDAQ up 12.6%, SP400 up 28.8% and SP600 up 36.3%
In past year SP500 is up 42.8%, Dow up 47.2%, NASDAQ up 46.2%, SP400 up 61.2% and SP600 up 77.6%
For the broad market indices, Dow has been best over the past 3, 6 and 12months. Based on market cap, the SP600 did best over the past 3 months and SP400 over the past 6 SP 600 over the past 12 months.
For the SP sectors, the past week saw XLB (materials) flat at 0.0%, XLC (communications) down – 1.5%, XLE (energy) down – 0.2%, XLF (finance) up 0.3%, XLI (industrial) down - 0.7%, XLK (technology) down – 2.2%, XLP (staples) up 0.4%, XLRE (real estate) down – 0.9%, XLU (utilities) down – 0.2%, XLV (health) down – 0.5% and XLY (discretionary) down – 3.9%
For 3 months XLB up 21.5, XLC up 9.4%, XLE up 18.1%, XLF up 19.6%, XLI up 17.9%, XLK up 9.1%, XLP up 7.9%, XLRE up 17.0%, XLU up 5.3%, XLV up 12.3% and XLY up 0.2%
Over 6 months XLB is up 27.8%, XLC up 21.8%, XLE up 53.7%, XLF up 40.4%, XLI up 23.9%, XLK up 14.3%, XLP up 5.0%, XLRE up 21.0%, XLU up 17.5%, XLV up 14.5% and XLY up 11.2%
In the past year XLB up 76.3%, XLC up 54.5%, XLE up 98.2%, XLF up 82.2%, XLI up 78.4%, XLK up 49.0%, XLP up 21.6%, XLRE up 38.2%, XLU 18.1%, XLV up 29.5% and XLY up 42.4%.
The relative performance of the sectors was 1 week XLP best and XLY worst, 3 months XLB best and XLY worst, 6 months XLE best and XLU worst and 12 months XLF best and XLU worst.
The Consumer Price index rose by 0.6% in April, and was up 4.2% year over year. The core prices, which exclude volatile energy and food, were up 0.9% in April and the 3% year-over-year. This was the biggest 12 month increase since 1995. However, the Federal Reserve continues to believe that inflation is transient because of the base effect (prices unusually low last April when the pandemic began) and therefore they will continue with their planned asset purchases and maintaining low interest rates.
Job openings increase by 600,000 and March to record 8.1 million. This occurred at the same time that only 266,000 jobs were added in April. Available jobs were a record 5.3% in March, up from 5% in February. The highest before the pandemic was at 4.8% in 2018 at a time when unemployment was extremely low.
Initial unemployment claims were down from 507,000 to a value of 473,000 and the 4 week moving average is 534,000. Continuing claims have been largely unchanged over the past month, around 3,655,000.
The producer price index rose 0.6% in April, double what was expected, and is up 6.2% year-over-year. This is the largest increase since this data started being collected in the 2010. The expected value was 3.8%. The core producer price index was up 0.7% for the month and 4.6% year-over-year.
Retail sales were flat in April after a 10.7% gain in March. Retail sales were flat in April after a 10.7% gain in March, below expectations. However, this may have been due to a much larger government stimulus coming in March than in April. Consumer sales are watched as a measure of the health of the economy and consumer attitudes.
Industrial production was up 0.7% to 16.3 percent, and this value was 16.5% above April 2020. However, this is still 2.7% below February 2020 prior to the pandemic. Capacity utilization was up 0.5% to 74.9%, 4.7% below the long term average.
Manufacturers inventories were up 0.3% from March, in keeping with expectations. Although this was the 8th consecutive month of growth, there is no change year on year.
This was a turbulent week in the market with 3 losing sessions followed by gains on Thursday and Friday, although the overall market remained down for the week. The widely reported fear is on inflation, sparked by the rises in the consumer price index and producer price index, were somewhat offset later in the week by comments from the Fed that it intends to continue its program of supporting the economy and not raise rates until 2023.
The announcement by the CDC that individuals who are fully vaccinated against COVID no longer will need to wear masks in many areas gave rise to the hope that the economy will start growing even faster.
The question remains, given the high stock valuations, whether inflationary fears will have a larger effect on prices than a growing economy.
Stock Wealth Safely this week
The Stock Wealth Safely selection to gain 5% this week was NKE, 2 weeks after being chosen. The SPX gained 0% over that period.
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