By Rick Schwerd |
Our investment team remains committed to sharing updates and market insights to keep you informed. Please look for our next update on June 5.
Markets Scale New Peaks
After a brief period of consolidation earlier this month, the major indexes have returned to record-setting territory. Momentum accelerated Wednesday and Thursday as the market found fresh catalysts in positive trade news and strong corporate guidance. The S&P 500 has risen 6.8 percent over the last month and is up 9.5 percent this year, while the NASDAQ Composite climbed 10.9 percent over the last month and is 14.6 percent higher year to date.
Strong company earnings and improving outlooks continue to drive higher prices.
Futures markets pointed to a significantly lower open Friday morning, likely due to disappointment over the lack of tangible outcomes from President Trump's visit to China, higher oil prices, increasing interest rates and some profit-taking following the recent market run.
Inflation and the Fed's Balancing Act
We received critical inflation data this week that provided a mixed picture for the Federal Reserve. Wednesday's Producer Price Index (PPI) report came in hotter than expected at 6.0 percent year-over-year, driven largely by energy costs. However, the Consumer Price Index (CPI) showed that while headline inflation is feeling the pressure of $100+ oil, core inflation remains more anchored. The Federal Reserve maintains an easing bias. However, the current war with Iran will likely keep policymakers on the sidelines for the foreseeable future.
Stable Labor Market Continues
The labor market remains resilient. Last Friday's April labor report showed a gain of 123,000 jobs, following an increase of 190,000 jobs in March. The unemployment rate remained at 4.3 percent. Weekly initial jobless claims rose slightly to a still historically low 211,000, with continuing claims also remaining at historically low levels. This all points to a stable labor market with low hiring and low firing.
China Visit
This week's summit in Beijing yielded significant commercial commitments, including Chinese orders for Boeing jets and U.S. commodities, but fundamental tensions persist. While both leaders emphasized stability and cooperation around reopening the Strait of Hormuz, President Xi issued a stern warning regarding Taiwan. Ultimately, the visit provided a temporary diplomatic thaw and potential trade wins but offered no concrete breakthroughs on high-tech export bans or the ongoing conflict in Iran.
Looking Ahead
The historically strong first-quarter earnings season is winding down, with a few major companies reporting next week, including Nvidia, Home Depot and Walmart. Expectations remain high for Nvidia, as it continues to be one of the primary beneficiaries of artificial intelligence capital spending, as detailed in our last update. The economic calendar is light over the next couple of weeks. We will receive several housing data points, along with the Personal Consumption Expenditures (PCE) inflation measure on May 28.
Have a great weekend and as always, if you have any questions or concerns regarding markets or your financial planning needs, please reach out to us at (518) 415‑4401.
About the Author: With almost three decades of financial industry experience, Rick serves as a Senior Investment Officer at Arrow Bank. He oversees individual and corporate retirement plans, personal trusts, investment management accounts, foundations and not‑for‑profit relationships.