Last Week:

  • U.S. equities finished negative for the week: Last week, the Dow Jones Industrial Average (Dow) lost 152 points, or fell 0.62%, to 24,311. The Standard & Poor’s (S&P500) index ended the week flat at 2,670. The Nasdaq closed 0.37% lower at 7,120, while the 10-year Treasury ended the week at 2.96%.
  • U.S. economic data: Despite all the issues investors seem to be grappling with recently (the yield curve, peak earnings growth, trade wars, geopolitical risks, etc.), economic data released this week continues to show the U.S. economy remains healthy. Once again, weekly jobless claims fell and U.S. Gross Domestic Product (GDP) expanded a moderate 2.3% annualized during the first quarter, with investment adding +1.2%. The U.S. Employment Cost Index (ECI) also showed wage gains, rising +0.8% during the first quarter, which is very healthy against the backdrop of an improving labor market.
  • Central banks leave rates unchanged: Last week, the European Central Bank (ECB) and the Bank of Japan (BoJ) both issued marginally “dovish” interest rate decisions with the BoJ in particular removing the time commitment for hitting their 2% inflation target, while the ECB acknowledged the recent softening in Euro-zone growth momentum. Investors will keep an eye on the FOMC meeting this week although the market is broadly expecting the Fed to keep rates steady.

Look Ahead:

  • First quarter earnings season will continue as we enter another heavy earnings volume week with notable reports from, Merck, American Tower, Tapestry, Pfizer, Eaton, Apple, Mastercard, Kraft Heinz, and DowDuPont among others.
  • On the economic calendar, the week will be relatively busy with the focus on the Federal Open Market Committee (FOMC) rate decision on Wednesday. In addition, U.S. Personal Consumption Expenditure (PCE) figures will be released on Monday morning, ISM manufacturing Purchasing Managers Index (PMI) for April on Tuesday, trade balance figures on Thursday, and the U.S. Jobs report on Friday. Outside the U.S., China will report PMIs on Monday morning and we will see Euro area GDP for the first quarter on Wednesday, as well as manufacturing PMI for both China and Euro-zone.