- U.S. equities finished positive for the week: The S&P500 rallied every day of the week, although the bulk of the gains occurred on Monday on the back of strong Chinese and U.S. manufacturing activity as measured by the Purchasing Managers Index (PMIs) and the Friday Jobs report modestly helping. During the week, the Dow Jones Industrial Average (Dow) gained 496 points, or rose 1.91%, to 26,425. The Standard & Poor’s (S&P500) index increased 58 points, or rose 2.06% to 2,893. The Nasdaq closed 2.71% higher at 7,939 while the 10-year Treasury ended the week at 2.50%.
- Economic Data Recap: Last week, the Bureau of Labor Statistics (BLS) reported that the U.S. economy added 196k jobs in March, above expectations of 175k jobs. The February jobs number was revised up from +20k to +33k jobs, bringing the average jobs added this year to 180k jobs per month. Although the average is below 2018’s 233k rate of new jobs, the number is still robust and well above the 100k needed to maintain the unemployment rate where it is. The unemployment rate remained at 3.8%, still near 50-year lows, with broad based job gains led by healthcare and in professional and technical services showing the continued strength of the U.S. labor market. Average hourly earnings grew a modest +0.1%, with the last 12-months earnings growth rate staying at +3.2%.
- The U.S. manufacturing PMI data out this week was also encouraging at 55.3%, an increase from February’s 54.2% reading, showing continued expansion in the manufacturing sector. Although the non-manufacturing PMI came in at 56.1%, below last month’s 59.7%, it remains solidly in expansion territory. Although mixed, overall the data alleviates concerns around weakness in the U.S. economy and reminds investors of the continued strength of the consumer and the overall economy.
- Outside the United States, last week we saw the Chinese manufacturing PMI for March rise back into expansion territory at 50.8. Following the weak start to the year, the latest reading points to the first increase in Chinese manufacturing activity in four months and the strongest since July of last year. As the world’s second largest economy, the positive readings helped allay investor fears around a global economic slowdown and signaled the Chinese stimulus program might be bearing fruit.
- The corporate calendar will start relatively slowly this week, but pick up towards the end of the week as the first quarter earnings season kicks off. Notable reporters include Delta Airlines, Bed Bath & Beyond, Fastenal, JP Morgan, Wells Fargo, PNC Financial Services Group, and First Republic Bank, among others. There will also be a number of broker conferences and investor meetings during the week.
- On the economic calendar, we will see U.S. Factory orders and Inflation numbers to start the week, with Federal Open Market Committee (FOMC) minutes on Wednesday, Producer Price Index (PPI) and import/export prices at the end of the week. Outside the U.S., we will see German import/export numbers on Monday and the European Central Bank monetary policy decision on Wednesday, with Chinese PPI, inflation, and trade balance data towards the end of the week.