Highlights of the week ended May 5, 2017 and a look ahead to this week’s expected announcements and potential market-moving activity.
- U.S. equities finished positive for the week: The Dow Jones Industrial Average (DJIA) closed 66 points higher, or rose 0.32%, to 21,007. The Standard & Poor’s 500 (S&P 500) index rose 15 points, or rose 0.63%, to 2,399. The Nasdaq closed last week 0.88% higher at 6,101, hitting another all-time high.
- U.S. Economy
- Last Friday, The U.S. Bureau of Labor Statistics reported total nonfarm payrolls increased a seasonally adjusted 211,000 in April, and the unemployment rate dropped 0.1% to 4.4% – matching the low point reached in the last economic expansion (May 2007). The job gains for the month occurred in leisure and hospitality, health care and social assistance, financial activities and mining. The falling unemployment rate suggests there could be significant upward pressure on wages as businesses compete for fewer workers. However, changes in wages have been modest – average hourly earnings rose +0.3% compared to March and +2.5% over the year.
- Following the jobs report, the odds of an interest rate hike at the June Federal Open Market Committee (FOMC) meeting increased from 93% to 100%, which will be the second hike this year. This follows the Fed’s announcement to keep the federal funds rate steady at 0.75%-1.00% earlier last week. In the FOMC statement, the Fed noted that the slowing in growth during the first quarter is likely to be “transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2% over the medium term.”
- Other Headlines
- The U.S. House of Representatives voted to pass a new healthcare bill that seeks to replace the Affordable Care Act.
- Emmanuel Macron was elected president of France on Sunday, scoring a big win over Marine Le Pen.
- First quarter earnings season continues with results expected from Disney, Whole Foods, News Corp & Macy’s to name a few. Economic data for the upcoming week include, Retail Sales, The U.S. Treasury Budget, April Producer Prices, Consumer Price Index (CPI), The Fed’s Balance Sheet.