As we entered the holiday shortened week, the major indexes were on track for a solid performance this month. The Dow Jones Industrials, after closing above the 40,000 mark for the first time on May 17th, are up 3.3% so far this month, while the S&P 500 has gained 5.3%. Meanwhile, the NASDAQ is out in front with an 8% advance that has placed it at a new high.
The futures are suggesting a mixed, but slightly positive, start to today’s session. In overnight trading, markets in Asia were mostly lower. Meanwhile, stocks in Europe are showing small losses. Elsewhere, oil prices have moved higher, with West Texas Intermediate up about 1.8%, to around $79.10 a barrel.
On the economic news docket for this week, Thursday brings us the latest data on initial jobless claims from the Department of Labor. Expectations are calling for an increase of around 3,000 from the prior-week’s tally, to 218,000. That same day, the National Association of Realtors will release its report on pending home sales for April, where the consensus is calling for a month-to-month increase of just 0.1%, versus a 3.4% gain in March.
The key announcement, however, will be Friday’s release of the Personal Consumption Expenditures (PCE) report from the Department of Commerce. Wall Street is looking for this closely watched inflation reading to show an increase of 2.7% in consumer prices over the 12 months through April, which would be flat with the March reading. Meanwhile, the month-over-month increase is expected to tick down to about 0.2% for April, versus a 0.3% increase in March.
These numbers will likely not be enough to persuade the Federal Reserve to begin lowering interest rates. Indeed, several Federal Open Market Committee (FOMC) members are scheduled to speak this week, but the most recent comments of Federal Reserve officials who have spoken support the notion that the lead bank is prepared to wait longer before reversing monetary policy.
We’ll also get the latest figures on personal spending from the Bureau of Economic Analysis on Friday, where analysts are looking for the month-to-month rate of increase for April to show a deceleration to around 0.3%, down from the 0.8% pace recorded in March. - Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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