Overview: Stocks were mixed across the globe last week. The U.S. stock market rallied after a busy week of generally positive earnings, with the S&P 500 up 1.2% for the week. Overseas, international developed stocks were basically unchanged and emerging markets lagged, largely due to a stronger dollar which hurt returns. Through the first quadrimester of 2019, all major stock indices are up at least 12%, and bonds are up about 3% for the year.
Economy: The U.S. economic growth beat expectations, with GDP growing at an annualized quarterly rate of 3.2%, well above the consensus of 2.3%. This number should be viewed with a big caveat however, as net exports and inventories contributed more than half of the 3.2% number. Since trade and inventory are volatile numbers that effect the headline number, a better gauge is final sales, which grew by only 1.4%, well below the 3.5% average of last year. It is important for investors to understand that we still have a growing economy, but slower growth is to be expected.
Looking ahead: This morning, markets got a read on consumer spending and inflation as spending rebounded in March. In addition, the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index, fell to a 1-year low of 1.6%, below the Fed’s 2% goal. This week, we have a scheduled Fed meeting where officials are expected to hold rates steady. The week of data will culminate with the jobs report on Friday. Non-farm payrolls are expected to increase by 180,000, average hourly earnings are projected to be higher by 3.3%, and the unemployment rate consensus is to hold steady at 3.8%.
This communication is for informational purposes only. It is not intended as investment advice or an offer or solicitation for the purchase or sale of any financial instrument.
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