U.S. stocks gained about 2% last week, more than recouping the previous week’s losses.
Stocks ended the week on a down note Friday but broadly higher for the week. The Dow gained 1.8% and the S&P added 2.0%, although both indexes remain in the red for the year to date. NASDAQ rose 2.8% and is up by about the same percentage YTD. Facebook, one of its most widely watched components, rebounded by nearly 5% as founder and CEO Mark Zuckerberg seemed to fare well during his two-day testimony on Capitol Hill about his company’s use of membership data.
Foreign stocks were higher for the third straight week. Hong Kong, which had been down three weeks in a row, bucking the uptrend, rebounded 3.2%, while Shanghai rose 0.9%, regaining some of the prior week’s 1.2% loss. The Stoxx Europe 600 index rose 1.2%, its third straight weekly gain of more than 1%, closing at a one-month high. Oil prices jumped 8% on concerns about rising tensions in the Middle East, specifically warnings by President Trump about retaliation for a reported gas attack by Syria and reports that Saudi Arabia had shot down a missile over Riyadh, the capital. U.S. crude ended the week at more than $67 a barrel, its highest level since late 2014.
The Federal Reserve released the minutes of its March 20-21 monetary policy meeting, at which it raised the federal funds rate by a quarter of a percentage point. The minutes indicated that the Fed is on course for further rate hikes later this year given the strengthening economy. "With regard to the medium-term outlook for monetary policy, all participants saw some further firming of the stance of monetary policy as likely to be warranted," the minutes said. "Almost all participants agreed that it remained appropriate to follow a gradual approach to raising the target range for the federal funds rate."
Inflation measures for March showed price increases heating up. The headline consumer price index fell 0.1% from a month earlier, the first monthly decline since last May. But that figure was skewed by a drop in gasoline prices, which is likely to be temporary, given the sharp rise in crude oil last week. The core index, excluding food and energy prices, actually rose 0.2% for the month, 2.1% on an annualized basis, which tops the Fed’s 2.0% inflation target. The producer price index rose 0.3% for the month while the core index jumped 2.7% compared to a year earlier. Elsewhere, the University of Michigan’s consumer sentiment index opened April at 97.8, down from a previous reading of 101.4 and well below the consensus forecast, which called for no change.
Reports/dates/facts/links worth paying attention to over the next week:
1. April 16: Retail sales for March; National Association of Home Builders housing market index for April; Empire State manufacturing survey for April.
2. April 17: Housing starts for March; industrial production for March.
3. April 18: Federal Reserve Beige Book.
4. April 19: Weekly unemployment claims; leading economic indicators for March; Philadelphia Fed business outlook survey for April.
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