Last week the Dow Jones and S&P 500 ended their best weeks since November 2020
On Friday, the Dow jumped 575.77 points, or nearly 1.8%, to 33,212.96. The S&P 500 rose about 2.5% to 4,158.24.
The tech-heavy Nasdaq index outperformed, helped by strong software company earnings and a decline in the 10-year Treasury yield. It ended the day up 3.3% to hit 12,131.13.
A report showing inflation was easing a little helped stocks rise on Friday. The price index for core personal consumption expenditure rose 4.9% in April, down from the 5.2% pace seen the previous month. This particular ratio is closely watched by the Federal Reserve when setting policy.
Meanwhile, the University of Michigan consumer confidence indicator fell to its lowest level in more than 10 years.
Now, all eyes remain firmly on the American consumer as they adjust to a more normalized post-Covid economic reality.
This week, Bank of America’s weekly economic research report offered a word of optimism. “Remember,” he said, “the stock market is not the economy.”
The report cites recent stock market trends that could spook investors, including negative earnings reports from retail giants Walmart, Amazon and Target.
Now, the S&P Retail Select Industry Index has fallen 39% from a peak in November, with a particularly dramatic fall in May.
“What’s Behind the Massive and What Does It Mean for Consumer Prospects?” request the report. The answer? Businesses could simply catch up with swings in consumer demand as the economy continues to rebalance after the initial pandemic lockdown and the gradual easing of restrictions.
“With spending on goods shifting from a boom to a mild correction, some businesses may have been caught off guard,” the report said. This is especially true for the online retail sector.
“The share of online spending has grown every year since the industry started in 2000,” the report said. This sector saw a jolt at the start of the pandemic, but is now facing stable spending for the first time.
Further, the report states – Negative earnings reports in the retail sector are not indicative of impending economic catastrophe,
All 11 major S&P 500 sectors rose, with consumer discretionary, technology and real estate posting the largest percentage increases
Among the best performing sectors, stocks were hydrogen stocks, electric vehicle drives like Tesla, lithium stocks like Livent & Albemarle
New data on Friday showed U.S. households increased spending for a fourth straight month, though they dug deep into their savings to do so.
The data, along with strong earnings, pushed retailers’ shares up sharply. Dollar Tree, Ulta Beauty and Ross Stores were among the week’s biggest gainers in the S&P 500, gaining at least 20% each.
Trading volumes were light ahead of the long weekend, however, with US stock markets closed Monday for Memorial Day.
We have a big week on the US economic calendar, which five members of the Federal Reserve’s Open Market Committee (FOMC), which makes decisions on the rate of inflation, are about to speak out on, in the hope that “they could shed some light on the political outlook after the next two meetings.”
On the asx today SPI futures point to a 1.2% gain
Beware today from Melbourne-based infant formula company Bubs Australia (ASX:BUB) who struck a deal to send more than a million boxes to the United States to ease a national shortage, with President Joe Biden taking to Twitter to endorse the deal over the weekend
Goods
Gold gained $3.40 or 0.2% to US$1,857 an ounce. Silver was up $0.13 or 0.6% at US$22.10 an ounce.
Oil added $0.98 or 0.9% to US$115.07 a barrel.
Bitcoin futures fell 1.6%.
Ex-dividend
There are eight companies ready to trade without the right to its dividend.
Coronado World Resources (ASX: CRN) pays 11.9289 cents unstamped
Dalrymple Bay (ASX: DBI) pays 4.5675 cents unstamped
Elders (ASX:ELD) pays 28 cents 30 percent franked
Capital of the Griffons (ASX: GCI) pays 0.82 cents unstamped
Kkr Credit Income Fund (ASX: KKC) pays 1 cent without postage
Perpetual Credit Income Trust (ASX:PCI) pays 0.4607 cents without postage
Qualitas Real Estate Income Fund (ASX:QRI) pays 0.8159 cents without postage
360 Capital Enhanced Income Fund (ASX:TCF) pay 3 unstamped cents
Currencies
The 7:00 Australian dollar has strengthened since Friday, buying 71.63 US cents (Friday: 70.99 US cents), 56.82 pence sterling, 91.03 yen and 66.76 euro cents.
