Inflation And Stocks Retreat As Spring Arrives

Tough week for stocks as there was approximately a 1 percent decline. We also saw interest rates decline a bit as well. This can be correlated as people sell stocks out of fear and move to bonds. More demand for bonds drives down yields as bond issuers don’t need to pay as much to buyers hungry for “calmer waters” than stocks.

Prices Decline in March

In March, the Consumer Price Index retreated for the first time in 13 months. Its 0.3 percent dip left annualized consumer inflation at a moderate 2.4 percent. Fuels, autos, and groceries have all become less expensive recently, according to Bureau of Labor Statistics data. Core consumer prices were up 2.0 percent in the year ending in March. The Producer Price Index fell just 0.1 percent in March, with the yearly PPI gain left at 2.3 percent.1

Retail Sales Fall

March’s 0.2 percent decrease followed a 0.3% pullback in February. The silver lining? Minus gas and vehicle sales, retail sales were up 0.1 percent last month. Core retail sales were flat for March.2

An Improvement for Consumer Sentiment

Rising to an initial April reading of 98.0, the University of Michigan’s consumer sentiment index improved 2.1 points from its final March level. The index’s current conditions component increased 2.0 points to an outstandingly high 115.2.2

A Volatile Week for Stocks

Selling outweighed buying during this past, abbreviated market week. Across four trading days, the S&P 500 fell 1.12 percent as U.S. investors considered both corporate earnings and global tensions. The Nasdaq Composite’s weekly losses were slightly deeper at 1.21 percent; the Dow Jones Industrial Average declined only 0.97 percent. Friday’s settlements: Dow, 20,453.25; Nasdaq, 5,805.15; S&P, 2,328.95.3,4

This Week:

Earnings from Celanese, DISH Network, J.B. Hunt and Netflix appear Monday. Tuesday, investors review earnings from Bank of America, Charles Schwab, Citrix, Goldman Sachs, Harley-Davidson, IBM, Johnson & Johnson, Kinder Morgan, UnitedHealth, W.W. Grainger and Yahoo!, along with data on March housing starts, building permits and industrial output; also, Facebook’s F8 conference begins. Earnings announcements from Abbott Labs, American Express, BlackRock, CSX, eBay, Kaiser Aluminum, Morgan Stanley, Qualcomm, TD Ameritrade and U.S. Bancorp emerge Wednesday, plus a new Federal Reserve Beige Book. On Thursday, the earnings parade includes Alliance Data, American Airlines, BB&T, BONY Mellon, Briggs & Stratton, D.R. Horton, E*TRADE, GATX, Imax, KeyCorp, Mattel, Nucor, PPG, Philip Morris, Sherwin-Williams, Snap-On, Travelers Companies, Unilever, Verizon and Visa. March existing home sales figures are out Friday, along with earnings from General Electric, Honeywell International, Rockwell Collins, Schlumberger, Stanley Black & Decker and SunTrust Banks.

% CHANGE YTD 1-YR CHG 5-YR AVG 10-YR AVG
DJIA +3.49 +14.10 +11.83 +6.22
NASDAQ +7.84 +17.37 +18.56 +13.30
S&P 500 +4.03 +11.82 +13.99 +6.03
REAL YIELD 5/5 RATE 1 YR AGO 5 YRS AGO 10 YRS AGO
10 YR TIPS 0.32% 0.24% -0.25% 2.31%

Sources: wsj.com, bigcharts.com, treasury.gov – 4/28/174,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

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Citations

  • 1 – marketwatch.com/story/inflation-falls-for-first-time-in-13-months-cpi-shows-2017-04-14 [4/14/17]
  • 2 – investing.com/economic-calendar [4/14/17]
  • 3 – google.com/finance?q=INDEXDJX%3A.DJI&ei=4PbwWNn_O8-w2AbUyJ7ICQ [4/14/17]
  • 4 – markets.wsj.com/us [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F14%2F16&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F14%2F16&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F14%2F16&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F13%2F12&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F13%2F12&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F13%2F12&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F13%2F07&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F13%2F07&x=0&y=0 [4/14/17]
  • 5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F13%2F07&x=0&y=0 [4/14/17]
  • 6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/14/17]
  • 7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/14/17]