In this week’s recap: Good indicators for earnings season and other economic data lead to record highs for stocks.
Weekly Economic Update
The Week on Wall Street
Stocks reached record highs last week, riding the tailwind of improving economic data and a strong start to the earnings season.
The Dow Jones Industrial Average rose 1.18%, while the Standard & Poor’s 500 gained 1.37%. The Nasdaq Composite index added 1.09%. The MSCI EAFE index, which tracks developed overseas stock markets, climbed 1.00%.1,2,3
Earnings, Economic Data
Stocks rallied early in the week on strong retail sales, a sharp drop in initial jobless claims, and a retreat in bond yields. Stocks then climbed to fresh record highs on Thursday, with the Dow Jones Industrial Average rising above 34,000 for the first time and the S&P 500 approaching 4,200.4
The market overcame some initial jitters arising from health authorities recommending a pause on a COVID-19 vaccine. Stocks also looked past an increase in the Consumer Price Index and a Federal Reserve report that indicated businesses were raising prices.
A surge in housing starts helped the rally, with stock prices moving higher to close out the week.
The Economic Pulse
Last week provided insight into the economic recovery, and the numbers vindicated the optimism that has driven markets higher.
An acceleration in inflation was expected, but came in at a rate (+2.6%) that didn’t appear to rattle the markets. It was, however, retail sales (an increase of 9.8%), new jobless claims (576,000--the lowest level since March 14, 2020), continuing unemployment claims (the lowest four-week moving average since March 28, 2020), and housing starts (+19.4%) that emboldened investors.5,6,7,8,9
Confirmation of this recovery came with the start of the new earnings season, which kicked off with strong earnings that, in some cases, exceeded Wall Street consensus expectations.
T I P O F T H E W E E K
When was the last time you calculated your net worth? Doing this annually will help you gauge the pace of your financial progress.
THE WEEK AHEAD: KEY ECONOMIC DATA
Thursday: Jobless Claims. Existing Home Sales. Index of Leading Economic Indicators.
Friday: New Home Sales. Purchasing Managers Index (PMI) Composite Flash.
Source: Econoday, April 16, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Monday: International Business Machines (IBM), Coca-Cola (KO).
Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), Lockheed Martin (LMT), United Airlines (UAL), Procter & Gamble (PG), Abbott Laboratories (ABT), CSX Corporation (CSX).
Wednesday: Verizon Communications (VZ), Lam Research (LRCX), Anthem, Inc. (ANTM), Chipotle Mexican Grill, Inc. (CMG), Crown Castle International (CCI).
Thursday: AT&T (T), Intel Corporation (INTC), Snap (SNAP), Blackstone Group (BX), American Airlines (AAL), Southwest Airlines (LUV), Union Pacific (UNP), D.R. Horton, inc. (DHI), Credit Suisse Group (CS), Dow, Inc. (DOW).
Friday: American Express (AXP), KimberlyClark Corporation (KMB).
Source: Zacks, April 16, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“The hardest tumble a man can make is to fall over his own bluff.”
T H E W E E K L Y R I D D L E
What number is 4 more than the number that is double one-fifth of one-tenth of 900?
LAST WEEK’S RIDDLE: Ian bought a bag of apples on Friday and ate a third of them. On Saturday he ate half of the remaining apples. On Sunday he looked in the bag and found that just two apples were left. How many apples were originally in the bag?
ANSWER: 6. He had 6 apples to start with, ate 2 the first day and 2 the second day.
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1. The Wall Street Journal, April 16, 2021
2. The Wall Street Journal, April 16, 2021
3. The Wall Street Journal, April 16, 2021
4. The Wall Street Journal, April 13, 2021
5. CNBC, April 15, 2021
6. The Wall Street Journal, April 15, 2021
7. Department of Labor News Release, April 15, 2021
8. Department of Labor News Release, April 15, 2021
9. Reuters, April 16, 2021