Hello, this is Claire Rubin, Private Bank Investment Strategist at Fifth Third Bank with this week’s Economic Beat.
Major global equity benchmarks were mixed last week in another volatile week for financial markets. The S&P 500 Index rose 1.6% in total return to close at a record high and the blue-chip Dow Jones Industrial Average added 1.4%. The tech-heavy Nasdaq Composite dropped 0.6% for the week. The yield on the 10-year U.S. Treasury retraced some of its recent rise, falling 5 basis points for the week to end at 1.67%.
On Tuesday, a massive cargo ship ran aground in the Suez Canal, completely blocking traffic in the waterway that carries about 12 percent of global trade. Over the weekend, salvage teams were preparing to remove part of the canal’s bank in efforts to pull out the ship. West Texas Intermediate (WTI) crude oil ended the week 0.8% lower as investors weighed the related disruptions from the Suez logjam against questions on European demand amid negative COVID-19 news.
President Joe Biden said he is now aiming to distribute 200 million doses of COVID-19 vaccines in his first 100 days in office, doubling the original goal after surpassing it in mid-March. The U.S. is now administering roughly 2.5 million doses per day. At least 31 states are giving all adults access to vaccines by mid-April and more are aiming for President Biden’s May 1 goal.
In economic news released last week, U.S. existing home sales dropped 6.6% in February to a six-month low. Inventory was down 29.5% from a year earlier, reflecting the sharpest decline on record, while the median selling price rose to the highest for any February. Higher asking prices, paired with lower inventories and rising mortgage rates may be reducing affordability leading into the busy spring selling season. Sales of new homes also declined more than expected, falling 18.2% in February to a nine-month low. Severe winter weather likely limited the search for homes last month.
U.S. durable goods orders decreased for the first time since April in February, down 1.1% from the prior month on expectations for a modest increase. Core capital goods orders, which excludes aircraft and military hardware and is seen as a proxy for business investment, fell 0.8%, also contrary to estimates for a gain. January’s figures were revised higher. The third reading on fourth quarter gross domestic product showed a revision higher to 4.3% annualized growth, up from 4.1% previously reported. Personal consumption, which makes up nearly 70% of the U.S. economy, was revised slightly lower to a 2.3% annualized pace.
U.S. household spending fell 1.0% in February, following an upwardly revised 3.4% increase in January. Personal incomes fell 7.1% as the initial boost from stimulus checks faded. Incomes and spending are poised to reaccelerate in the coming months as the March stimulus checks are reflected.
In the week ahead, we’ll get our first major insights into the state of the U.S. economy in March, with the Conference Board’s Consumer Confidence Index, the Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI), and the Labor Department’s monthly Employment Situation Report. Economists expect that U.S. employers added over 600,000 workers to payrolls in March amid expanding vaccinations and a pickup in economic activity.
President Biden is expected to unveil more details about his "Build Back Better" plan on Wednesday.
As always, we’ll be watching and reporting back to you. Thank you.