Hello, I’m Greg Curvall, Senior Portfolio Manager with Fifth Third Bank.
The S&P 500 rallied on Friday, on the back of an upbeat jobs report, following four consecutive days of losses, though finished the week in negative territory.
Last week, the Federal Reserve increased its key interest rate by 0.25 percentage points, it’s 10th hike in 14 months. That pushed its benchmark rate to between 5 percent and 5.25 percent, up from near-zero in March 2022, although the Fed hinted the rate hike may be its last for now.
Oil prices fell 9 percent in just three days last week. The price of West Texas Intermediate (WTI) crude, fell below $70 for the first time since March, erasing all the gains made since OPEC’s production cut announcement back in early April.
The positive mood Friday was a turnaround from earlier in the week, when investors were focused on the collapse of First Republic Bank, the largest U.S. bank to fail since 2008. The market took a collective sigh of relief when JPMorgan Chase won the auction to acquire First Republic after the Federal Deposit Insurance Corporation (FDIC) seized control of the distressed regional bank.
The April Jobs Report showed that the U.S. economy added 253K jobs last month, beating estimates for 180K new jobs. Only three economists of the 87 polled by Refinitiv had projected job growth at or above 253K. However, February and March’s jobs gains were revised lower. Annual wage growth also accelerated to 4.4 percent, up from 4.2 percent, while the unemployment rate dropped to 3.4 percent, down from 3.5 percent, a 53-year low. With payrolls coming in better-than expected, the unemployment rate falling, and wage growth accelerating, data continues to show that the U.S. labor market remains resilient.
We have another busy economic calendar this week. Starting on Monday, we get April’s NFIB survey of small business owners. Economists expect the report to show a slowing of economic activity, along with a moderation in inflation. Also on Monday, the Fed will release the latest Senior Loan Officers Opinion Survey (SLOOS). It is likely to show a further tightening in lending standards. It will also be a big week for April’s inflation stats, with the Consumer Price Index (CPI) out on Wednesday, and the Producer’s Price Index (PPI) coming out on Thursday.
As always, we will be watching and reporting back to you next week. Thank you.