Stocks and Bonds Mixed Last Week; Key Data Reported This Week

Last week, the Dow (-1.0%), NASDAQ (+0.4%) and S&P 500 (-0.2%) exhibited mixed results.  Meanwhile, taxable bonds fell about 0.2%, but tax-free municipal bonds eked out a small gain of about 0.1%.  The 10-year Treasury yield was rather volatile, but finished the week little changed at 3.46%.

Mixed economic reports came in last week, as April Consumer Price Index (CPI – the most popular measure of inflation) fell to 4.9% (from 5.0% the prior month).  The Producer Price Index (PPI) also fell to 2.3%, the lowest level since January 2021 and suggesting the increasing cost to suppliers is slowing down.  Initial jobless claims also rose more than expected.  Inflation and the labor market are key components the Fed looks at when deciding if it will raise interest rates again at its next meeting in June.

As noted in the past, consumer spending represents more than 2/3 of the US economy and that will be in the spotlight this week.  On Tuesday, the April retail sales report will be published.  Maybe more importantly, corporate earnings reports from three of the bellwether consumer companies – Walmart, Target, and Home Depot – will be reported this week.  These data reports and the forward-looking guidance from those key retail companies will likely set the tone for the economic calendar this week.  However, economic data will likely be overshadowed the next few weeks as the government debates a resolution to the impending debt ceiling issue.  This will certainly provide volatility to the markets, so buckle up.  And then my favorite monthly economic report, Leading Economic Indicators (LEIs), will be reported on Thursday.

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