Stocks Finish Mixed While Rising Inflation Pushes Yields Higher
Good morning,
The Dow (-0.2%), NASDAQ (-0.1%), and S&P 500 (+0.1%) were roughly flat for the week, while the EAFE (-1.5%) finished lower. Meanwhile, taxable bonds fell 1.1% and tax-free municipal bonds declined 0.6%. The 10-year Treasury yield rose to finish the week at 4.59%.
The Consumer Price Index (CPI) for April came in at 3.8%, the highest reading we have seen since May 2023. The Producer Price Index (PPI) also rose 6%, marking its highest reading since December 2022. Both measures of inflation have been trending higher, in large part due to the conflict in Iran pushing oil prices upward. These continued higher inflation prints pushed bond yields higher, with yields on U.S. government bonds reaching their highest levels in over a year. Many believe the increase in inflation is temporary and will decline once the Iran conflict is resolved, but there is growing concern that if inflation continues trending upward, the Fed could look to increase rates to combat inflation. On that note, Kevin Warsh was approved by the Senate to become the next Fed Chair, replacing Jerome Powell. Warsh’s first meeting as Chair is set for June 16–17, with Powell remaining in his position for the time being.
International markets were down across the board last week, largely due to the continued conflict in the Middle East and the strengthening of the dollar. International bond yields also rose last week, which put further pressure on equity valuations.
Have a great day, and a terrific week!
Source: Yahoo Finance
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The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
