Stocks Mixed and Bonds Gain on Weakening Economic Data

In a holiday-shortened week, the Dow (+0.6%), NASDAQ (-1.1%), and S&P 500 (-0.1%) exhibited mixed results.  Meanwhile, taxable bonds jumped about 0.6% and tax-free municipal bonds gained about 1%.  The yield on the 10-year Treasury dropped to 3.28%, the lowest mark since September 2022.

There was a slew of economic data reported last week and nearly all of it suggested that the economy is weakening.  However, the labor market remains resilient with unemployment dipping to 3.5%, but there are cracks beginning to appear.  The number of job openings fell below 10 million for the first time in two years, and the number of job openings per available worker is also slipping.  The combination of these data could be compelling enough to cause the Fed to pause its rate hiking campaign when it meets again in early May, but that’s a long time away.  This week marks the beginning of the quarterly corporate earnings season, and FactSet reports that earnings are expected to decrease by 6.8% compared to the same period last year.  Also, investors will be focused on Wednesday’s release of the Consumer Price Index (CPI), a key inflation data point.

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