Although the trading week was abbreviated because of the Good Friday holiday, it wasn’t short on drama. Wednesday provided the first bit of important information as core and overall retail sales data was released that morning.
For the month of March, retail core sales were up .5 percent compared to an expected increase of .4 percent. Overall retail sales were up 1.4 percent compared to an expected 1.3 percent. This was in spite of the fact that many believed that retail sales would soften in the face of Trump’s tariffs.
However, some believe that the positive number occurred thanks to consumers scrambling to make purchases before they went into effect. Although there is evidence in the retail sales report to suggest that this isn’t the full story, it’s hard to believe that people weren’t buying, at least in part to beat higher prices in the future.
Whether the March report is indicative of anything won’t be known for another month or two. By then, any lasting consequences should be reflected in future reports, and if consumers act anything like investors did in April, it may be fair to draw a line between tariffs and consumer behavior.
Also on Wednesday, Jerome Powell made some prepared remarks about the economy and fiscal policy. He said that the labor market is strong and that the Fed’s dual mandates were not in conflict at the moment. In addition to ensuring price stability, the Fed is also tasked with ensuring full employment.
It’s believed that tariffs will lead to inflation and higher unemployment, which would force the Fed to decide which of their goals is more important at the moment. Of course, President Trump wants interest rates to come down no matter what as the EU and other central banks have eased policy.
President Trump has also threatened to get rid of Powell if he doesn’t do what he asks. It’s worth noting that Powell’s term is over in 13 months, and at that point, Trump can replace Powell with few questions asked.
On Thursday, the last scheduled significant news announcement was made regarding unemployment claims data. Over the last seven days, there were 215,000 requests for benefits compared to an expected 225,000 requests.
The S&P 500 closed at 5,282, which represents a gain of about three points over the past five trading days. The index hit a high of 5,443 on Monday morning before reversing and heading back toward last Friday’s low of 5,224. On Wednesday, the market made its low of the week at roughly that same number before reversing and gaining ground into Thursday’s close.
The Dow finished about 377 points lower for the week to close at 39,142. Like the S&P, the Dow made a high of the week on Monday but made its low of the week on Thursday. The Monday high was 40,746 while the Thursday morning low was 39,040.
Finally, the Nasdaq followed the other two indexes by making its high of the week on Monday morning. After peaking at 17,001, the index reversed and made a low of 16,106 on Wednesday afternoon. On Thursday, the index closed at 16,286, which represents a drop of 1.12 percent over the last five trading days.
There were a number of important news announcements from outside the United States that might be of interest to American investors. Canada announced on Tuesday that its monthly inflation reading came in at .3 percent while the median CPI came in at 2.9 percent. On Wednesday, the Bank of Canada (BOC) announced that the country’s key interest rate would remain at 2.75 percent.
On Wednesday night, Australia announced that its unemployment rate dropped to 4.1 percent over the past month. Finally, the European Central Bank (ECB) announced that the main refinancing rate would fall from 2.65 percent to 2.4 percent.
The upcoming week should be another consequential one as the Flash Manufacturing PMI and Flash Services PMI are set to be released on Wednesday. Unemployment claims data is scheduled to be released Thursday while the University of Michigan will release consumer sentiment and inflation expectation figures.