The final full trading week in April was yet another consequential one as markets continued to grapple with tariff implications. This week, it was revealed that tensions with China could ease as both sides understand that a protracted trade war could lead to long-term damage.
There were several scheduled announcements that also contributed to market volatility over the past few days. On Monday, the Flash Manufacturing PMI report came in at 50.7, which was slightly higher than the expected reading of 49. It also indicates that the manufacturing sector is in a period of expansion, which has been a rare sight over the past few years.
On Wednesday, the Flash Services PMI came in at 51.4, which was slightly lower than the expected 52.2. Despite the miss, the reading says that the service sector is also expanding. While an increase in manufacturing may be the result of companies trying to buy products before tariffs fully go into effect, the same can’t be said of services. Instead, it may indicate a source of economic strength going forward.
Also on Wednesday, it was revealed that new home sales were higher than expected in March. In that month, there were 724,000 new homes sold compared to an expected 684,000. Home buying can also be seen as a positive sign for the economy as new homeowners generally spend money on furniture, home maintenance projects and other items.
However, this may be tempered by the results of the existing home sale report. On Thursday, it was revealed that 4.02 million such properties were sold compared to 4.27 million a month ago.
On Friday, the University of Michigan revealed its consumer sentiment and inflation expectations data. Consumer sentiment rebounded slightly to 52.2 from 50.8 last month. Respondents expect the inflation rate to be 6.5 percent a year from now, compared to 6.7 percent last month.
The S&P 500 made up some of its losses for the year as it finished up 5.72 percent for the week. The market made its low of the week on Monday when it dipped to 5,104 and closed the week at its highest point. Despite the rally during the last five trading days, the index is still down 4.13 percent in April.
As with the S&P 500, the Dow was also higher this week closing up 1,422 to finish at 40,113. This was a gain of 3.68 percent for the last five trading days during a week that saw the market start near its low and gain ground as the week progressed. On Monday afternoon, the Dow made its low of the week at 37,952 while it closed at its highest point of the week on Friday afternoon.
Finally, the Nasdaq also saw significant gains this week as the index surged 8.22 percent to finish at 17,382 at the close of trading on Friday. As with the other two major indexes, the Nasdaq started at the low of the week and closed near the highs on Friday. On Monday, the market dipped to 15,741 before reversing.
In addition to news in the United States, there were a few major new items that were released by other nations. On Friday, it was revealed that retail sales in Great Britain were up .4 percent over the past month compared to an expected drop of .3 percent. On that same day, Canada announced that retail sales dipped .4 percent, which was in line with expectations. However, core retail sales were up .4 percent compared to an expected dip of .3 percent.
The upcoming week should be another interesting one as there will surely be more fallout and uncertainty regarding tariff implementation. For instance, the JOLTS report is scheduled for Monday while the nonfarm payroll reports are expected to come out on Wednesday and Friday.