Week in Review
Stocks added to year-to-date gains last week, led by a 1.2% rise in the Dow Jones Industrial Average. The NASDAQ lagged, rising 0.3%, and the S&P 500 climbed 0.8%. Interest rates rose and the Dollar fell, while gold prices ended the week unchanged after a Friday selloff. Bitcoin jumped 8.5%, ending the week above 30,000 for the second straight week. Crude oil had its best finish of the year closed at levels not seen since last November.
Inflation showed further signs of slowing last week, as the year-over-year change in CPI decelerated to 5%, the lowest level since May 2021. Falling energy prices contributed to the decline, with prices for energy commodities dropping 17%. Core inflation – which excludes volatile food and energy components of the index – was less compelling. It accelerated to 5.6% year-over-year, still well above the Federal Reserve’s 2% target. Nearly a third of that number is comprised of housing costs, which most economists believe will begin to show meaningful disinflation this summer.
Gains in stock prices were broad over the last month, as only the Real Estate sector failed to finish in the green. Communication Services was far and away the best sector, as the group jumped 12% – more than double the 5.5% rally for stocks overall. Energy, Information Technology, and Health Care all outperformed as well.
For the year, growth-oriented sectors are comfortably in a leadership position. Communication Services is again the best performer, with prices 24% higher since December. Information Technology and Consumer Discretionary are both up double-digits. Five sectors, meanwhile, are in negative territory for the year. Risk-off sectors like Health Care, Real Estate, and Utilities have fallen out of favor after being leaders in 2022. Financials, thanks in part to weakness in the banking industry, are lagging the S&P 500 by 11%.
Updates on the housing market dominate this week’s busy economic calendar.