Economic Journal - Friday, 5/13/2016

(As of 7:15 am PST)

It’s been a back and forth week for US markets this week. Entering Friday’s session, the S&P500 is up 0.3% for the week, while the Dow is down 0.1% and the Nasdaq is flat. We had some big moves mid-week as the Dow scored its biggest percentage gain in two months Tuesday, only to have those gains erased Wednesday as downside pressure crept back in. Yesterday’s session bounced all around ultimately to finish flat on the day. Today we’re seeing a similar pattern emerge. Markets are bouncing around the unchanged line despite some surprisingly positive economic data which may ultimately propel stocks to the upside later in the day. April retail sales increased 1.3% month-over-month marking the biggest gain in over a year. The gains were fueled by a 3.2% increase in auto sales and a 2.2% in gas station sales, with gains also seen throughout most of the sector. A strong retail sales report will translate into improved Q2 GDP forecasts, a positive for the market on the whole. Reports on the Producer price index showed prices were up a meager 0.2% in April, indicating inflation remains subdued. Lastly on the data front, consumer sentiment soared as the latest reading from the University of Michigan’s index moved 7.6% in May hitting its highest level in nearly a year. In other news, oil is being weighed down today on comments by Russia’s energy minister that indicated the oil market has a long ways to go before balancing out. Crude prices were down over 1% to $46 per barrel early Friday. International markets are mixed today with most of Asia limping into the weekend with losses while European stocks turned to the upside in their final hour of trading with positive gains across the board. In summary, the market appears content to hover near these current levels in a tight range trade for the foreseeable future. With earnings season winding down, and some big market moving events on the horizon (OPEC meeting and FOMC meeting in June) there’s not much conviction to propel things higher at this point. 

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