The S&P 500 was down for the week, off just under 1% and closing Friday at 5204. It was an unusual week as the focus was on Fed expectations and interest rates. Mondays downward market reaction was a carryover from Good Fridays (market was closed) report that Februarys core personal consumption expenditures price index showed a 2.8% annual increase, still above the Feds 2% inflation target. By Wednesday the yield on the 10 year Treasury had climbed to 4.429%, the highest level of the year and matching where we were last Thanksgiving. On Thursday the markets capitulated and sold off with the S&P 500 down more than 1% for the day and marking the third down day of the week. Then came Fridays big economic news before the markets open. First, 303K jobs were added in March, the most in ten months, and well above the consensus forecast of 200K. Second, the March unemployment rate dipped to 3.8%, below the unchanged 3.9% expectation. Given these hot numbers, the markets initially sold off as expectations for the Fed lowering interest rates waned. However, the markets did a double take and looked at it from a glass half full perspective. With the economy getting stronger, this should lead to improved corporate earnings and more bullishness. Reversing Thursdays action, the S&P 500 scored a 1% daily gain and closed above the 5200 level again. From a technical perspective, it might not feel like it, but we were within one point of setting a record high this week and remain less than 1% off that high. That said, banks kick off earnings season next week, and well also get inflation, consumer confidence, and retail sales numbers. As we hover around the S&P 500s 20 day Moving Average, getting good numbers could lead to a move upward. For TSP TIPS the Composite Scores for the C/S/I funds remain near 100% and the C fund remains at the top of the Performance Ranking leaderboard. As such we recommend no changes to our current investment mix.
The S&P 500 was down for the week, off just under 1% and closing Friday at 5204. It was an unusual week as the focus was on Fed expectations and interest rates. Mondays downward market reaction was a carryover from Good Fridays (market was closed) report that Februarys core personal consumption expenditures price index showed a 2.8% annual increase, still above the Feds 2% inflation target. By Wednesday the yield on the 10 year Treasury had climbed to 4.429%, the highest level of the year and matching where we were last Thanksgiving. On Thursday the markets capitulated and sold off with the S&P 500 down more than 1% for the day and marking the third down day of the week. Then came Fridays big economic news before the markets open. First, 303K jobs were added in March, the most in ten months, and well above the consensus forecast of 200K. Second, the March unemployment rate dipped to 3.8%, below the unchanged 3.9% expectation. Given these hot numbers, the markets initially sold off as expectations for the Fed lowering interest rates waned. However, the markets did a double take and looked at it from a glass half full perspective. With the economy getting stronger, this should lead to improved corporate earnings and more bullishness. Reversing Thursdays action, the S&P 500 scored a 1% daily gain and closed above the 5200 level again. From a technical perspective, it might not feel like it, but we were within one point of setting a record high this week and remain less than 1% off that high. That said, banks kick off earnings season next week, and well also get inflation, consumer confidence, and retail sales numbers. As we hover around the S&P 500s 20 day Moving Average, getting good numbers could lead to a move upward. For TSP TIPS the Composite Scores for the C/S/I funds remain near 100% and the C fund remains at the top of the Performance Ranking leaderboard. As such we recommend no changes to our current investment mix.