Weekly Market Commentary May 2nd to May 6th 2022
All eyes were on the Federal Reserve this week as they announced a second rate hike. The Fed Funds Rate was increased by 0.50% as was widely expected. The Committee also provided guidance on balance sheet run off of maturing bonds starting on June 1 (with predefined caps expanding on September 1.)
The Nonfarm Payrolls Report showed that 428k new jobs were added in the U.S., in line with the prior month and ahead of consensus estimates. The headline Unemployment rate was unchanged at 3.6%. Average Hourly Earnings moderated to a 5.5% annual pace. The JOLTs Jobs Report reached a new record of 11.55 million available jobs in the U.S. in an increasingly tightening labor market.
ISM Manufacturing in April fell to 55.4, below the prior month’s reading and consensus estimate. Rising input prices, a stalled supply chain from China lockdowns and the war in Ukraine weighed on the reading. Manufacturers reported hiring challenges impacting production capacity.
The S&P 500 had a fifth consecutive weekly decline, closing lower by -0.2%. This is the longest weekly losing streak since 2011. The Nasdaq followed suit closing the week lower by -1.5% after a wild ride before and after Fed comments. The 10-Year U.S. Treasury yield continued its precipitous ride, ending the final trading session at 3.13%.
Next week’s key economic releases include the Consumer Price Index, Import – Export Prices and U.S. Consumer Sentiment.