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Market Recap – April 8, 2024

Keel Point

April 8, 2024

March employment growth was stronger than forecast which is positive news for economic growth, consumer spending and corporate earnings.  Stock markets responded positively on Friday, but the S&P 500 closed down 1.07% for the week, leaving it YTD at +9.11%.

  • The 303,000 new non-farm jobs created in March indicates the economy remains strong. These job gains also drove the unemployment rate back down to 3.8% from 3.9% in February, keeping the unemployment rate below 4% since February 2022. Average wage gains slowed to 4.1% from 4.3%, easing wage pressure on inflation.
  • Job “quits” reported last week are signaling a further drop back in wage growth to 3.5% this year. With productivity growth running at 2% or higher, that points to sub-2% growth in unit labor costs – back to pre-pandemic rates.
  • The surge in stock market gains this year added $7 trillion to households’ equity assets in the first quarter, with the increase in housing prices adding another $1.5 trn since the beginning of the year. From economic studies over time, the impact of this $8.5 trn wealth increase is to raise consumption by about $200 billion, or about 0.7% of GDP.

March CPI inflation will be report on Wednesday.  Headline inflation will be up because of higher energy costs, but core CPI inflation should be down for the last 12-month period.  If not, the chances of a June Fed interest rate cut will come off the table, which is different than what markets are expecting.

  • The steady rebound in crude oil prices will add to inflationary pressures in the coming months, but the pass-through into core prices should be limited.
  • The increase in WTI and Brent crude prices implies an increase in retail gasoline prices to about $3.80 per gallon, which is about a 5% month over month gain in April. That would raise the April CPI by about 0.15%.
  • With the recent bombings of Russian production facilities and increased tension in the Middle East, oil prices could climb back above $100 a barrel. Although temporary, such an increase would be unsettling for financial markets.

 

Source:  Yahoo Finance / Axios

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SIPC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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