Following a four-day rally, the markets took a breather on Friday as investors mulled worse-than-expected retail sales data from March and a preliminary April reading of the Thomson Reuters/University of Michigan consumer sentiment index, which registered its lowest level in nine months.
Wall Street will see some economic data this week that has the potential to help spur the Dow and S&P 500 upward to new record heights or spark a pullback, including:
Consumer Price Index for March – Last month, the Labor Department said that the CPI, a measure of a basket of goods and services purchased by consumers considered by most as a broad gauge of inflation, rose by 0.7 percent in February after no change in January. It was the largest one-month spike since June 2009, mostly on the back of higher gas prices. “Core” CPI, which excludes the volatile food and energy sectors, rose by 0.2 percent in February. For March, economists are expecting a flat month for the CPI and a 0.2 percent rise in Core CPI.
Housing Starts for March – The Commerce Department reported last month the housing starts jumped in February to a seasonally adjusted 917,000 annual rate, representing the second-fastest pace since July 2008. Building permits, a barometer of future demand, rose by 4.6 percent to 946,000 in February, the highest level since June 2008, lending further support that the housing market in the States continues to mend. For March, economists are anticipating the annual rate of starts to increase to about 932,000 and permits to slip a bit to 942,000.
Industrial Production for March – Overall industrial production jumped more than expected in February, according to a March report from the Federal Reserve. The Fed said that industrial production climbed 0.7 percent for the month, marking the biggest rise in three months, led by increases in output of business equipment and motor vehicles. The manufacturing segment of industrial production spiked 0.8 percent in February. Economist are expecting expansion for March, estimating an increase of 0.2 percent in overall industrial production and a 0.1 percent increase in the manufacturing component.
Initial Jobless Claims for the Week Ended April 13 – In the week prior, first-time filings for jobless benefits dropped by 42,000 to a 346,000 level, surpassing predictions. It was a stark contrast to the revised 31,000 increase for the week earlier. The four-week, moving average, which economists pay more attention to because is smooths weekly volatility and gives a better feel for labor trends, increased to 358,000, the highest level since February. Economists are expecting the latest estimate for the April 13 week to be essentially flat.
Philadelphia Fed Survey for April – The Federal Reserve of Philadelphia reported last month that the business conditions for mid-Atlantic manufacturers climbed back into expansion territory in March, after contracting in January and February. The Fed’s local general business index rose to 2.0, following a -12.5 mark in February (and -5.8 in January). Readings above zero signal expansion in manufacturing activity, with negative readings indicating contraction. Economists are anticipating another positive reading in April, slightly higher at 4.0.
Those two days will bring the most closely watched information on the health of our economy. Adding into the mix will be less impactful data, such as the Empire State Manufacturing Survey and Housing Market Index on Monday. The week will wrap with no data being delivered on Friday.