The S&P 500 failed to break the 2400 level last week but did set an all-time closing high of 2399.63 on Wednesday, May 10. The market continues to drive higher, led by technology stocks and decent first quarter earnings. I expect stocks to continue to grind higher for the next several weeks.
Last week, the U.S. economy reported solid economic data, supporting the theory the first quarter’s weakness with a sub-1% GDP number will rebound in the second quarter. Retail sales for April were up 0.4% while CPI increased by 0.2% for the month. This data, in addition to low initial jobless claims, provides a good indication the economy is performing well in the second quarter.
In the week ahead, look for more signs of economic strength in housing data and keep an eye on any Federal Reserve talk about reducing the balance sheet or what is the natural rate of unemployment. These two monetary policy topics will have the market’s attention for the next month.
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