Equities Rallied on U.S.-China Trade Talks

Wall Street enjoyed one of its best weeks in quite some time as stocks moved higher by the close of trading last Friday. Each of the major benchmark indexes posted solid weekly gains on the heels of easing U.S.-China trade tensions. The 90-day tariff truce helped drive the S&P 500 back into positive territory for the year. Most of the market sectors experienced growth, with the exception of Health Care. Consumer Discretionary and Information Technology led the advance, each climbing more than 7.0%. Weaker-than-expected economic reports chilled investor enthusiasm somewhat, despite the favorable tariff news. Crude oil prices moved higher for the second consecutive week. While easing global tensions helped stocks, gold prices slipped lower. After reaching a three-month high of 4.55% last Thursday, yields on 10-year bonds dipped by the end of the week. Nevertheless, yields closed the week more than 20 basis points higher than their values at the start of May.

April CPI Brought Smallest Annual Increase Since 2021

Consumer prices ticked up 0.2% in April after falling 0.1% in the previous month, according to the latest Consumer Price Index. Over the last 12 months, consumer prices have risen 2.3% following a 2.4% increase for the 12 months ended in March. The April change was the smallest 12-month increase in the CPI since February 2021. The all items less food and energy index rose 2.8% over the last 12 months. More than half of the April price increase was attributable to a 0.3% rise in shelter prices. Prices for energy also rose 0.7% last month. Food prices, in contrast, fell 0.1% in April. Consumer prices less food and energy rose 0.2% in April following a 0.1% increase in March.

Eye on the Week Ahead

The housing sector is front and center this week. The latest data on sales of new and existing homes is available for April. Sales of existing homes fell in March, while sales of new single-family homes rose. Higher mortgage lending rates have kept some potential homebuyers away over the past several months.