Stocks Continue Rally

Both the S&P 500 and the Nasdaq advanced for the fourth straight week, which is the first time that has happened since February. Not to be outdone, the Dow advanced for a fifth straight week. Much of the week’s focus was on inflation data (see below). Investors will now look to responsive comments from Federal Reserve officials for any potential changes in interest rate expectations. Information technology and real estate led the market sectors, while consumer discretionary and industrials closed in the red.

CPI Rose 0.3% in April

Consumer prices rose 0.3% in April after rising 0.4% in March. Over the last 12 months, consumer prices were up 3.4%. Excluding food and energy, consumer prices rose 0.3% for the month and 3.6% for the year. While prices may have decreased some, they remain well above the Federal Reserve’s 2.0% target. Increases in prices for shelter (0.4%) and gasoline (2.8%) accounted for more than 70% of the overall increase in April. Prices for food were unchanged last month.

Eye on the Week Ahead

This week, the April data on sales of existing homes and new homes is released. March saw sales of existing homes decline, helping to draw sales down 3.7% over the last 12 months. New home sales advanced in March and are up over 8.0% for the year.