It was an important week. While rates rose early, they ended the week lower. Were they foreshadowing things to come?

Monday                             S&P 500 -%| NASDAQ -%

Happy Memorial Day!

Tuesday                       S&P 500 0.02% | NASDAQ 0.59%

Consumer Confidence rose unexpectedly in May. Markets rose on the day but lost steam as treasury auctions drew less interest than expected, pushing rates up. The move higher was likely not a condemnation of future rate hikes.

Wednesday                 S&P 500 0.74% | NASDAQ 0.58%

API Crude inventories fell more than expected for the week. Interest rates rose again on Wednesday, pushing equities lower. Interestingly, higher rate expectations have a negative impact on Growth markets, but the S&P 500 was more heavily hit Wednesday. This signals that while current rates are higher, future rate cut expectations are likely intact.

Thursday                     S&P 500 0.60% | NASDAQ 1.08%

GDP figures for the first quarter were revised lower, to 1.3%. Initial jobless claims remain benign at 219K. While benign the average loss has increased approximately 10% over the last few months. Markets experienced a rare glitch where markets were not reporting index levels and traffic for an hour during the day. The glitch did not appear to impact investor sentiment throughout the trading window.

Friday                          S&P 500 0.80% | NASDAQ 0.01%

Personal Consumption Expenditures (PCE) price index rose at an annualized rate of 2.7% over the last year. This measure of inflation is the Federal Reserve Board’s (FRB) preferred gauge. It is markedly closer to 2% than CPI. GDP expectations for the second quarter have been revised down to 2.7%. The weaker inflation data and lower GDP expectations both moved rates lower on the day, causing a rally in equities. While the NASDAQ does not look like it rallied, it was down over a percentage point early in the day.

Conclusion                  S&P 500 0.51% | NASDAQ 1.10%

As we move to the end of earnings season, we see few companies reporting. 14 major companies reported earnings across the week with none of them missing expectations. Markets lost ground for the week, however, they moved much higher for the month. The S&P 500 rose 4.8% and the NASDAQ rose 6.9% in May. June will likely be more turbulent as we have rebounded from the losses of April. However, weaker inflation and jobs data will likely mean that the volatility experienced will land is on better footing.