Markets were mostly mixed this week. The major indices ended just below last week's close after losing ground Friday.
Investors took in a lot of new economic data with personal income and spending data released Friday in addition to PCE prices for the month of March.
Additionally, earnings season continued this week with some of the biggest firms reporting first quarter performance such as Apple (AAPL), Amazon (AMZN), Facebook (FB), and many others. Finally, recent developments from the Federal Reserve and White House suggest continued aggressive monetary and fiscal policy as the economy is still recovering.
New Economic DataNothing too surprising came out of the economic data released this week as everything came in pretty close to analysts estimates. Initial claims were at 553,000 last week which was slightly higher than the 530,000 expected. Claims dropped for the third straight week after 566,000 claims were reported the previous week. The continued decline comes after claims were steady between 700,000 and 900,000 each week from late August 2020 to the first week of April this year.
Personal spending and personal income for March were also mostly in line with analysts expectations. Spending rose 4.2% while personal incomes increased 21.1% compared to estimates for 4.0% and 21.0% respectively. The surge in income is largely due to the $1,400 stimulus checks sent out by the latest economic recovery package. Those numbers represent a strong rebound from February when personal spending fell 1.0% and personal income dropped 7.0%.
Lastly, Real Gross Domestic Product (GDP) increased at an annualized rate of 6.4% in the first quarter according to preliminary data released on Thursday.
Heavy Earnings WeekEarnings season continued this week with perhaps the most packed week so far as big tech dominated headlines. Apple, Facebook, Alphabet (GOOG), Microsoft (MSFT), and Twitter (TWTR) all reported and all surpassed earnings and revenue expectations. Despite the strong performance, only FB and GOOG stock rose on the news while AAPL remained flat. TWTR stock fell after missing on users and providing disappointing guidance while MSFT dropped possibly due to traders expecting an even bigger beat of estimates.
In addition to tech companies, Amazon outperformed earnings estimates as it showed 44% revenue growth from its year-ago quarter. Meanwhile, oil and gas companies surpassed estimates as BP, Exxon (XOM), and Chevron (CVX) all reported better than expected earnings. Finally, Ford Motor (F) provided some insight into how the automobile industry is doing when it surpassed earnings and revenue estimates as well.
Money Printer Go BrrrrrrrrrrrThe biggest news this week might have been President Biden’s reveal of his $1.9 trillion "American Families Plan". The newest proposal would include $800 million in tax cuts to middle and lower income families while being partly funded by tax increases on the wealthiest Americans.
The newest stimulus proposal along with recent comments from Fed chair Jerome Powell suggest that fiscal and monetary policy will continue to support the economy. Powell continued to express that the central bank will further support the economy and increase employment while dismissing inflation concerns and fears of an overheating economy.
These developments may concern some who are overly concerned about inflation but unemployment is still at 6.0% and 9.7 million remain unemployed. Lastly, the new stimulus plan includes ways to pay for some of the bill through tax hikes.
All said, the S&P 500 gained 0.02%, the NASDAQ dropped 0.39%, and the Dow Jones Industrial Average fell 0.50%.