Market and economic update: April saw improved housing activity

A lack of economic data last week led to modest market volatility, although the S&P 500 did reach a new record high. Data in the United States seemed to affirm that the economic recovery is intact. Housing activity improved in April as both existing and new home sales improved from March.

The Index of Leading Economic Indicators pointed toward continuing economic expansion, rising for the third consecutive month. Weekly initial unemployment claims rose slightly last week but remained consistent with an improving U.S. jobs market.

Outside the United States, flash estimates of May Purchasing Managers Index (PMI) indices indicated improvements in the global economy. The HSBC manufacturing PMI for China estimate improved to its best level in five months, while data for the eurozone remained consistent with modest economic improvements.

In Japan, the preliminary manufacturing PMI indicated some recovery from the April slowdown due to the increase in consumption taxes. The key data curiosity this week will be the second estimate of first quarter gross domestic product (GDP), which is widely expected to be revised lower from the initial estimate of 0.1% growth.

With the first quarter now nearly two months in the rearview mirror, the data will likely not be market moving unless growth is unexpectedly revised higher. The market’s attention is likely focused on next week and the May employment report to determine the path and pace of Federal Reserve policy.

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Robert L. Haworth, CFA, is a senior investment strategist and Darrell Behnke is the Madison market leader for the Private Client Reserve of U.S. Bank. 

This information represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. The organizations mentioned in this publication are not affiliates or associated with U.S. Bank in any way.

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