Indexes Were Mostly Higher For The Week, All Were Higher For The Month And The Quarter Stocks closed mostly higher on Thursday with only the Nasdaq Composite finishing modestly in the red. The small-cap Russell 2000, and the mid-cap S&P 400 led with gains of 0.48% and 0.40% respectively.
They were mostly higher for the week as well, sans the Nasdaq, which just missed the mark. The small-cap and mid-cap indexes also led the way for the week with gains of 2.54% and 1.84%.
But all of the major indexes were up for the month, making it 5 months in a row for the big three indexes (Dow, S&P, and Nasdaq), and 2 months in a row (not to mention 4 up months out of 5), for the small-cap and mid-cap indexes. They were also all up for the quarter, making it 2 quarters in a row for all of them. Friday's Personal Consumption Expenditures (PCE) index came in mostly as expected with headline inflation up 0.3% m/m, in line with last month, and just under the consensus for 0.4%. On a y/y basis it came in at 2.5%, up a bit from last month's 2.4%, but in line with expectations for 2.5%. The core rate (ex-food & energy) was up 0.3% m/m, which was under last month's upwardly revised 0.5% (from 0.4%), and in line with views for 0.3%. On a y/y basis it came in at 2.8%, which was just under last month's upwardly revised 2.9% (from 2.8%), and in line with views for the same. While core inflation is still a ways away from the Fed's 2% target, it's well under 2022's peak of 5.3%. Later on Friday, Fed Chair Jerome Powell said the PCE report was "pretty much in line with our expectations." He added that the Fed would still like to see more "good" inflation data, underscoring the Fed's mantra of being data dependent. And while he cautioned that cutting rates too soon could be "very disruptive," he also said that waiting too long could bring "unneeded damage to the economy and the labor market." The Fed is expected to hold rates steady when they meet again on April 30/May 1. But they are expected to finally begin cutting rates at their June 11-12 meeting. We'll get three more inflation reports however before the next meeting. But before that, we'll get another look at the labor market with this week's Employment Situation Report on Friday, April 5. In other news, last Friday's Retail Inventories report was up 0.5% m/m, in line with last month's pace.
And Wholesale Inventories rose 0.5% m/m, up from last month's -0.2%, and views for 0.2%.
Today we'll get the ISM Manufacturing report, and Construction Spending. And we'll kick off a new week, month and quarter. If they turn out anything like last week/month/quarter, it'll be another great period for the market. Let me also remind everyone that while the economy is strong, inflation has moderated, and interest rates are expected to be coming down soon, the cyclical tendencies are on the market's side as well. I'm talking about the 4-year Presidential cycle that shows that year 4 (that's this year) is the second-best year of all four years (second only to year 3 which was last year). So it looks like there could be a lot more upside to go this year. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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