Stocks Closed Mixed On Friday, Nasdaq Closed Higher For The Week  Image: Bigstock Stocks closed modestly lower on Friday and mixed for the week. For the week, the Dow was down -1.11%; the S&P was down -0.29%; while the Nasdaq was up 0.40%. That was the third up week in a row for the Nasdaq. It also happens to be the week that they officially exited their bear market, and began a new bull market. The Nasdaq is now up 20.28% from last year's bear market low close, and 0.23% in their new bull market. Last week also saw confirmation that inflation continues to ease. The CPI report showed core inflation at 5.5% y/y vs. last month's 5.6% and last year's peak of 6.6%. The PPI report put core inflation at 3.2% y/y vs. last month's 3.4% and last year's peak of 8.2%. That underscored the Fed's hint from the previous week that rates are likely on pause, at least for their next meeting in June. In other news, Friday's Consumer Sentiment report ticked down to 57.7 vs. last month's 63.5 and views for 63.0. Earnings season will start winding down with 'only' 735 companies set to report this week. Although, we will get a fair number of retail stocks, including marquee names like Home Depot, Target, and Walmart, along with Chinese powerhouse Alibaba.
Next week that slows to only 262 names on deck. But, with most of earnings season over, we can see it's been another better than expected earnings season. There's been plenty of talk about the debt ceiling in the last couple of weeks. And that's only going to get louder and louder as we approach the June 1 deadline (the date Treasury Secretary, Janet Yellen, said the U.S. government may not be able to pay its bills). Although, she did tell Congress that it "could be a number of weeks later than these estimates." And there are others who believe that the U.S. won't reach that point until mid-July. Either way, the urgency is real. And given how slow Congress is to act, often waiting until the last minute (or later) to get anything accomplished, it's distorted treasury yields considerably with the 1-month treasury yield above the 3-month treasury yield. In fact, the 1-month yield went from 3.36% in mid-April to a soaring 5.79% currently. That's 54 basis points above the 3-month yield of 5.25%.
I would imagine all will get worked out in the end, as it always has in the past. But the latest brinkmanship is definitely adding unnecessary volatility to the market. But looking past this, there's plenty of reason to be optimistic about the market with inflation on the decline, interest rates appearing to be on pause, personal incomes hovering near all-time highs, and the economy, while slowing, continuing to grow. As long as D.C. doesn't break anything in the debt ceiling drama, stocks could be ready for their next leg up. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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