John Hancock: Weekly Market Recap Week Ended May 26th

Yield volatility 

The yield of the 10-year U.S. Treasury bond rose for the second week in a row, climbing to the highest level in two and a half months. The 10-year bond  closed around 3.80% on Friday—up from 3.46% a couple weeks earlier, yet well below a recent peak of 4.07% on March 2.

Earnings slump

Companies in the S&P 500 recorded an average earnings decline of 2.2% versus the same quarter a year earlier, according to FactSet data from the recently concluded earnings season. That result marked the second consecutive quarterly earnings decline. Consumer discretionary was the strongest among all 11 sectors, with earnings growth of 55%.

Persistent inflation

The U.S. Federal Reserve’s preferred gauge for tracking inflation showed that consumer prices rose at a slightly faster pace in April than in March, reversing a recent trend of inflation moderation. The Personal Consumption Expenditures Price Index rose at a 4.4% annual rate in April, up from 4.2% in March. Excluding volatile food and energy prices, core inflation rose 4.7% in April versus 4.6% in March.

Fed split

Minutes released on Wednesday from the most recent policy meeting of the U.S. Federal Reserve showed that officials were divided as to whether another interest-rate increase will be needed when they meet again on June 13–14. At their early May meeting, some officials said they expected that an economic slowdown would remove the need for another rate hike, while others suggested another increase is likely.

Source: https://wmr.jhinvestments.com/