Market bounce back
After a few weeks of decline, the stock market made significant increases. The Dow Jones opened the week around $37,735 and closed at $38,675 (+2.495%), while the S&P 500 opened at $5,010 and closed at $5,127 (+2.28%). Overall the market had a strong comeback, with most gains coming in late in the week. The economy has shown mixed signs of strength, as hiring and unemployment have been inconsistent, and inflation is stalling. It’s still unknown how the stock market will react to the inflation news for May, so this upcoming week could be a roller coaster.
Interest rate steady
The Federal Reserve issued a statement last week stating that interest rates will remain where they are due to the continued lack of inflation improvement. “In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.” The current objective for inflation is 2% or below, and unfortunately, inflation is far above that goal at 3.5%. Many have confidence that the Fed will eventually decrease interest rates for the year, but the future is ambiguous.
Japanese Yen
The Japanese Yen had quite the week, with major ebbs and flows. To start the week, the Yen dropped to historic lows, only to quickly bounce back after news that the Japanese government looked to intervene. The Japanese economy has navigated the last few years of economic decline quite well but as other currencies and economies weaken, the Japanese economy has slowed down over the last few months.
Apple stocks
Apple ended the week at $183.36, the highest it’s been since February of this year. The jump comes after news of an Apple stock buyback totaling $110 billion. The company is essentially using its own funds to buy available stocks on the market, which will allow the stock to be more valuable for those holders of the stock. We may see the stock jump even higher over the next week, as new iPad models are set to release May 7th. Apple’s Q2 earnings call reported falling sales, but the stock market was more focused on the stock buyback.
Why it matters to you
As discussed with interest rates in the U.S., the economic landscape this year is at best ambiguous. There are signs of life, but of course, even the Federal Reserve is hesitant to declare the economy strong again. Some may predict an economic crash soon, but that seems unlikely. However, with the difficult news, we might be able to find some positive angles.
We are still seeing high interest rates in the housing market and lending prices, but this could be a good time to invest in bonds or CDs with high interest rates. There’s usually a positive to the negative, and while we’re cautious about making major purchases on credit, making smart investments could be a way to take advantage of this difficult economy.
