Another winning week for the bulls, in a year full of them! Things kicked off with a bang with a gap up Monday as the after shocks of the Comey removal – the one thing that seemed to shake this market for 24 hours – passed in the night. Wednesday, minutes of the Federal Reserve’s latest policy meeting showed broad agreement on plans to begin shrinking the central bank’s balance sheet and also pointed to a likely rate increase next month, as widely expected. Another gap up to start the day Thursday and serenity was found for the week. Every day was up for the S&P 500 to book a weekly finished of +1.4% while the NASDAQ raced ahead +2.1%.
The minutes of the early May meeting showed that members were in agreement on a general approach to unwinding the massive balance sheet built up over the course of the asset-buying spree that was at the center of the Fed’s quantitative easing strategy. Nearly all Fed officials said they were content with a plan to end the reinvestment of principal of maturing securities — the main approach favored to shrink the balance sheet instead of asset sales — in slow, ever-increasing stages, rather than ending the reinvestment all at once. In their discussion of interest-rate policy, most Fed officials said it would “soon” be time to raise rates again, a signal that the majority among the central bank’s policy makers remain resolute about hiking rates at their meeting next month.
On the economic front, it was reported Wednesday that existing home sales fell 2.3% in April, coming in below expectations as lean inventory constrained demand. New home sales declined 11% but this is a volatile report month to month. Friday, data was released that showed orders for durable goods fell to a five-month low in April, though the decline was slightly narrower than had been expected. Separately, the latest estimate on first-quarter gross domestic product was revised higher, moving to 1.2% from 0.7%.Continue reading