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Economic Update 05/12/14

ISM: SERVICE SECTOR VERY HEALTHY

At 55.2, the Institute for Supply Management’s April non-manufacturing PMI climbed 2.1 points above the March reading. The nation’s service sector expanded for a 51st straight month, and the survey saw big monthly leaps in its new orders index (up 4.8 points to 58.2) and its business activity index (which rose 7.5 points to 60.9).

THE S&P EARNINGS SCORECARD (SO FAR)

As last week ended on Wall Street, 451 members of the S&P 500 had announced results in the Q1 earnings season. According to Bloomberg’s tally, 76% of those firms exceeded profit projections and 53% beat revenue forecasts. Analysts surveyed by Bloomberg estimate that earnings for S&P constituents improved 5.5% in Q1 while sales rose 3.0%.

GAS AT $3.66 A GALLON, OIL JUST UNDER $100

The Memorial Day weekend arrives May 24-26; will prices fall slightly by then? The national average for regular unleaded on May 9 was $0.11 higher than a year ago, according to AAA’s Daily Fuel Gauge Report. NYMEX crude rose 0.2% across five days to settle at $99.99 as the week ended; gold pulled back 1.2% last week, finishing at $1,287.60 on the COMEX Friday.

A RECORD CLOSE FOR THE DOW

A small Friday advance left the index at 16,583.34 at Friday’s closing bell. While the blue chips rose 0.43% for the week, the S&P 500 retreated 0.14% and the Nasdaq declined 1.26%. The S&P settled at 1,878.48 Friday, the Nasdaq at 4,071.87.

THIS WEEK: Monday, Wall Street will react to the weekend independence vote held by pro-Russian separatists in eastern Ukraine, who have vowed to form their own republic; no major news is scheduled stateside. April retail sales numbers are out Tuesday along with Q1 results from Hertz Global; additionally, investors will consider China’s April industrial output and retail sales. Wednesday marks the release of April’s PPI plus earnings from Cisco, Jack in the Box, Macy’s, Abercrombie & Fitch, RE/MAX, SodaStream and Valero. Thursday, Federal Reserve chair Janet Yellen speaks on small businesses and the economy in the nation’s capital; April’s CPI and industrial production report arrive, the latest initial claims figures are released and Wal-Mart, Kohl’s, Nordstrom and J.C. Penney announce quarterly results. Friday sees the release of the University of Michigan’s initial May consumer sentiment index and data on April building permits and housing starts.

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