Weekly Economic Update- 5/17/21

The Week On Wall Street

A surge in consumer inflation unsettled investors, leading to a turbulent week of trading on Wall Street. The Dow Jones Industrial Average slipped 1.14%, while the Standard & Poor’s 500 fell 1.39%. The Nasdaq Composite index dropped 2.34% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 3.02%.^1,2,3

Inflation Concerns

The market has been troubled recently by building inflationary pressures. Investors are concerned that rising prices may hurt corporate profits and force the Fed to tighten its monetary policy sooner than anticipated. Worse, investors fear the Fed may have to react more aggressively if it waits too long to act.

After back-to-back losses, the retreat in stock prices culminated on Wednesday, following the release of the higher-than-anticipated Consumer Price Index (CPI) report. Stocks managed to claw back some of the week’s losses with a Thursday-Friday rebound, sparked by investors doing some bargain hunting.

Consumer Prices Spike

Wednesday’s release of April’s CPI inflamed investors’ inflation fears, as consumer prices rose 0.8% in April and jumped by 4.2% year-over-year. These numbers were above expectations.⁴ April price increases were led by a remarkable 10% increase in used cars, with additional pockets of sharp increases, notably in transportation services and commodities. Perhaps equally concerning is that energy costs showed a decline during April, a price weakness that may reverse in the coming months.⁵

Weekly Riddle

A girl has as many brothers as sisters, but each brother has only half as many brothers as sisters. How many brothers and sisters are there in the family?

Last week’s riddle LAST WEEK’S RIDDLE: I’m tall when I’m young and short when I’m old. What am I? Answer: A candle.

Posted on May 17, 2021

Market Index	Close	Week %	YTD %
DJIA	34382.13	-1.14	+12.34
NASDAQ	13,429.98	-2.34	+4.20
S&P 500	4,173.85	-1.39	+11.12
Treasury	Close	Week %	YTD %
10 Year Note	1.63	+0.03	+0.70

Sources: wsj.com, treasury.gov –

Citations

The Wall Street Journal, May 14, 2021
The Wall Street Journal, May 14, 2021
The Wall Street Journal, May 14, 2021
CNBC, May 12, 2021
U.S. Bureau of Labor Statistics, May 12, 2021

6. U.S. Bureau of Labor Statistics, May 12, 2021

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