Below are the economic and market highlights for the week:
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In a rush to stock up ahead of tariff announcements, durable goods orders surged 9.20% in March. Much of the increase was driven by demand for aircraft, mainly Boeing passenger planes as new orders jumped 139%. Automobiles, metals, and metal parts were also in high demand as car companies sought to bring in more supplies before the tariffs kicked in. Meanwhile, business investment as measured by “core” orders rose a modest 0.10%. Core orders are typically a good indicator of future demand, and given the weak reading, it suggests a weak outlook as companies await more clarity on tariffs.
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It was a tale of two housing markets as existing homes sales slipped while new homes sales soared. Sales of existing homes fell 5.90% in March to a six-month low. The monthly decline was the biggest one-month drop since November 2022. The sales pace was also the slowest for the month of March since 2009. Despite slowing sales, affordability continues to be a challenge for buyers as the median price of a home hit $403,700, an all-time high for March. Median prices rose as sales in the $1 million+ and $750K to $1 million category rose 13.80% and 8.60%, respectively. With prices elevated in the existing home sales market, prospective homebuyers sought refuge in new homes. Sales rose 7.40% in March and were 6.00% higher than March 2024. The rise was driven by strong sales activity in the more affordable segment of the market where prices were below $399K. Affordable new builds remain a catalyst for growth in the new home segment so long as homebuyers remain confident about their financial situation.
Markets Rally on Optimism for Trade Deals and Rate Cuts
Stocks attempted to regroup this week, scoring three big days of gains after yet another volatile week for investors. Trading started off on a rocky note on Monday as reports circulated that Trump was considering firing Fed Chair Jerome Powell and Treasury Secretary Bessent told investors in a closed-door meeting that the U.S.-China standoff was unsustainable. Markets breathed a sigh of relief as a day later Trump walked back his stance, saying he wouldn’t fire Powell and the White House was considering reducing China tariffs from 145% to 50-65%. Soothing investors’ psyches, the White House reiterated their confidence that several major trade deals will be ironed out in coming weeks, with Trump indicating on Friday that a deal with Japan could be finalized within days. The S&P 500 rallied on Trump’s pivots, with the index 8% off its recent low set on April 8th. For the week, growth stocks outperformed value stocks, led by technology. Tech shares were supported by strong Q1 25 earnings results from tech giant Google and enterprise technology company ServiceNow. With markets firmly back to a risk-on mode, all S&P 500 sectors except defensive consumer staples finished higher for the week. In the fixed income market, bonds rallied as yields on 10 and 30-year bonds moved to some of their lowest levels since Liberation Day indicating investors remain hopeful the Fed will cooperate with interest rate cuts and as the “Sell America” trade paused. The economic data overall this week reinforced the cloudy outlook for the U.S. economy as consumers and businesses have taken a “wait and see” approach so long as tariff uncertainty remains. As such, we’d expect markets to trade in a volatile band in reaction to the daily rhetoric until some deals start getting made.
The Week Ahead
Key reports include Q1 GDP, nonfarm payrolls, and ISM Manufacturing.