Stock Market Update

The S&P 500 futures are down two points and are trading slightly below fair value, the Nasdaq 100 futures are down seven points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down eight points and are trading fractionally below fair value.

Industrial Production was unchanged in April (Briefing.com consensus 0.2%) following a revised 0.1% increase in March (from 0.4%). Capacity Utilization declined slightly to 78.4% in April (Briefing.com consensus 78.4%) from 78.5% in March (revised from 78.4%).

Initial jobless claims for the week ending May 11 decreased by 10,000 to 222,000 (Briefing.com consensus 218,000). Continuing jobless claims for the week ending May 4 increased by 13,000 to 1.794 million.

The key takeaway from the report is that the level of initial jobless claims remains supportive of an economy that is not steering toward a recession.

Housing starts increased 5.7% month-over-month in April to a seasonally adjusted annual rate of 1.360 million units (Briefing.com consensus 1.440 million). Building permits declined 3.0% month-over-month to a seasonally adjusted annual rate of 1.440 million (Briefing.com consensus 1.488 million).

The key takeaway from the report is that there wasn't any strength in single-unit starts (-0.4% month-over-month) or single-unit permits (-0.8%), which is a setback for an inventory-constrained existing home market dealing with the added constraint of high mortgage rates and high prices that have created affordability pressures.

Import prices increased 0.9% month-over-month in April (+1.1% yr/yr). Excluding fuel, they were up 0.7% (+0.9% yr/yr). Export prices rose 0.5% month-over-month in April (-1.0% yr/yr). Excluding agricultural products, they were up 0.7% (+0.1% yr/yr).

The key takeaway from the report is that import and nonfuel import prices have accelerated in each of the last two months, which is contributing to inflation sticking stubbornly above the Fed's 2% target.

The Philadelphia Fed Index for May checked in at 4.5 (Briefing.com consensus 5.0) versus 15.5 in April. A number above 0.0 is indicative of expansion, so the May reading connotes a slowdown in the pace of expansion versus the prior month.

The key takeaway from the report is that manufacturing activity in the Philadelphia Fed region is still positive, but weakened in May in a manner that fits with a slower growth narrative.