Markets finished a choppy week of trade to end lower Friday, making it the worst week for the indices since they were struggling earlier in the year.
It was also the second week in a row they traded lower. The NASDAQ, dragged down by Apple moving lower for multiple sessions, was nearing correction territory, although all three indices recovered toward the close of trade.
The April employment report showed that the U.S. economy added the fewest number of jobs in seven months, coming in at 160,000 vs. a consensus prediction of 200,000. Construction employment increased slightly, while retail jobs were shed. The soft tone in the report, coupled with weaker economic data, prompted analysts to lower their interest rate hike expectations to one rate hike in 2016 from two.
“I can’t see the Federal Reserve raising interest rates prior to the election, and most likely they will do nothing in 2016,” Stephen Kalayjian of The Kalayjian Report said.
Crude oil pared some of its losses for the first weekly decline in over a month as oil sands disruptions in Alberta, Canada, and lower U.S. output offset yet another build in inventories and rising OPEC production. A reporter for CNBC said the Alberta fire that reduced oil sands output was equivalent to the size of the city of Chicago.
Elsewhere in commodities, gold enjoyed a stellar week. The SPDR Gold Trust, an exchange traded fund designed to trade the commodity, rose to its highest levels in two years.
The U.S. dollar bounced despite the weaker jobs report. The dollar came into Friday riding a three-day win streak, rising about 0.6 percent on the week and bouncing off more than one-year lows vs. the yen and a basket of currencies.
Trading week ahead
Global data will include China's consumer and producer price indexes; Germany's imports, exports and industrial production for March; and the Eurozone's gross domestic product. Several Federal Reserve speakers will be on the circuit, and Bank of Japan’s Governor Haruhiko Kuroda will give a speech Friday.
In the U.S., it will be relatively quiet on the data front, with just two key reports due Friday: retail sales and the producer price index. Both reports are closely monitored by the Federal Reserve and are taken into account when developing monetary policy. Retail sales speaks to the strength of the consumer and PPI is a measure of the cost to produce goods and what gets passed down to the consumer.
Consumer stocks will be the last group in the Standard & Poor's 500 to report as the earnings season winds down. The most watched names will include Dean Foods, White Wave, Macy’s, Kohl’s, Ralph Lauren, Nordstrom and J.C. Penney. Analysts will be focusing on revenue and margin growth, same-store sales for the quarter and the year, inventory builds, promotional activity, and forward guidance for the company and industry.
Department stores continue to struggle against slowing mall foot traffic as online shopping dominates the trend and grows every day. Penney reportedly slashed employee hours and froze overtime to avoid missing its quarterly targets, according to The New York Post.
Disney will report on its quarter Tuesday after the market closes. Consensus is generally positive because of the success of "Star Wars" merchandise and tailwinds at the box office.
