New York Stock Market Rises Amid April CPI and Manufacturing Slowdown Data

Last Week's Unemployment Claims Exceed Expectations
April Manufacturing Production Down 0.3% MoM

The three major indices of the U.S. New York stock market showed an upward trend in the early trading session on the 16th (local time). Following the previous day's release of the April core Consumer Price Index (CPI) showing a slowdown in the inflation rate and stagnant retail sales data, all three indices simultaneously hit record highs, continuing the market's widespread expectations for interest rate cuts for the second day. Last month's manufacturing production also unexpectedly declined, interpreted as a sign that the U.S. economy is showing cooling signs.

As of 10:29 a.m. at the New York Stock Exchange (NYSE) on this day, the Dow Jones Industrial Average was trading at 39,994.8, up 0.22% from the previous close. The S&P 500, focused on large-cap stocks, rose 0.19% to 5,318.26, and the tech-heavy Nasdaq index was up 0.18% at 16,772.84.

By individual stocks, Walmart rose 6.54% after reporting earnings that exceeded market expectations. Walmart announced first-quarter sales of $161.5 billion and adjusted earnings per share (EPS) of $0.60, surpassing analyst forecasts of $159.5 billion and $0.52, respectively. This was attributed to significant increases in e-commerce revenue and purchases by high-income consumers. Canada Goose also surged 17.69% after reporting fourth-quarter fiscal 2024 results that beat analyst expectations. Under Armour, which presented a disappointing earnings outlook for this year, rose 0.88%.

The number of new unemployment claims in the U.S. last week was reported to have decreased compared to the previous week. According to the U.S. Department of Labor, new unemployment claims for the week of May 5?11 totaled 222,000, exceeding the expert forecast of 219,000. However, compared to the previous week (232,000), when claims temporarily increased due to New York City's spring break and school workers filing for unemployment benefits, it decreased by 13,000. Continuing claims, which represent those filing for unemployment benefits for at least two weeks, were 1,794,000 for the week of April 28 to May 4, an increase of 13,000 from the prior week.

Indicators also showed that the manufacturing sector is cooling down. U.S. manufacturing production in April fell 0.3% month-over-month, below the expert forecast of a 0.1% increase. It also underperformed the previous month's result of a 0.2% increase.

Chris Lakin, Managing Director at Morgan Stanley E-Trade, said, "The data released today is not dramatic but indicates steady signs of a cooling economy," adding, "Overall, there is no reason to revert the Fed to an overly hawkish (monetary tightening preference) stance."

The previous day, the three major indices of the New York stock market all hit record highs. The inflation slowdown data revived optimism about the Federal Reserve's interest rate cuts within the year, stimulating investor sentiment.

According to the U.S. Department of Labor, the core CPI in April rose 3.6% year-over-year, the lowest in three years since April 2021. This matched the expert forecast (3.6%) and was below the previous month's increase (3.8%). The core CPI, which excludes volatile energy and food prices and shows the underlying inflation trend, is one of the inflation indicators the Fed closely monitors.

Additionally, retail sales, an indicator used to assess the U.S. economic trend, remained flat last month. According to the U.S. Department of Commerce, April retail sales were $705.2 billion, unchanged from the previous month. This was significantly below both the market forecast (0.4% increase) and the prior month's result (0.6% increase). This was interpreted as a signal that household spending is under pressure due to inflation and high interest rates, suggesting a potential slowdown in the U.S. economy.

Mayungyu, Chief Investment Officer (CIO) at BMO Wealth Management, stated, "The market recognizes that the inflation situation is favorable," and added, "Combined with some insights gained from the earnings season, we can expect fairly solid earnings and generally favorable outlooks."

Government bond yields are rising. The U.S. 2-year Treasury yield, sensitive to monetary policy, is trading at around 4.77%, up 4 basis points (1bp = 0.01 percentage points) from the previous trading day. The 10-year U.S. Treasury yield, a global benchmark for bond yields, remains steady at about 4.35%, similar to the previous trading day.

International oil prices are on the rise. West Texas Intermediate (WTI) crude oil is trading at $79.72 per barrel, up $1.09 (1.4%) from the previous trading day, while Brent crude, the global oil price benchmark, is up $0.88 (1.1%) at $83.63 per barrel.