Several statistics released on Friday that showed the U.S. economy is cooling off helped ease investor inflation fears and saved Wall Street from the worst week of 2021.
Hot and cold numbers on the U.S. economy took Wall Street on a wild ride last week. First came the hot numbers. The Consumer Price Index, a measure of retail inflation, was released on Wednesday. It recorded a 4.2% annual gain in April, up from 2.6% in March and well above market forecasts of 3.6%. It was also the highest reading since September 2008.
Wall Street didn't like the numbers, sending major equity averages lower, especially the tech-heavy Nasdaq. These declines were on the top of Mondays and Tuesday's selloffs, as traders and investors sold shares following the news.
The Producer Price Index, a measure of wholesale inflation, was released on Thursday. It recorded a 6.2% annual gain in April, the most significant increase since November 2010.
But after a three-day selloff, Wall Street shook off the hot PPI numbers, with all major averages ending higher by Thursday's closing.
Then, on Friday, came the cold numbers, beginning with April retail sales. Again, they missed even the low market expectations, which had called for a 1% increase and a significant change from March when they rose by 10.7%.
A big chunk of consumer spending, retail sales are a vital driver of the U.S. economy and a source of inflationary pressures.
Meanwhile, The University of Michigan's consumer sentiment fell to 82.8 in May from 88.3 in April, well below forecasts of 90.4, preliminary estimates showed.
A lower reading on consumer sentiment suggests that consumer spending may be cooling off further.
Then there's industrial production, which rose at an annual rate of 16.50% in April, but missed market expectations. In addition, capacity utilization of 74.90% was slightly below market expectations.
All four numbers helped ease inflation fears among market participants, who jumped back into the market by buying beaten-up shares and saving Wall Street from the worst week of 2021.
The Dow gained more than 350 points, or 1%. The Nasdaq rallied by more than 2%, led by a rebound in technology stocks, while the S&P 500 gained 1.5%.
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