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Weekly Economic Update

Last Week and the Economy

• FOMC Maintains Steady Interest Rates
• GDP & PCE Inflation Released
• Strait of Hormuz Updates

Major stock indices were positive across the board last week. The Nasdaq Composite posted the largest weekly gain at 1.12%, and the S&P 500 rose by 0.91%. The Russell 2k Small Cap Index and the Dow Jones Industrial Average also ended the week 0.93% and 0.55% higher, respectively. The MSCI-EAFE Index – which tracks international stocks – also rose by 0.89%.

Federal Reserve Holds Rates Amid Internal Disagreement

The Federal Open Market Committee (FOMC) concluded its April meeting on Wednesday by maintaining the federal funds rate at a target range of 3.50% to 3.75%. In its official statement, the Committee noted that while economic activity has expanded at a “solid pace,” inflation remains elevated due to recent spikes in global energy prices. The Fed also highlighted that the ongoing conflict in the Middle East is contributing to a high level of uncertainty for the national economic outlook.

The decision revealed significant internal division, as the Committee split in an 8-4 vote. One member, Stephen I. Miran, voted to lower the target range by a quarter-point, while three others – Beth Hammack, Neel Kashkari, and Lorie Logan – opposed the inclusion of “easing bias” language in the final statement. Despite these dissents, Chair Jerome Powell emphasized that the Committee remains strongly committed to returning inflation to its 2% objective. Further, this was likely Powell’s last meeting as Fed Chair, and he noted that he will continue to serve on the committee following his term as Chairman.

Q1 GDP Growth and March PCE Inflation Data Released

The U.S. Bureau of Economic Analysis (BEA) reported on Thursday that real Gross Domestic Product (GDP) grew at an annual rate of 2.0% in the first quarter of 2026. This represents a notable acceleration from the 0.5% growth rate recorded in the fourth quarter of 2025. The increase was driven primarily by consumer spending, which contributed a full percentage point to the overall growth figure, alongside steady business investment.

In a related report, the BEA released inflation data showing that “core” Personal Consumption Expenditures (PCE) – which excludes volatile food and energy costs – accelerated to an annual rate of 3.2% in March. This is an increase from the 3.0% rate reported in the previous month. While consumer spending has remained resilient through the early months of the year, analysts suggest that slowing income growth may begin to impact spending levels in the coming quarters.

U.S. Launches “Project Freedom” to Escort Ships Through Strait

Following the failure of diplomatic talks in Pakistan, the U.S. military launched “Project Freedom” on Monday, May 4, to restore merchant traffic through the Strait of Hormuz. The operation, directed by President Trump, involves Navy guided-missile destroyers and approximately 15,000 personnel assisting commercial vessels that have been trapped since the conflict began in late February. Two American-flagged merchant ships successfully transited the waterway on Monday morning under Navy protection.

The Strait of Hormuz has been effectively closed for over two months, a disruption described as the largest in the history of the world oil market. The closure has pushed Brent crude prices above $108 per barrel and caused a 70% reduction in regional tanker traffic. While the U.S. continues its naval blockade of Iranian ports, the new escort initiative aims to protect neutral shipping from further Iranian attacks, though Tehran has warned that any U.S. interference in the waterway will be met with force.

Data Sources for stock and index quotes: Yahoo Finance, WSJ

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Key Economic Data Points

Data Sources: U.S. Bureau of Labor Statistics, FRED – St. Louis Fed, U.S. Bureau of Economic Analysis

Weekly Quote:

An investment in knowledge pays the best interest.
-Benjamin Franklin, Founding Father

The Week Ahead – Economic Data & Events

Monday: Manufacturing, Shipments, and Orders

Tuesday: Advance International Trade in Goods, Trade Balance, ISM Non-Manufacturing, JOLTS

Wednesday: ADP National Employment Report, Labor Market Tightness Index, Global Supply Chain Pressure Index (GSCPI)

Thursday: Productivity & Costs (Preliminary), Survey of Consumer Expectations

Friday: Employment Situation, Michigan Consumer Survey (Preliminary), Wholesale Trade

Weekly Reports: Mortgage Applications (Wednesday), EIA Petroleum Status Report (Wednesday), Jobless Claims (Thursday), EIA Natural Gas (Thursday), Fed Balance Sheet (Thursday), Baker Hughes Rig Count (Friday)

Source: New York Fed

The Week Ahead – S&P 500 Companies Reporting Earnings

Monday: Palantir Technologies (PLTR), Pinterest (PINS), Vertex Pharmaceuticals (VRTX), SBA Communications (SBAC), Skyworks Solutions (SWKS), The Williams Companies (WMB)

Tuesday: Pfizer (PFE), Advanced Micro Devices (AMD), PayPal (PYPL), Occidental Petroleum (OXY), Arista Networks (ANET), Super Micro Computer (SMCI), American Electric Power (AEP), Ball Corp (BALL), Microchip Technology (MCHP), Public Service Enterprise Group (PEG), Sempra (SRE)

Wednesday: The Walt Disney Co (DIS), Uber Technologies (UBER), CVS Health (CVS), The Kraft Heinz Company (KHC), IQVIA Holdings (IQV), Emerson Electric (EMR), Corteva (CTVA), Albemarle (ALB), Equinix (EQIX), Marriott International (MAR), Host Hotels & Resorts (HST)

Thursday: The Walt Disney Co (DIS), Uber Technologies (UBER), CVS Health (CVS), The Kraft Heinz Company (KHC), IQVIA Holdings (IQV), Emerson Electric (EMR), Corteva (CTVA), Albemarle (ALB), Equinix (EQIX), Marriott International (MAR), Host Hotels & Resorts (HST)

Friday: Fidelity National Information Services (FIS), Constellation Energy (CEG), NRG Energy (NRG), Dominion Energy (D)

Source: Select Sector SPDRs Earnings Calendar

Weekly Tip:

Your budget isn't a cage. It’s a map.

Data Sources for stock and index quotes: Yahoo Finance, WSJ

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Last Week's Riddle and Answer

Last Week's Riddle:
What do the numbers 11, 69 and 88 all have in common?

Last Week's Answer:
The answer is that they can all be read the same upside down. If you flip 11, 69, and 88 upside down, they will still read 11, 69, and 88.

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