First Western Trust’s investment management teams looks at the economic highlights from the week ending May 3, 2013:
Equity markets enjoyed a strong week, propelled by better than expected U.S. unemployment data, further stimulus actions taken by the European Central Bank (ECB), and continued generally better-than-expected 1Q13 earnings reports.
Through Friday, 405 companies in the S&P 500 had reported 1Q13 earnings with 70% beating estimates by an average of 4.3%. Revenues have been challenging with only 39% of companies beating estimates. On average, revenues have missed expectations by –1.2%.
On Thursday, the ECB lowered interest rates by 0.25% to 0.50% in an attempt to further stimulate the Euro Zone Economy. In addition, it indicated the possibility of further stimulus including lowering interest rates into negative territory. While the bank could theoretically take such action, members stressed that such a move is unlikely in the foreseeable future.
U.S. employment data provided a boost to the markets with weekly jobless claims falling to the lowest level of the recovery while monthly employment reports exceeded expectations.
Internationally, Chinese manufacturing data was slightly weaker than expected while Euro Zone manufacturing data was better than expected but still solidly in contraction territory.