Stocks today rallied after the long Easter Weekend as the Dow closed the day higher by 183 points to 20,636. Trading volume was lower on the day and the VIX fell as volatility began to ease.
Bank of America reports earnings tomorrow before the bell and gurus are expecting results to confirm a trend of slowing loan growth being offset by strong trading revenue. Sheraz Mian, research director at Zack’s noted that “loan growth deceleration” in the bank space is coming from lower mortgage activity in the wake of higher interest rates, weak car-loan demand and strong capital markets which encourage bigger borrowers to tap the bond markets instead of bank lending. With all that being said the experts are expecting BAC to start the day off with a gain in both earnings and revenue.
The March Consumer Price index showed a 0.3% decline which is the first decline in more than a year. Prices have been rising steadily since early 2015 and the inflation rate appears to be right on the mark for the Fed’s target rate. In this latest reading energy prices were lower while food prices were higher thanks to a jump in fruits and vegetable prices. If the volatile food and energy readings are stripped out of the inflation reading then the “core” CPI reading was off by 0.1%. The best news in the report was a 0.5% increase in wages which shows that a tightening labor market should accelerate wages in the near future.
Since the first of the year lumber futures in the US have been on the rise hitting a high not seen since early 2013. Reasons for the rise include a strong housing market and a pending tariff on Canadian lumber imports which may take affect sometime in May. WTI crude meanwhile pulled back 1.1% to $52.60 per barrel.