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The Markets
Although May Day brought a rally in stock markets across the board, it wasn't enough to wipe out the week's losses. Several earnings reports and a disappointing GDP reading dampened the fervor that drove markets to new highs a week prior, while a Fed announcement fueled speculation about a June interest rate hike. The 10-year Treasury yield rose past the 2% mark.

Last Week's Headlines
• Gross domestic product rose at a paltry 0.2% during the first quarter of 2015, according to the Bureau of Economic Analysis's (BEA) advance estimate. That compares with a 2.2% rise in Q4 2014. The reading reflects increases in consumer spending, private inventory investment, and federal government spending, which offset decreases in exports, business investment, and state and local government spending. Imports also increased, which affects the final numbers negatively. Observers noted several factors that could have been at play during the winter months, including challenging weather, a strengthening dollar, disruptions in West Coast port operations, and lower oil prices. While disposable personal income rose 4.1% in Q1, compared with 3.2% in Q4, the personal savings rate also rose, by 5.5% in Q1 vs. 4.6% in Q4.
• In its announcement after the April meeting, the Federal Open Market Committee suggested that the first quarter's slower growth was due in part to "transitory factors." The Committee also said that, with "appropriate policy accommodations," it expects growth to expand at a moderate pace. Noting its mandate to "foster maximum employment and price stability," the Fed reiterated its position that the current target interest rate range of 0 to 0.25% is appropriate. "The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term."
• Pending home sales remained at their highest level since June 2013 in March, according to the National Association of Realtors®. Sales, as measured by contracts signed, rose 1.1% since February, and were 11.1% higher than a year prior. The index has increased year-over-year for seven consecutive months. While this is good news, noted NAR chief economist Lawrence Yun, "The increased number of traditional buyers who appear to be replacing investors paying in cash is even better news." He also said that high demand is causing prices to rise to "unhealthy levels"--in some areas nearly four or more times the pace of wage growth.
• Lending credence to Yun's point about prices, the S&P/Case-Shiller Home Price Index 10-city and 20-city indices showed prices rising at a faster pace in February than a month earlier. However, the national index slowed in comparison to January. The 10-city index rose 4.8% year-over-year, compared to 4.3% in January; the 20-city index saw a 5.0% annual increase, compared to 4.5% in January; and the national index rose 4.2% in February over the previous year, compared to 4.4% a month prior. "While nationally prices are recovering," said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, "new construction of single family homes remains very weak despite low vacancy rates among both renters and owner-occupied homes."
• Despite a personal income picture that remained virtually flat from February to March, consumers spent more during the month than they had since November 2014. The BEA said that both personal income and disposable personal income rose less than 0.1%, while personal consumption expenditures increased 0.4%.
• Weekly unemployment insurance claims totaled 262,000 for the week ended April 25. According to the Department of Labor, that was the lowest level for initial claims since April 15, 2000.
• The Institute for Supply Management's Manufacturing Index held steady at 51.5, matching the March reading, which was the lowest since May 2013. Readings above 50 indicate growth.
• Controversial Greek Finance Minister Yanis Varoufakis was relieved of his role leading negotiations with eurozone officials about the country's financial future, and a new team was put in place.

Eye on the Week
Ahead Investors may be holding their breath in anticipation of Friday's April employment report, hoping that it improves substantially over March. Other key indicators include reports on business productivity and international trade, which should offer some insight on how the strong dollar has affected the deficit.

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All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Prepared by Broadridge Investor Communication Solutions, Inc. 2015.