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It was a volatile week for equities as earnings daily fell short of or topped expectations. But the underlying trend was down based on mostly softer-than-expected economic data in and outside the U.S.
 The week ended down for major indexes. The biggest downward move was on Monday. The decline was partly due to an unexpected slowdown in the pace of Chinese economic growth. From the U.S., the Empire State manufacturing index slowed more than anticipated and the National Association of Home Builders confidence index was down for a third straight month. Stocks dropped further on jitters from news of two bombings at the Boston Marathon.
Equities made a partial rebound Tuesday on good news on headline housing starts and on earnings from Coca-Cola and from Johnson & Johnson. Soft CPI numbers suggested that the Fed would continue easy monetary policy.
 But stocks were back down Wednesday and Thursday. At mid-week the economic news was the Fed’s Beige Book but most analysts took the report as close to expectations or marginally better than the prior report. Tugging equities down was disappointing earnings news. Apple dropped after a key supplier, Cirrus Logic, gave a disappointing revenue forecast. Yahoo retreated after quarterly revenue fell short of forecasts. Bank of America posted revenue and profits that were below expectations. Lower oil and copper prices weighed on energy and materials sectors.
Weaker-than-expected Philly Fed manufacturing and leading indicators as well as disappointing earnings pulled stocks down Thursday. On the earnings front, the financial sector weakened after Morgan Stanley reported disappointing bond trading results and sales that missed forecasts. Health care stocks dipped on news that UnitedHealth Group reported first quarter earnings that edged above expectations, but revenue that was lower than expected.
Most major indexes made a partial but notable comeback on Friday even as traders were distracted by coverage of the lockdown in Boston for authorities to search for a suspect in the marathon bombings. However, the Dow rose only incrementally, being pulled down by IBM due to weak earnings. Other indexes were up more significantly, largely on bottom fishing and on favorable reports from Capital One and Google.
Overall, it was a notably negative week for equities based essentially on slowing global growth.
Equities were down this past week. The Dow was down 2.1 percent; the S&P 500, down 2.1 percent; the Nasdaq, down 2.7 percent; the Russell 2000, down 3.2 percent; and the Wilshire 5000, down 2.2 percent.
For the year-to-date, major indexes are up as follows: the Dow, up 11.0 percent; the S&P 500, up 9.0 percent; the Nasdaq, up 6.2 percent; the Russell 2000, up 7.4 percent; and the Wilshire 5000, up 9.3 percent.
Weekly percent change column reflects percent changes for all components except interest rates. Interest rate changes are reflected in simple differences.
 Treasury yields ended the week mixed but mostly down slightly.
Rates dipped the most on Monday on weak economic news (Empire State, NAHB, and Chinese GDP) and somewhat on flight to safety on news of the bombings at the Boston Marathon. Rates rebounded modestly the next day on healthy housing starts and flow of funds into equities.
Rates were little changed the rest of the week. Yields continue to be pressed down by easy Fed policy and belief that Fed policy will remain loose for quite some time.
For this past week Treasury rates were mixed but little changed as follows: 3-month T-bill, down 2 basis points; the 2-year note, unchanged; the 5-year note, up 2 basis points; the 7-year note, unchanged; the 10-year note, down 1 basis point; and the 30-year bond, down 4 basis points.
Spot West Texas Intermediate fell notably this past week with several sizeable daily swings. The biggest move was a $2-1/2 per barrel fall on Monday on weak economy data—notably a slowing in growth in China. This put spot WTI below $90 per barrel for the first time since late December 2012. After little change on Tuesday, crude declined almost $2 per barrel Wednesday despite favorable economic indicators. The drop was due to disappointing company earnings and a stronger dollar. Crude rebounded a little over $1-1/2 per barrel Thursday on belief that WTI had been oversold. Net for the week, the spot price for West Texas Intermediate dropped $3.06 per barrel to settle at $87.91.
Economic news was mixed but mostly soft this past week. But for some reports, it was the detail that mattered—especially for the housing starts and industrial production reports.
 Housing starts were unexpectedly strong in March but it was all in the multifamily family component. And overall permits slipped, indicating that the housing recovery may be softening despite the strong headline number for starts.
In March, housing starts jumped 7.0 percent after a 7.3 percent gain the month before. The March starts annualized level of 1.036 million was up 46.7 percent on a year-ago basis.
The increase in starts was led by a monthly 31.1 percent increase in the multifamily component after an 11.2 percent boost in February. The single-family component decreased 4.8 percent after rising 5.5 percent in February. On a technical note, when one unit of a multifamily permit is started, all units are counted as started.
 By region, the increase in March starts was led by the South region which rose 10.9 percent. Also advancing were the Midwest, up 9.6 percent, and the West, up 2.7 percent. The Northeast declined 5.8 percent.
Permits fell back, declining 3.9 percent to an annual pace of 0.902 million units. Market expectations were for 0.942 million units for February permits.
The latest housing market index reading from the National Association of Home Builders is more in line with the easing in permits than the gain in starts, suggesting softening ahead. The housing market index for April fell 2 points to a much lower-than-expected 42. This was the lowest reading since October. Buyer traffic was down 4 points to 30 for the lowest reading since September. Current sales were down 2 points to 45 but future sales, and this is the good news in the latest NAHB report, were up 3 points to 53.
Overall, the latest housing starts report gave mixed signals with starts up and permits down. And the NAHB housing market index report is giving mixed signals too.
 Industrial production was up more than expected in March but it was due to utilities output, not manufacturing, which declined.
Overall industrial production gained 0.4 percent after a 1.1 percent spike in February. Unusually cold weather drove up utilities output.
The manufacturing component slipped 0.1 percent after rebounding 0.9 percent in February. Excluding motor vehicles, manufacturing decreased 0.3 percent in March after a 0.8 percent increase the prior month.
Within manufacturing, the output of durable goods declined 0.2 percent in March after having risen 1.6 percent in February. Among durables, small to moderate losses were widespread in March. However, the output of motor vehicles and parts was up notably. The production of nondurable goods was unchanged in March after having edged up in both January and February.
 The output of utilities jumped a monthly 5.3 percent in March while production at mines slipped 0.2 percent. Utilities output was up due to atypically strong demand for heating in March.
Capacity utilization for total industry firmed to 78.5 percent from 78.3 percent in February. Expectations were for 78.3 percent.
Manufacturing numbers have been volatile recently. The trend is still up but may be softening. This may be corroborated by the latest regional manufacturing surveys.
The latest reports from the New York Fed and Philly Fed indicate that manufacturing is losing some momentum.
 Activity in the New York manufacturing sector slowed in April where the Empire State index is down more than 6 points to plus 3.05. A positive reading indicates monthly growth in general conditions but the current reading, down from 9.24 in March and 10.04 in February, indicates a slowing in monthly growth.
The slowing unfortunately includes new orders which are still growing, at 2.20, but just barely and down from monthly growth rates of 8.18 and 13.31 in the prior two months. Shipments are also slowing and at 0.75 barely are near flat.
One positive in the report was a rise in hiring from 3.23 in March to 6.82 in April which, however, is still a limited rate of growth and was down from February's 8.08.
Business activity in Mid-Atlantic manufacturing was flat in April. The Philly Fed's composite index came in marginally above zero, at plus 1.3 to show minimal monthly growth. The reading is little changed from March's plus 2.0.
But outside of the shipments component, which was moderately positive at plus 9.1, there was little strength in the report. New orders were essentially flat at minus 1.0 versus March's plus 0.5, and employment turned down with a reading of minus 6.8, compared to plus 2.7 last month.
The latest regional numbers are disappointing and suggest a softening in manufacturing. But regional data on manufacturing have been weaker than national data on the sector—an important caveat. The next key indicator for manufacturing will be durables orders.
 In a partial reversal of February, lower energy costs brought down headline CPI inflation in March. The core rate also eased.
The consumer price index for March declined 0.2 percent after jumping 0.7 in February. The core CPI-excluding food and energy-slowed to a 0.1 percent pace, following a 0.2 percent rise the month before. Analysts projected a 0.2 percent gain.
By major components outside the core, energy decreased 2.6 percent, following a jump of 5.4 percent in February. Gasoline dropped 4.4 percent after surging 9.1 percent. The food component was unchanged after a 0.1 percent rise in February.
For the core measure, the indexes for shelter, used cars and trucks, medical care, personal care, and airline fares all rose in March. These increases more than offset declines in the indexes for apparel, household furnishings and operations, and tobacco.
 Year-on-year, overall CPI inflation slowed to 1.5 percent in March from 2.0 percent in February (seasonally adjusted). The core rate posted at 1.9 percent, compared to 2.0 percent in February. On an unadjusted year-ago basis, the headline CPI in March was up 1.5 percent and the core was up 1.9 percent.
Both the headline and core CPI inflation rates remain below the Fed's "trigger" of 2.5 percent for potential changes in policy. The latest CPI report will give the Fed flexibility to stay loose.
 According to the index of leading economic indicators, the economy may be slowing ahead. The latest reading posted at minus 0.1 percent in March, following a gain of 0.5 percent the month before.
The March figure was kept from being more negative by financial components. Outside of the report's financial measures, subcomponents were widely negative.
The first positive factor, as it has been through much of the recovery, was the report's interest rate spread which compares the overnight fed funds rate, which is near zero, to the 10-year Treasury yield which is near 2.0 percent. Low rates should stimulate demand for borrowing but the low 10-year yield does not point to much demand right now, a point that raises questions over how to read this component. The report's leading credit index was the second largest positive factor in the month, which is good news that points to rising consumer and business spending.
Other readings were clearly negative including a dip in building permits, a dip in the factory workweek, and a rise for initial unemployment claims in a reading that does not look to improve in the April report based on recent reports on claims. Consumer expectations were also a negative. But recent reports on the consumer mood have been divergent—some actually up, though.
The March report also included a dip of minus 0.1 percent for the coincident index which reflects ongoing sluggishness in the economy.
According to the latest Beige Book, overall economic activity expanded at a "moderate pace" during the reporting period from late February to early April. Some Fed Districts reported growth as "modest" while New York and Dallas Districts indicated that the pace of expansion accelerated slightly since the previous Beige Book. This broad language is close to that reported in the prior Beige Book—with growth characterized as modest to moderate.
Regarding two key sectors-manufacturing and the consumer—one improved while the other slowed.
"Most Districts noted increases in manufacturing activity since the previous report. Particular strength was seen in industries tied to residential construction and automobiles, while several Districts reported uncertainty or weakness in defense-related sectors. Consumer spending grew modestly, and firms in some Districts cited higher gasoline prices, expiration of the payroll tax cut, and winter weather as factors restraining sales growth."
Residential real estate activity continued to improve in most Districts. The Fed corroborated that tight supply is helping to boost home prices. In turn, new home construction continued to pick up in most Districts. Commercial real estate and construction activity improved in most Districts.
The labor market appears to be showing only spotty improvement.
"Labor market conditions remained unchanged or improved slightly, and reports of hiring were more widespread in the manufacturing, residential construction, information technology, and professional services sectors. Several Districts noted robust demand for workers tied to the residential construction sector."
Inflation does not appear to be a problem as the majority of Districts said overall price pressures remained minimal during the reporting period.
Overall, the Beige Book was probably close to expectations. Growth continues—but at a soft pace. And the important readings on the labor market indicate that the Fed is still below target for some time. This likely means that monetary policy is on hold and quantitative easing continues. However, this does not mean that debate on the timing for slowing QE will not continue. Long lags in monetary policy call for early debate.
Net, the past week’s economic news shows a slowing growth rate for the economy. Housing and manufacturing recently are sluggish after moving beyond headline figures. But the Fed is likely to keep monetary policy easy as inflation remains constrained. Nonetheless, the U.S. economy is still positive and is still quite favorable compared to problems in Europe.
This week’s highlight may be Friday’s report for first quarter GDP although there is plenty of competition. Fourth quarter GDP was anemic and the question is whether the first quarter showed improvement. Manufacturing has shown mixed signals—meaning the durables orders report will get extra attention. Housing also has shown mixed signals as seen in the latest numbers on housing starts and permits. This week’s updates for the housing sector include existing home sales, new home sales, and FHFA home prices.
The Chicago Fed National Activity Index was up to 0.44 in February versus a revised minus 0.49 in January. All four components of the report show gains relative to January with three of the four above zero. Production led February's gain followed by employment and by sales/orders/inventories. Consumption & housing remains in the negative column though a bit less so than in January.
Consensus numbers are not available for this month’s report
Existing home sales in February rose 0.8 percent to an annualized pace of 4.98 million units. January was revised to up 0.8 percent from the initial estimate of 0.4 percent. Low supply had been holding down sales but that appears to be changing as higher prices are bringing more homes into the market. Supply jumped 9.6 percent to 1.94 million units. Months’ supply rose to 4.7 months from 4.3 months in January. Prices are rising as the median sales price gained 1.8 percent to $173,600.
Existing home sales Consensus Forecast for March 13: 5.03 million-unit rate
Range: 4.90 to 5.10 million-unit rate
The Markit PMI manufacturing index (final) expanded at a solid rate based March, posting at 54.6, in line with the mid-month flash reading of 54.9 and slightly above February's 54.3. The new orders index came in at 55.4, unchanged from February. Export orders, at 51.8 versus a sub-50 reading of 48.5 in February, showed monthly growth which was especially good news given wide concern about foreign demand. Output was strong at 56.6 as was employment at 54.6. Inventory readings showed slight builds.
Markit PMI manufacturing flash index Consensus Forecast for April 13: 54.2
Range: 51.5 to 55.2
The FHFA purchase only house price index for January increased 0.6 percent, following a rise of 0.5 percent the prior month. The January gain was led by the Pacific region, increasing 1.6 percent. The weakest region was New England, down 0.7 percent for the month. The year-on-year rate for January came in at plus 6.5 percent versus 5.6 percent for the prior month. Home prices are gradually improving although still below pre-recession peak levels.
FHFA purchase only house price index Consensus Forecast for February 13: +0.7 percent
Range: +0.5 to +0.7 percent
New home sales in February declined 4.6 percent to an annualized pace of 411,000. But this followed a strong 13.1 percent jump in January. Sales were up 12.3 percent on a year-ago basis. Importantly, seasonal factors are large for winter months and volatility is common over these months. One modest positive was a rise in houses for sale to 152,000 from 150,000 in January. The combination of a dip in sales and rise in supply put months' supply at 4.4 months, compared to 4.2 months in January. Low supply recently has been constraining sales.
New home sales Consensus Forecast for March 13: 419 thousand-unit annual rate
Range: 400 thousand to 435 thousand-unit annual rate
The Richmond Fed manufacturing index in March softened to 3 to indicate monthly growth but at a slower rate than February's 6 level. However, shipments showed solid monthly growth at an 8 level with employment at 9. The workweek was also strong. But the negatives were led by new orders which contracted to minus 4 versus zero in the prior month. Backlog orders were really down at minus 14.
Richmond Fed manufacturing index Consensus Forecast for April 13: 3
Range: -3 to +10
Durable goods orders in February jumped a monthly 5.6 percent, following a 3.7 percent decrease in January. But strength was largely in civilian aircraft orders as seen in the transportation component. The transportation component rebounded a sharp 21.8 percent in February after dropping 17.7 percent the prior month. Excluding transportation, durables orders slipped 0.7 percent in February after a 3.0 percent gain the month before. Numbers reflect revisions from the more recent total factory orders report.
New orders for durable goods Consensus Forecast for March 13: -2.8 percent
Range: -6.0 percent to +0.3 percent
New orders for durable goods, ex-trans., Consensus Forecast for March 13: +0.5 percent
Range: -0.8 percent to +1.0 percent
Initial jobless claims for the week ending April 13 rose 4,000 to 352,000. This followed a revised drop of 40,000 the week before. Continuing claims showed improvement in the latest available data which for this series is the April 6 week. Continuing claims fell 35,000 to 3.068 million with the 4-week average down 2,000 to 3.083 million. These levels are near recovery lows but, despite the latest dips, are little changed from the month-ago comparison.
Jobless Claims Consensus Forecast for 4/20/13: 350,000
Range: 340,000 to 360,000
The Kansas City Fed manufacturing index fell at a slower rate in March, but producers were considerably more optimistic about future months. The month-over-month composite index was minus 5 in March, up from minus 10 in February but down from minus 2 in January. The slight improvement in activity was largely concentrated in nondurable goods-producing plants, particularly food and chemicals. Most other month-over-month indexes also rose, but remained below zero. The production index increased from minus 11 to minus 1, and the shipments and new order indexes recorded levels of 0, the highest value in seven months. Most future factory indexes improved considerably in March. The future composite index jumped from 4 to 14, and the future production, shipments, new orders, and order backlog indexes also increased.
Kansas City Fed manufacturing index Consensus Forecast for April 13: -1
Range: -2 to 0
GDP growth for the fourth quarter was revised up to an annualized rate of plus 0.4 percent from the second estimate of 0.1 percent and compared to a third quarter gain of 3.1 percent. The upward revision was largely due to a smaller net export gap, stronger growth in nonresidential structures, and somewhat higher inventory growth. Demand numbers were revised up slightly. Final sales of domestic product came in at 1.9 percent-up from the second estimate of 1.7 percent. Final sales to domestic purchasers were nudged up to 1.5 percent versus the second estimate of 1.4 percent. Headline inflation for the GDP price index posted a 1.0 percent annualized inflation rate versus the second estimate of 0.9 percent. When excluding food and energy, inflation was revised to 1.3 percent, versus the second estimate of 1.2 percent.
Real GDP Consensus Forecast for advance estimate Q1 13: +3.1 percent annual rate
Range: +2.3 to +3.3 percent annual rate
GDP price index Consensus Forecast for advance estimate Q1 13: +1.4 percent annual rate
Range: +0.9 to +1.8 percent annual rate
The Reuter's/University of Michigan's consumer sentiment index in early April fell to 72.3 from a scorching mid-80s pace in the last two weeks of March and versus a soft low 70s pace in the first two weeks of March. Final March came in near a recovery high at 78.6. The current conditions component of this report offered early news on April and the news was not good with the index down nearly 6 points to 84.8 which was the lowest reading since mid-January. Expectations fell nearly 6-1/2 points from final March to 64.2 which however was above last month's mid-month reading of 61.7.
Consumer sentiment Consensus Forecast for final April 13: 73.0
Range: 71.0 to 77.0
R. Mark Rogers is the author of The Complete Idiot’s Guide to Economic Indicators, Penguin Books.
Econoday Senior Writer Mark Pender contributed to this article.
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