Weekly Market Outlook – Running Out Of Room To Rally

The only other noteworthy item from last week is the Institute of Supply Management's services index report. As was the case with is sister report -- the manufacturing index -- we were given a pleasant surprise. The non-manufacturing index easily eclipsed its outlook of 58.5 to reach a record-high reading of 60.4.

ISM Index Charts

Source: Institute of Supply Management, TradeStation

That's going to be a tough act to follow, as it likely has a lot to do with the sudden restart of the economy; it doesn't reflect normal working conditions. Still, economic activity begets economic activity. Everything else is on the grid.

Economic Report Calendar

Source: Briefing.com

After Tuesday's consumer inflation report, brace yourself -- Thursday could be raucous. In addition to the Fed's capacity utilization and industrial productivity figures, we'll hear about last month's retail spending.

In step with strong ISM figures, economists believe the nation's factories and their total output continued to improve through March. In fact, forecasters predict capacity utilization and industrial productivity will rise to their highest reading since the pandemic took hold.

Capacity Utilization and Industrial Productivity Charts

Source: Federal Reserve, TradeStation

Thursday is a big day, too. That's when we'll hear about last month's retail spending, indicating whether or not consumers are truly feeling confident. Economists are calling for explosive growth, but keep in mind that's growth compared to February's surprisingly weak numbers. Nevertheless, spending continues to move into record territory. Consumers are doing their part, emboldened by stimulus checks.

Retail Spending Charts

Source: Census Bureau, TradeStation

Finally, look for March's housing starts and building permits data on Friday. They should be good. Economists are calling for gains on both fronts, pushing back against a real estate headwind that materialized a couple months back. We need some strength here.

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