Week in Review: Stocks steady as investors eye inflation, first-quarter earnings

Global economic news


U.S. cost of living rises for ninth month

The U.S. Consumer Price Index increased 0.5% for a second month. The rise was led by a 3.5% increase in energy costs, a 5.6% surge in gas prices, and a 0.8% gain in food costs. Excluding volatile food and energy prices, the core gauge rose 0.1%, less than forecast. It is the ninth month in a row that the U.S. cost of living has increased. Producer prices also continued their rise last month, gaining a seasonally adjusted 0.7%, as energy costs mounted. Underlying inflation pressures, as measured by the core index, gained a more-than-expected 0.3%. While faster than anticipated, that inflation level is still in line with the U.S. Federal Reserve Board's unofficial inflation target of 2.0%.

China's rapid growth continues

China's economy in the first quarter grew 9.7% from a year earlier, down from a 9.8% rate in the fourth quarter. Inflation accelerated to nearly a three-year high as the CPI rose in March by 5.4% from a year earlier, up from 4.9% in February. That was the fastest rise since July 2008. China's leaders have said that taming inflation is their top priority for the year.

Euro hits 15-month high amid rate hike expectations

The euro hit a 15-month high against the dollar this week amid expectations that the European Central Bank will raise rates to control inflation. This week, the European Union reported a record monthly increase in eurozone inflation that pushed the annualized rate for March to a 29-month high. Investor optimism that officials will succeed in containing the European debt crisis also supported the euro in spite of Ireland's downgrade and lingering worries of a Greek default.
Moody's cuts Irish debt rating

Moody's Investors Services cut Ireland's credit rating by two levels on Friday to the lowest investment grade and left the country's outlook at negative. That downgrade came only one day after Fitch Ratings affirmed its "BBB+" rating and removed the threat of downgrade. Ireland's government, like those in other peripheral eurozone countries, is struggling to lower its budget deficit and restore economic growth.
U.S. Congress passes budget deal, averting shutdown

The U.S. Congress gave its final approval to legislation that will cut government spending by $38.5 billion. The passage of the bill averted a government shutdown that had been slated for the end of day on Thursday.
U.S. data show economy still struggling

Economic data showed economic growth in the United States is still struggling to recover from the recession that ended in June 2009. New U.S. jobless claims rose by 27,000 to a seasonally adjusted 412,000 last week. Claims thus reached their highest level in two months. U.S. retail sales rose a weaker-than-expected 0.4% in March but, excluding gas sales, were up only 0.1%. Even so, on Friday, the Thomson Reuters/University of Michigan preliminary index of consumer sentiment rose in April from a 16-month low as job gains helped Americans deal with rising fuel costs.
Singapore tightens policy

Singapore tightened monetary policy on Thursday as it reported a strong first quarter for the economy. Singapore's speedy growth should be a bellwether for other emerging economies in the region and comes on the back of strong economic data from China.
Global corporate news

Alcoa kicks off earnings season with profit reports

Aluminum maker Alcoa was the first blue-chip company to report first-quarter earnings this week. The company swung to profit in the first quarter because of improved sales and higher prices in most major markets.
Google's profits fall short of expectations

Google reported an 18% profit increase for the first quarter. Those earnings for the Internet bellwether fell short of forecasts amid a 54% surge in operating costs as the company tried to retain staff and expand beyond its core Internet search business.
Banks post profits

Bank of America's first-quarter profit fell 35%, and revenue dropped across the majority of its business lines. Even so, it was the first time in three quarters that the largest U.S. lender by assets reported a profit. Meanwhile JPMorgan's profit rose 67%, but the bank is still struggling to boost revenue amid sluggish loan growth and mounting mortgage costs.

Zipcar's IPO draws greater-than-expected demand

Zipcar, the Cambridge, Massachusetts-based car sharing company, raised $174.3 million in its initial public offering this week after increasing the shares. Its shares soared as much as 75% on its first day of trading. Zipcar was one of seven companies that launched initial public offerings this week.
The week ahead

Earnings season continues with reports throughout the week from names including Citigroup, Amazon, Intel, IBM, and Johnson & Johnson.

The U.S. census bureau releases reports on building permits and housing starts on Tuesday, April 19.

Markit releases its eurozone Purchasing Managers' Index on Tuesday, April 19.

The Mortgage Bankers' Association reports U.S. mortgage applications, and the National Association of Realtors releases U.S. existing home sales data on Wednesday, April 20.

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Sources: MFS research; The Wall Street Journal; The Wall Street Journal Online; Bloomberg News; Financial Times; Forbes.com; CNNMoney.com; msnbc.com.

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