The biggest market moving events of the week were the release of the Consumer Price Index (CPI) data on Tuesday May 17, 2016, and the Federal Open Market Committee (FOMC) Minutes from the April 2016 meeting which were released on Wednesday, May 18, 2016.
CPI – The consensus was for a 0.3% month over month increase, and the data showed a 0.4% month over month increase. While this does not sound consequential, it is a data point that the federal reserve and market participants watch to determine if the FOMC will raise interest rates. It is thought that if inflation rises faster than the FOMC would like, they can raise short term interest rates to slow down inflation.
FOMC Minutes – The content of the FOMC Minutes surprised the market on Wednesday. Within the Minutes, it was stated that a potential June rate hike is still a possibility and that some at the FOMC believed that market participants had not properly assessed the potential for a June rate hike. This sent the stock market tumbling, and interest rates rocketing higher.
On the week, the S&P was up 0.28%, the DJIA was down 0.20% and the Nasdaq was up 1.10%