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Money Watch Weekly Wrap

The economy slowed in the first quarter, house prices are still dropping, gas prices are hovering near $4 and stocks went UP? It was another week when investors were reminded that the stock market can diverge from economic data. Stock indexes reached multi-year highs, as companies continued to report robust first quarter earnings, while we learned that the US economy only grew by 1.8 percent in the first quarter of the year.

At its policy meeting, the Federal Reserve kept interest rates at 0-0.25 percent; intends to complete its $600 billion bond-buying program in June as planned; and believes that rising inflation is "transitory." In his first regularly-scheduled press conference, Chairman Bernanke said the Fed is powerless to reduce gas prices - and it can't solve long-term unemployment either. Here's your very own Fed Decoder!

  • DJIA: 12,810, up 2.4% on week, up 4% for month, up 10.6% YTD (Best monthly performance this year)
  • S&P 500: 1363, up 2% on week, up 2.8% for month, up 8.4% YTD
  • NASDAQ: 2873, up 1.9% on week, up 3.3% for month, up 8.3% YTD
  • June Crude Oil: $113.93, up 1.4% on week (up 6.7% on the month, up 24.7% YTD)
  • June Gold: $1556.40, up 3.5% on week (up 8.1% on the month-biggest monthly % gain since 11/09)
  • AAA Natl Average Price for Gallon of Regular Gas: $3.93 (Record was $4.11 in July, 2008)
Total bank failures for 2011 = 39 (5 new bank failures over weekend)

FACTOIDS OF THE WEEK: What the Fed Said:

  • Economic growth 2011: revised down to 3.1-3.3
  • Unemployment: 8.4 - 8.7 percent by end of the year
  • Gas prices should drop, as the situation stabilizes in the Middle East
  • The Fed can't do anything about rising gas prices, but knows that it stinks for us
  • Jobs market is getting better, but only slowly and the Fed can't do much about it
  • The deficit is the most important issue for the country, but Congress shouldn't be too aggressive in cutting spending because the recovery is fragile. If Congress hacks too much, the Fed will keep the spigots open longer and wider
IN THE WEEK AHEAD: The April employment will dominate the week's events. Economists expect that non-payrolls rose by 190,000, after a gain of 216,000 the prior month and the unemployment rate dropped to the lowest level since March 2009 -- 8.8 percent from 8.9 percent.

Mon 5/2:
Loews Corp., ADP
10:00 ISM Manufacturing Index

Tues 5/3:
Pfizer 10:00 Factory Orders

Automobile Sales

Weds 5/4:
Time Warner, Walgreen, Whole Foods, Kellogg
8:15 ADP Employment Report

10:00 ISM Non-Manufacturing Index

Thurs 5/5:
Target, Sara Lee, Nordstrom, J.C. Penney
8:30 Weekly Claims

8:30 Productivity and Costs

Fri 5/6:
Washington Post Co., Pepco Holdings
8:30 Employment Report

3:00 Consumer Credit

9:55 Consumer Sentiment

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