1. U.S. Stalls Weapons Shipment to Israel in Bid to Stop Rafah Offensive — US Defense Secretary Lloyd Austin said the US has paused the supply of “high-payload” munitions to Israel over concerns about a potential military offensive on the Gazan city of Rafah. The delivery was supposed to contain 3,500 bombs, split roughly evenly between 2,000-pound (907-kilogram) and 500-pound explosives, according to a senior administration official. Austin, speaking separately, said no final decision has been made on the shipment. Austin told a Senate Appropriations panel on Wednesday. Washington is worried about the damage the large bombs could inflict on dense urban areas like Rafah, where about 1.4 million Palestinians are sheltering from Israel’s war with Hamas.
2. House Blocks Marjorie Taylor Greene’s Effort to Oust Mike Johnson as Speaker — The House voted to block a resolution by Rep. Marjorie Taylor Greene (R., Ga.) to oust Speaker Mike Johnson, with Democrats stepping in to help save the Republican leader. Greene had forced the vote late Wednesday despite the opposition of most other congressional Republicans and former President Donald Trump. The vote was 359-43 to table, or set aside, Greene’s motion, with seven voting present. Democratic leaders had previously said they would help Johnson (R., La.) block the motion, citing his decision to allow a successful vote on funding Ukraine in its war against Russia.
3. Weekly jobless claims jump to 231,000, the highest since August — Jobless claims totaled a seasonally adjusted 231,000 for the week ending on May 4, up 22,000 from the previous period and higher than the Dow Jones estimate for 214,000, the Labor Department reported Thursday. It was the highest claims number since Aug. 26, 2023.

The increase in claims follows a string of mostly strong hiring reports, though hiring in April was light compared with expectations. Also, job openings have been declining amid expectations that the labor market is likely to slow through the year.

The report also showed that continuing claims, which run a week behind, increased to 1.78 million, up 17,000 from the previous week. The four-week moving average of claims, which helps smooth out weekly volatility in numbers, increased to 215,000, up 4,750 from the previous week.
3. Inflation Eases as Core Index Hits Lowest Level Since 2021 — The consumer-price index, a gauge for goods and service costs across the U.S. economy, rose 3.4% in April from a year ago, the Labor Department said Wednesday. So-called core prices that exclude volatile food and energy items climbed 3.6% annually, the lowest increase since April 2021. Both figures were in line with economists’ expectations. Because it will likely take another two reports to shore up officials’ confidence that inflation can return to the lower levels that prevailed before the pandemic, the Fed might not be ready to cut interest rates before September. Price pressures remain for millions of Americans. Gasoline prices pushed up overall inflation, while consumers continued paying more for housing in April. But year-over-year rent increases slowed from a month earlier, a key sign for economists that a big driver of inflation in recent years is slowly easing.

Costs of groceries and vehicles also edged lower in April from the previous month, while price increases for medical care slowed.

“There is only one side of the market and it is not the bull side or the bear side, but the right side.” – Jesse Livermore

1. US consumer confidence hits lowest level since July 2022 — The Conference Board’s consumer confidence index retreated to 97 in April, below economists’ expectations for 104 and lower than March’s reading of 103.1. The Conference Board reasoned this was driven by a more pessimistic outlook for “future business conditions, labor market conditions, and income expectations.” Several months of inflation data have come in hotter-than-expected, as price pressure prove more persistent than some policymakers and economists had expected. New data showed the core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 2.8% over the prior year in March, above estimates for 2.7% and unchanged from the annual increase seen in February.
2. Fed Says Inflation Progress Has Stalled and Extends Wait-and-See Rate Stance — In their policy statement released Wednesday, officials highlighted a “lack of further progress” toward bringing inflation down in recent months. But Fed Chair Jerome Powell said at a news conference that he didn’t think it was likely the Fed would need to consider interest-rate increases, and he volunteered that rate cuts could begin if the labor market weakened unexpectedly. Separately, the central bank approved plans to slow the ongoing reduction of its $7.4 trillion asset portfolio in a bid to extend the wind-down of emergency pandemic stimulus efforts it launched four years ago. The Fed can reinvest the proceeds of its Treasury securities into new ones when they mature, but since 2022 it has been allowing up to $60 billion in Treasurys to roll off the portfolio every month. Starting in June, it will slow this monthly pace of decline to $25 billion.
3. US Jobs Post Smallest Gain in Six Months as Unemployment Rises — US employers scaled back hiring in April and the unemployment rate unexpectedly rose, suggesting some cooling is underway in the labor market after a strong start to the year. Nonfarm payrolls advanced 175,000 last month, the smallest gain in six months, a Bureau of Labor Statistics report showed Friday. A later release showed that business activity in the service sector — the largest part of the economy — unexpectedly weakened to the lowest level in four years, while prices climbed. Average hourly earnings climbed 0.2% from March and 3.9% from a year ago, the slowest pace since June 2021. Some economists were expecting a stronger increase in part due to a new California law mandating a $20 minimum wage for fast-food workers, which took effect April 1.
4. Dairy Workers Urged to Use Protection to Prevent Bird Flu — Dairy workers remain at risk for the H5N1 bird flu that’s spreading in cows and should wear protection to ward off the virus, US health officials said as they released details on one worker who experienced an eye infection.
The dairy worker underwent genetic testing of samples from both eyes and his nose, according to a letter to the New England Journal of Medicine from the US Centers for Disease Control and Prevention’s Tim Uyeki and Texas health officials, which confirmed the presence of the virus. The highly contagious strain of avian flu has spread across dairy cattle in 36 herds across nine states this year, and the US Food and Drug Administration said it found fragments in one out of every five commercial milk samples tested. The US Department of Agriculture is testing beef for the presence of H5N1 because of concerns about potential spread to humans. Pasteurized milk and cooked beef are safe to consume, the FDA has said.

The week ahead — Economic data from Econoday.com:

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