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Investing Specialists

Bouncing Up or Bouncing Back?

After some truly horrendous data in December, January, and February, the economy needed its recent show of strength just to get back to the trend line.

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With a flood of economic data, earnings, and merger news, equity markets managed just a small gain this week. The S&P 500 gained 1% while European markets grew a faster 1.5%, and emerging markets an even faster 2%. Interest rates continued to fall despite a very strong employment report and the Fed's decision to continue the taper. The 10-year U.S. Treasury bond yield fell from 2.67% to 2.59%.

On the surface, the economic data was contradictory, but less so if one were paying attention to the dates. First-quarter GDP growth was sharply below expectations, barely growing at 0.1%. Just about every category was flat or down, with only the consumption of services saving the United States from an outright decline in GDP.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.