Market Insights 4/12/2019

U.S. stocks traded higher on better than expected bank earnings.

Treasury yields were higher and the U.S. dollar saw pressure, while consumer sentiment missed forecasts and import prices came in hotter than anticipated. Crude oil prices were mostly higher and gold nudged lower.

The Markets…

The Dow Jones Industrial Average rose 269 points (1.0%) to 26,412

The S&P 500 Index was up 19 points (0.7%) to 2,907

The Nasdaq Composite increased 37 points (0.5%) to 7,984

In moderate volume, 804 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil gained $0.26 to $63.84 per barrel and wholesale gasoline was flat at $2.03 per gallon

The Bloomberg gold spot price decreased $1.68 to $1,290.88 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 96.97

Markets were mixed on the week, as the DJIA retreated 0.1%, the S&P 500 Index was up 0.5%, and the Nasdaq Composite gained 0.6%

Import prices hotter than expected, consumer sentiment declines more than expected

The Import Price Index rose 0.6% month-over-month for March, above the Bloomberg projection of a 0.4% gain, and following February’s upwardly-revised 1.0% gain from an initially-reported 0.6% increase. Compared to last year, prices were unchanged, versus forecasts of a 0.6% decrease and compared to February’s upwardly-revised 0.8% drop.

Treasuries were lower, with the yield on the 2-year note up 4 basis points to 2.39%, the yield on the 10-year note gaining 7 bps to 2.56%, while the yield on the 30-year bond rose 5 bps to 2.97%.

The April preliminary University of Michigan Consumer Sentiment Index decreased to 96.9 from March’s read of 98.4, and compared to expectations for a dip to 98.2. The consumer expectations portion of the survey fell to more than offset a slight improvement in the current economic condition component. The 1-year inflation forecast dipped to 2.4% from 2.5%, and the 5-10 year inflation forecast dropped to 2.3% from the previous 2.5% rate.

Europe, Asia mostly higher to close out the week

European equities finished mostly higher, with financials leading the way, aided by the upbeat earnings reports out of the sector in the U.S., which unofficially kicked off the season, as well as another dose of upbeat Chinese economic data. Also, uneasiness about possible European Union tariff retaliation to an earlier U.S. threat to target $11 billion of European goods was offset by further reports of progress on the U.S.-China trade front, appearing to keep sentiment positive.

The euro and British pound rose versus the U.S. dollar, while bond yields in the region were mostly higher.

Stocks in Asia mostly advanced, with reports of progress in trade talks between the U.S. and China appearing to continue to buoy sentiment and ahead of the unofficial start to earnings season in the U.S., while a host of Chinese economic data loomed. With some markets already closed, China reported trade figures for March, which showed exports rose much more than expected though imports unexpectedly declined.

Mainland Chinese stocks finished little changed and Hong Kong shares rose. Japanese equities gained, as the yen lost ground. Australian issues advanced and South Korean stocks rose.

Stocks mixed as earnings season ramps up

U.S. stocks finished mixed with continued optimism of a U.S.-China trade deal being countered by some caution ahead of the unofficial start to Q1 earnings season. Economic concerns lingered as the European Central Bank maintained a dovish tone and the International Monetary Fund lowered its global growth outlook.

Energy issues dipped even as crude oil prices gained ground on renewed conflict in Libya, while healthcare stocks led to the downside. Treasury yields continued to recover from the late-March drop that unnerved the markets. However, stocks battled back after another dose of upbeat Chinese economic data, a delayed Brexit deadline and as the financial sector rallied on the recovery in interest rates and Friday’s earnings results from Dow member JPMorgan Chase & Co. Communications services were also in the green, supported by the rally in Dow component Walt Disney on its new streaming service.

Next week will be shortened by the Good Friday holiday, on which the U.S. markets will be closed, but there will be plenty of data for the markets to digest as earnings season will continue to ramp up and the economic calendar will deliver a full docket of reports. Housing will come into focus, with the releases of the NAHB Housing Market Index, along with housing starts and building permits, while manufacturing will also likely command attention as industrial production will be accompanied by regional reports from New York and Philadelphia. Other key reports due out include: the Fed’s Beige Book, the trade balance, retail sales, Markit’s business activity releases and the Leading Index.