Monthly Archives: April 2017

U.S. Market Weekly Summary – Week Ending 04/28/2017

S&P 500 Gains 1.5% on Week as Technology Sector Leads Broad Climb Amid Better-Than-Expected Q1 Results

The Standard & Poor’s 500 index added 1.5% this week, with the technology sector leading broad gains amid Q1 earnings that have largely been topping analysts’ expectations.

The market benchmark ended the week at 2,384.20, up from 2,348.69 last Friday, and marking the measure’s second positive week in a row. The largest percentage increases were recorded by technology, health-care and consumer-discretionary stocks, while the financial and materials sectors also recorded strong advances. Just three sectors ended the week in the red: real estate, telecommunications and utilities.

The technology sector climbed 2.6% this week, boosted by stronger-than-expected Q1 results from teach heavyweights including Google (GOOGL, GOOG) and Amazon.com (AMZN). Google shares jumped 7.6% this week while Amazon added 2.9%.

The consumer-discretionary sector also had a number of companies report Q1 results above Street views, sending the sector up 2.0% for the week. Its gainers included Under Armour (UA), whose shares jumped 11% as the athletic-apparel company’s Q1 earnings came in better than Street expectations despite a revenue miss. Shares of BorgWarner (BWA), a vehicle equipment manufacturer, climbed 7.0% since last week amid better-than-expected Q1 results and a boost to its full-year EPS guidance. Comcast (CMCSA) shares added 2.7% as the media-and-technology company posted adjusted EPS and revenue above analysts’ consensus estimates.

The materials sector gained 1.8% this week. Its advancers included packaging company Ball (BLL), whose shares rose 4.4% this week amid a 54% jump in its quarterly cash dividend and a two-for-one split of its common stock. International Paper (IP) shares climbed 2.3% this week as its Q1 EPS and revenue topped Street views.

The financial sector climbed 1.6% this week. Among its gainers, shares of Invesco (IVZ) added 5.3% since last Friday as the investment manager’s 1Q earnings came in above the Street view despite weaker-than-expected revenue. XL Group (XL) shares climbed 3.6% this week as the insurance and reinsurance company posted Q1 results above analysts’ expectations. State Street (STT) climbed 8.0% this week as the financial-holding company reported Q1 adjusted earnings and revenue above analysts’ expectations.

Performance is historical and does not guarantee future results; current performance may be lower or higher. Investment returns/principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Most recent month-end performance is available in the Performance topic of www.sectorspdr.com.

Past performance does not guarantee future results.

Click here to view full Sector Tracker with all S&P 500 component stocks in various time periods.

Sector SPDRs are subject to risk similar to those of stocks including those regarding short selling and margin account maintenance. All ETFs are subject to risk, including possible loss of principal. Sector ETF products are also subject to sector risk and non-diversified risk, which will result in greater price fluctuations than the overall market.

The expense ratio for all Sector SPDRs is 0.14%. The gross expense ratio for XLRE is 0.15%, and after an expense waiver of 0.01%, the net expense ratio is 0.14%.

The Standard & Poor’s (S&P) 500 Index is an unmanaged index that tracks the performance of 500 widely held, large capitalization U.S. stocks. Indices are not managed and do not incur fees or expenses. It is not possible to invest directly into an index.

An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call 1-866-SECTOR-ETF (866-732-8673) or visit www.sectorspdr.com. Read the prospectus carefully before investing.

ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is distributor for the Select Sector SPDR Trust.

Opt-out of emails

Fun Stats on Amazon

Amazon.com sure has evolved and grown over the past 20+ years. It’s easy to forget they started out as an on-line bookstore.

Today, Amazon continues to evolve, adding original programming and extensive mobile capabilities.

Here are some fun Amazon stats.

300 million registered users

30 million monthly mobile app users

100,000 Amazon sellers have sales of $100,000 or more

50% of US on-line users have the Amazon app

80% of Amazon’s customers buy something at least once per month

Amazon had $136 billion in net sales in 2016

In 2016 Amazon had net-income of $2.4 billion

Amazon is spending $3 billion annually on video content

Amazon employees 45,000 robots in its warehouses

44% of on-line shoppers go straight to Amazon.com

On cyber Monday in 2016 33% of all dollars spent on-line were done at Amazon

51% of people asked stated they intended to do “most” of their shopper at Amazon

Nearly twice as many millennials use Amazon Prime compared to baby boomers

Lastly, The crown jewel of Amazon’s business, Amazon Web Services, posted a 42 percent jump in revenue during the first fiscal quarter of 2017, as it continues to set the standard for cloud computing.

For the period ending March 31st, AWS recorded revenue of $3.66 billion, up from revenue of $2.57 billion in the year-ago quarter. Operating income rose 47 percent compared to last year to reach $890 million, which provided the lion’s share of the total operating income for its parent company during the quarter.

AWS revenue growth does appear to be backing off the torrid pace it enjoyed a few years ago, but 42 percent is still pretty strong. The company announced it captured several new high-profile customers during the quarter, such as Dunkin Brands, Liberty Mutual, and IPO darling Snap, which had previously relied on Google for the bulk of its cloud infrastructure.

Fun Stats on Google

YouTube Statistics – 2017; Facts and Numbers

The very first YouTube video was uploaded on 23 April 2005.

The total number of people who use YouTube – 1,300,000,000.

300 hours of video are uploaded to YouTube every minute!

Almost 5 billion videos are watched on Youtube every single day.

YouTube gets over 30 million visitors per day

In an average month, 8 out of 10 18-49 year-olds watch YouTube.

By 2025, half of viewers under 32 will not subscribe to a pay-TV service.

6 out of 10 people prefer online video platforms to live TV

The total number of hours of video watched on YouTube each month – 3.25 billion.

10,113 Youtube videos generated over 1 billion views.

80% of YouTube’s views are from outside of the U.S.

The average number of mobile YouTube video views per day is 1,000,000,000

The average mobile viewing session lasts more than 40 minutes

Female users are 38% and male users are 62%.

User Percentage by Age 18-24 – 11%, 25-34 – 23%, 35-44 – 26%, 45-54 – 16%, 50-64 – 8%, 65+ – 3%, unknown age – 14%.

Mobile Youtube users spent 40 minutes on average session, up more than 50% year-over-year

More than half of YouTube views come from mobile devices.

YouTube’s mobile revenue is up to 2x y/y.

YouTube overall and even YouTube on mobile alone reaches more 18-34 and 18-49 year-olds than any cable network in the U.S.

The number of hours people spend watching videos (aka watch time) on YouTube is up 60% year-over-year, the fastest growth we’ve seen in 2 years.

You can navigate YouTube in a total of 76 different languages (covering 95% of the Internet population).

9% of U.S small businesses use Youtube

Approximately 20% of the people who start your video will leave after the first 10 seconds. Create a damn good intro.

U.S. economy bogs down in first quarter

U.S. economy bogs down in first quarter with slowest growth in 3 years, GDP shows

Small 0.7% GDP reflects temporary drop-off in consumer spending

The government’s official scorecard for the U.S. economy in the first quarter pointed to the weakest growth in three years, but the slowdown appeared tied to temporary effects that are likely to give way a rebound in the coming months.

Gross domestic product increased at a meager 0.7% annual pace in the first three months of the year, down from 2.1% and 3.5% in the back half of 2016. Economists polled by MarketWatch had forecast a 0.9% increase.

**Click to Enlarge**

united-states-gdp-growth

The drop-off mostly stemmed from the smallest increase in consumer spending since the end of 2009, largely reflecting fewer sales at car dealers. Consumer outlays rose just 0.3%, a steep drop from the 3.5% gain at the end of 2016.

Government also reduced spending and businesses scaled back on inventory production to make sure they didn’t get stuck with lots of unsold goods on warehouse shelves.

The pullback in consumer spending is unlikely to last, though. Americans spent less on gasoline, home-heating fuel and clothes after a spell of unseasonably warm weather in February—the second hottest on record. That is unlikely to be repeated in the spring.

More important, household finances are in the best shape in years amid record stock market gains, a strong labor market and gradually rising wages. Americans have more money to spend and that is reflected by rising home sales.

In the first quarter, investment in home building climbed 13.7%, marking the construction industry as a major engine of U.S. growth. The biggest problem in the real-estate market is a lack of properties for sale.

Another tailwind for the economy is business spending. Companies are investing more in structures such as drilling rigs and office buildings. So-called fixed business investment increased 10.4% and accounted for bulk of U.S. growth in the first quarter, a marked contrast to the prior two years when it was often an albatross.

Yet even though American corporations are brimming with optimism about a pro-business Trump White House, it’s shed none of the caution it’s exhibited during a stutter-step eight-year-old economic recovery. Companies barely increased the production of goods.

The value of new inventories was the other big drain on first-quarter growth. They rose by just $10.3 billion in the first quarter after a roughly $50 billion increase at the end of 2016.

Government spending fell 1.7%, the largest drop in four years.

Trade, another key part of the economy, was largely a wash on first-quarter results. Exports climbed 5.8% while imports rose 4.1%.

Inflation advanced at a 2.4% annual pace in the first quarter, according to the personal-consumption expenditures, or PCE index. The PCE index—the preferred inflation gauge of the Federal Reserve—easily topped the central’s bank’s 2% target for the first time in several years.

Yet the core PCE that strips out the volatile food and energy categories was little changed at 2%, underscoring the big effect that oil prices can have on U.S. inflation. U.S. oil prices CLM7, +0.84% have retreat after a run-up late last year, suggesting moderation in price pressures.

Market Insights 4/26/2017

Stocks Unable to Hold Gains Following Tax-Reform Outline

U.S. stocks relinquished mild morning gains to finish mostly flat as investors digested the Trump administration’s afternoon release of a rough framework regarding its tax-reform plan.

Treasuries were higher, the U.S. dollar gained ground, crude oil prices were mixed and gold was little changed. A light economic docket showed that weekly mortgage applications rose, though the domestic calendar will heat up tomorrow.

The Markets…

The Dow Jones Industrial Average lost 21 points (0.1%) to 20,975

The S&P 500 Index decreased 1 point to 2,387

The Nasdaq Composite was nearly unchanged at 6,025

In moderately-heavy volume, 963 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.06 higher to $49.62 per barrel and wholesale gasoline was $0.04 lower at $1.59 per gallon

The Bloomberg gold spot price inched $4.91 higher to $1,269.04 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly 0.2% higher at 98.94

Mortgage applications rise

The MBA Mortgage Application Index increased 2.7% last week, following the previous week’s 1.8% decline. The rise came as a 7.2% jump for the Refinance Index more than offset a 1.0% decrease for the Purchase Index. The average 30-year mortgage rate declined 2 basis points to 4.20%.

Treasuries finished higher, with the yield on the 2-year note ticking 1 bp lower to 1.27%, while the yields on the 10-year note and the 30-year bond dipped 3 bps to 2.30% and 2.96%. Bond yields had rebounded recently following eased European political risk concerns after the French Presidential election and as earnings season has remained favorable.

The markets awaited today’s initial announcement regarding President Trump’s tax-reform plans, which lacked complete details but is aimed at reducing the corporate tax rate to 15.0% and trimming the number of individual tax brackets to three from seven, with the top rate expected to be 35%. Amid this backdrop, political uncertainty remains elevated.

Tomorrow, we will get a good look at some “hard” economic data in the form of the preliminary March durable goods orders report, expected to show demand for manufacturing continues to gain steam and rise 1.3% month-over-month, on the heels of the prior months’ growth of 1.8% and 2.4%, respectively. However, after stripping out the more volatile components, growth is expected to be a bit more modest. Excluding transportation, orders are projected to increase 0.4%, after gains of 0.5% and 0.3% to begin the year, while the gauge of business investment, nondefense capital goods orders excluding aircraft, are expected to grow 0.5% after February’s 0.1% dip and January’s 0.2% gain.

Additional reports expected tomorrow include the advanced goods trade balance, forecasted to show that the deficit widened to $65.2 billion in March from $64.8 billion the month prior and pending home sales, expected to have decreased 1.0% m/m in March. The preliminary wholesale inventories report for March will be released and is anticipated to have increased 0.2% m/m, along with weekly initial jobless claims, expected to have ticked slightly higher to a level of 245,000 from the 244,000 the week prior. Rounding out the day we’ll receive the Kansas City Fed Manufacturing Index, projected to have moved lower to 17 for April from 20 in March, though a reading above zero indicates expansion in activity.

Europe and Asia add to recent gains

European stocks slightly added to the recent rally that has come courtesy of a plethora of upbeat global earnings reports and eased political risk uneasiness. However gains may have been limited ahead of today’s expected details of U.S. President Trump’s tax-reform plans and tomorrow’s monetary policy decision from the European Central Bank, which will likely be eyed to see if the aforementioned improved global landscape will have any impact on its policy stance.

Political concerns have cooled as the French Presidential election over the weekend suggested pro-Europe, mainstream candidate Emmanuel Macron is poised to defeat anti-EU Marine Le Pen in the final vote on May 7th. For analysis of the European political front, which includes a recently approved U.K. vote and a German election later this year.

Financials managed to tack onto the boost from the aforementioned tailwinds, aided by strong gains for Credit Suisse Group AG (CS $16) and Standard Chartered PLC. (SCBFF $9) on the heels of their earnings reports. The euro was lower and the British pound dipped versus the U.S. dollar, while bond yields in the region finished mixed.

The U.K. FTSE 100 Index, France’s CAC-40 Index and Italy’s FTSE MIB Index were up 0.2%, Germany’s DAX Index ticked 0.1% higher, and Switzerland’s Swiss Market Index advanced 0.6%, while Spain’s IBEX 35 Index declined 0.2%.

Stocks in Asia finished higher for a second-session, with the rally in the global markets continuing on a plethora of upbeat earnings reports, which joined eased European political risk concerns in the wake of the weekend’s French Presidential election. Japanese equities posted a fourth-straight solid gain, with the yen continuing to slide on the eased concerns and earnings optimism, while tomorrow’s monetary policy decision from the Bank of Japan appeared to have little impact on conviction.

Stocks trading in mainland China and Hong Kong overcame lingering regulatory crackdown uneasiness to gain ground. Australian securities returned to action following yesterday’s holiday to move to the upside, while a report showed the nation’s consumer price inflation came in mostly cooler than expected. Equities in South Korea and India traded higher. Stocks shrugged off lingering geopolitical concerns aimed at North Korea.

In addition to the aforementioned monetary policy decisions from the European Central Bank and the Bank of Japan, tomorrow’s international economic docket will yield industrial profits from China, import and export price data from Australia, CPI from Germany and consumer confidence from Italy and the Eurozone.

Market Insights 4/25/2017

Rally Continues Courtesy of Profit Reports

A number of upbeat earnings reports from Dow members gave the U.S. equity markets additional sustenance to add to yesterday’s rally that was fueled by the results from the French Presidential election.

Treasury yields added to their recent uptick, again benefitting financials, and crude oil ticked higher, while gold and the U.S. dollar were lower.

On the economic front, Consumer Confidence slipped from a multi-year high, while new home sales surprisingly rose.

The Markets…

The Dow Jones Industrial Average soared 232 points (1.1%) to 20,996

The S&P 500 Index increased 14 points (0.6%) to 2,387

The Nasdaq Composite broke above the 6,000 mark for the first time ever, rising 42 points (0.7%) to 6,025

In moderately-heavy volume, 930 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.33 higher to $49.56 per barrel and wholesale gasoline was unchanged at $1.63 per gallon

The Bloomberg gold spot price fell $12.38 to $1,263.93 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.3% lower at 98.83

Consumer Confidence dips from multi-year high, housing data remains upbeat

The Consumer Confidence Index declined to 120.3 in April from 124.9 in March, which was the highest level since December 2000, and compared to the Bloomberg estimate of a dip to 122.5. Sentiment toward the present situation and expectations of business conditions for the next six months both decreased from elevated levels. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—dipped to 11.7 from the 12.8 level posted in March.

New home sales rose 5.8% month-over-month in March to an annual rate of 621,000, the highest since July 2016, above forecasts of 584,000 units, and compared to the downwardly revised 587,000 unit pace in February. The median home price was up 1.2% y/y at $315,100. New home inventory dipped to 5.2 months of supply at the current sales pace. Sales were up m/m in all regions, except the Midwest, but all are higher y/y. New home sales are based on contract signings instead of closings.

The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed a 5.9% gain in home prices y/y in February, versus expectations of a 5.8% increase. Month-over-month (m/m), home prices were up 0.7% on a seasonally adjusted basis for February, in line with forecasts.

The Richmond Fed Manufacturing Activity Index slipped but remained solidly in expansion territory (a reading above zero), after declining to 20 for April from the 22 posted in March, which was the highest since April 2010, and versus expectations of a 16 reading.

Treasuries added to yesterday’s decline that came in the wake of the reaction to the French Presidential election that appeared to ease political risk concerns. The yield on the 2-year note gained 4 basis points (bps) to 1.27%, while the yield on the 10-year note increased 3 bps to 2.31%, and the 30-year bond rate rose 5 bps to 2.98%.

Tomorrow’s economic calendar will be light, with the only item of note being MBA Mortgage Applications

Europe builds on yesterday’s strong gains, Asia joins global rally on French election

European equities modestly extended yesterday’s sharp rally that came courtesy of eased political risk after the first round of the French Presidential election suggested pro-Europe, mainstream candidate Emmanuel Macron is poised to defeat anti-EU Marine Le Pen in the final vote on May 7th. For analysis of the European political front, which includes a recently approved U.K. vote and a German election later this year.

The markets also found support from some upbeat earnings reports on the both sides of the pond. Healthcare stocks led to the upside, aided by earnings results from Novartis AG (NVS $76), while technology issues also strengthened, even as SAP SE (SAP $102) gave up early gains that followed the German software company’s sales that topped estimates for the fourth-straight quarter, per Bloomberg. The euro and British pound finished higher versus the U.S. dollar and bond yields gained ground.

Stocks in Asia finished higher after jumps in the U.S. and Europe yesterday as the global markets appeared to breathe a sigh of relief after the first round of the French Presidential election eased concerns about the country’s future as a member of the European Union. Stocks are shrugging off heightened geopolitical concerns focused on North Korea.

Continued weakness in the yen helped Japanese equities to extend yesterday’s rally, while stocks in mainland China advanced, showing some modest resiliency in the face of heightened regulatory crackdown uneasiness, and those traded in Hong Kong jumped amid the cooled political concerns and ahead of some trade data. After the closing bell, Hong Kong’s import and export growth exceeded estimates for March. Meanwhile, securities in India and South Korea finished higher as well. Markets in Australia were closed for a holiday.

Like the U.S., tomorrow’s international economic calendar will be sparse, with CPI from Australia and Japan’s All-Industry Index the major reports slated for release.

Market Insights 4/24/2017

French Election Results Ignite Relief Rally

The U.S. equity markets rallied, with financials leading the way, in the wake of yesterday’s French Presidential election that appeared to have eased political concerns abroad.

Treasury yields moved higher and the U.S. dollar fell after the euro rallied following the election results, while crude oil and gold prices were lower.

The Markets…

The Dow Jones Industrial Average rallied 216 points (1.1%) to 20,764

The S&P 500 Index increased 25 points (1.1%) to 2,374

The Nasdaq Composite jumped 73 points (1.2%) to 5,984

In heavy volume, 906 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil ticked $0.39 lower to $49.23 per barrel and wholesale gasoline lost $0.02 to $1.63 per gallon

The Bloomberg gold spot price fell $8.65 to $1,275.79 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.9% lower at 99.08

Regional manufacturing report dips to kick off economic calendar

The Dallas Fed Manufacturing Activity Index unexpectedly dipped but remained solidly at a level depicting expansion (a reading above zero). The index declined to 16.8 in April, from 16.9 in March, and compared to the expected improvement to 17.0.

Treasuries finished lower in the wake of the reaction to the French Presidential election, as the yield on the 2-year note rose 5 basis points (bps) to 1.23%, the yield on the 10-year note gained 2 bps to 2.27%, and the 30-year bond rate increased 1 bp to 2.91%. Bond yields rebounded and the U.S. dollar dropped as the first round of the key French Presidential election came in as expected, appearing to alleviate some political concerns. Also, the markets remain optimistic regarding progress made on President Trump’s tax-reform plans, details of which are expected to be delivered this week.

Along with an increase of earnings season news, this week’s economic calendar will deliver key reads on the economy, beginning with tomorrow’s new home sales report, with economists forecasting a 1.4% m/m decline during March to an annual rate of 584,000 units, as well as the S&P/Case-Shiller CoreLogic Home Price Index, expected to show year-over-year increase of 5.8% during February, and a 0.7% m/m rise on a seasonally-adjusted basis.

Other reports slated for this week include durable goods orders, Consumer Confidence and the University of Michigan Consumer Sentiment Index. However, the headlining report will likely be the first look (of three) at Q1 GDP, projected to show growth slowed from a quarter-over-quarter annualized rate of 2.1% in Q4 to 1.1%. The docket will deliver a good mix of “soft” data (confidence/survey-based) and “hard” data, which have diverged to cause some concern in the markets.

Europe rallies, Asia mostly higher following French election results

European equities jumped, with financials leading a broad-based rally as the markets appeared to breathe a sigh of relief after the first round of the key French Presidential election came in as the polls had predicted. The election did not offer any surprising results and post-election polls are suggesting pro-Europe, mainstream candidate Emmanuel Macron is poised to defeat anti-EU Marine Le Pen in the final vote on May 7th. For analysis of the European political front, which still has the final French vote, a U.K. vote and a German election later this year.

The euro jumped and the British pound declined versus the U.S. dollar, while bond yields were mixed. In economic news, German business sentiment improved to the highest level in almost six years for April.

Stocks in Asia finished mostly to the upside as the markets appear to be relieved by the results from the French Presidential election over the weekend that went according to what the polls had suggested to ease some political uncertainty. Japanese equities gained solid ground following a drop in the yen, while markets in Australia, South Korea and India all gained ground. Stocks in Hong Kong also traded higher, but those traded in mainland China fell sharply on festering concerns about regulatory crackdowns.

Tomorrow, reports slated for release internationally include consumer price inflation data from Japan, consumer sentiment out of South Korea, business sentiment from France, PPI from Spain, and public sector net borrowing from the U.K.

Market Insights 4/21/2017

Stocks off Lows, but Stay Red on Close

U.S. stocks finished lower with financial stocks leading the decline, while an extension of recent losses for crude oil prices also weighed on the energy sector.

Traders were likely exercising some caution ahead of this weekend’s first round of a key French Presidential election. In economic news, existing home sales hit the fastest annual pace in over a decade and business activity reports missed forecasts.

In other developments, President Trump stated that there will likely be an announcement on tax reform next week on Wednesday or shortly thereafter.

Lastly, treasury yields were mixed and the U.S. dollar and gold were higher.

The Markets…

The Dow Jones Industrial Average declined 31 points (0.2%) to 20,548

The S&P 500 Index decreased 7 points (0.3%) to 2,349

The Nasdaq Composite shed 6 points (0.1%) to 5,911

In moderate volume, 931 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil declined $1.09 to $49.62 per barrel and wholesale gasoline was $0.02 lower at $1.65 per gallon

The Bloomberg gold spot price increased $2.92 to $1,284.82 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 99.91

Markets were higher for the week, as the DJIA advanced 0.5%, the S&P 500 Index gained 0.9%, and the Nasdaq Composite rallied 1.8%

Existing home sales hit fastest pace in over a decade, business activity slips

Existing-home sales in March rose 4.4% month-over-month to a 5.71 million annual rate—the fastest pace since February 2007—compared to the Bloomberg forecast of a 5.60 million pace. February’s figure was revised to a 5.47 million annual rate. Sales of single-family homes rose 4.3% m/m and purchases of condominium and co-op units grew 5.0%. The median existing-home price was up 6.8% y/y at $236,400. Housing supply came in at a 3.8-month pace at the current sales rate, and the inventory of homes for sale is down 6.6% y/y. Sales grew in all regions except for the West. Existing home sales are based on contract closings instead of signings and account for the majority of the housing sales market.

National Association of Realtors (NAR) Chief Economist Lawrence Yun said, “The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market.” Yun pointed out that finding available properties to buy continues to be a strenuous task, and sales will go up as long as inventory does.

The preliminary Markit U.S. Manufacturing PMI Index came in at 52.8 for April, below March’s final read of 53.3, and compared to estimates calling for an improved level of 53.8. The preliminary Markit U.S. Services PMI Index for April declined to 52.5 from March’s reading of 52.8, versus forecasts of an improvement to 53.2. Readings above 50 for both reports denote expansion in activity.

Treasuries straddled the unchanged mark, with yield on the 2-year note dipping 1 basis point to 1.18%, the yield on the 10-year note flat at 2.23% and the 30-year bond rate gaining 1 bp to 2.89%.

Europe mixed ahead of French election, Asia diverges amid lingering uncertainty

European equities finished mixed to little changed, with financials extending a recovery as the recent pressure on bond yields continued to show relative signs of lessening, but oil & gas issues fell as crude oil prices added to a weekly slide.

The markets appeared cautious in the face of heightened geopolitical and political uncertainty as France heads for the first round of its key Presidential election this weekend, exacerbated by yesterday’s terrorist attack in the nation. Also, the U.K. approved an election for June this week and German elections are slated for later this year.

In economic news, Eurozone business activity in the manufacturing and services sectors unexpectedly showed expansion accelerated slightly for April, while U.K. retail sales fell more than expected for March. The euro and British pound were lower versus the U.S. dollar.

Stocks in Asia finished mostly to the upside, on the heels of the solid gains in the U.S. yesterday that were fueled by a plethora of earnings reports that tilted to the positive side and comments that caused U.S. tax reform optimism to resurface. Japanese equities gained ground, with the yen holding onto recent weakness and as a report showed that growth in the nation’s manufacturing output accelerated slightly in April. Australian securities advanced and shares trading in South Korea were also higher.

Indian stocks dipped, while mainland Chinese equities finished flat and Hong Kong listings ticked lower with festering concerns about regulatory crackdowns continuing to hamstring sentiment in the world’s second largest economy. Political and geopolitical concerns remained, ahead of this weekend’s key French election and amid recent rhetoric from North Korea.

Stocks show some resiliency coming out of Easter break

U.S. stocks followed a long holiday weekend with a weekly advance despite lingering headwinds off elevated geopolitical and political concerns, as well as a pullback in crude oil prices on U.S. supply concerns that pressured the energy sector. Earnings season heated up and appeared to provide some support as about 71% of the 94 companies that reported results from the S&P 500 Index topped forecasts and 82% bested earnings estimates, per data compiled by Bloomberg.

The Dow lagged the major markets, with gains being limited by disappointing earnings reports from International Business Machines Corp. (IBM $161), Verizon Communications Inc. (VZ $48) and Goldman Sachs Group Inc. (GS $217). The markets got a late-week boost by comments from U.S. Treasury Secretary Mnuchin that appeared to foster resurfaced tax-reform optimism. Treasury yields and the U.S. dollar remained in focus, with both extending recent slides but showing modest signs of life as the week matured to help financials rebound, along with upbeat earnings from Morgan Stanley (MS $42), while exacerbating the pressure on crude oil prices.

Looking to next week, along with ramped-up earnings season, the economic calendar will deliver reads on new home sales, durable goods orders, Consumer Confidence and the University of Michigan Consumer Sentiment Index. However, the headlining report will likely be the first look (of three) at Q1 GDP, projected to show growth slowed from a quarter-over-quarter annualized rate of 2.1% in Q4 to 1.3%. The docket will deliver a good mix of “soft” data (confidence/survey-based) and “hard” data, which have diverged to cause some concern in the markets.

Investors appear to be shying away from risk, resulting in the recent pullback in stocks. We view this as temporary, although patience will be required and sharper downturns could occur within the ongoing bull market as political and geopolitical uncertainty abounds, while the Fed has begun to address the slow draining of its balance sheet. Global earnings have aided stock market gains, but the expectations bar is getting higher to hurdle. The next several weeks should show whether gains will persist or if expectations may have gone too far.

International reports due out next week include: Australia—Consumer Price Inflation (CPI). China—industrial profits. Japan—Bank of Japan monetary policy decision, CPI, retail sales and industrial production. Eurozone—European Central Bank monetary policy decision and CPI, along with German retail sales. U.K.—Q1 GDP and consumer confidence.

Market Insights 4/20/2017

Stocks Rise amid Earnings and Tax Reform Hopes

U.S. stocks gained solid ground amid a plethora of mostly upbeat earnings reports and comments from the Treasury Secretary that tax reform is still a top priority for the Trump administration, which plans to release its proposal soon.

Treasury yields extended a recovery to aid sentiment and financial stocks, while crude oil prices remained sluggish. Gold ticked slightly higher and the U.S. dollar was nearly unchanged.

In economic news, leading indicators topped forecasts, but jobless claims rose more than expected.

The Markets…

The Dow Jones Industrial Average advanced 174 points (0.9%) to 20,579

The S&P 500 Index increased 18 points (0.8%) to 2,356

The Nasdaq Composite increased 54 points (0.9%) to 5,917

In moderate volume, 866 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq

WTI crude oil declined $0.14 to $50.71 per barrel and wholesale gasoline was $0.01 higher at $1.67 per gallon

The Bloomberg gold spot price increased $0.97 to $1,280.00 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 99.82

Jobless claims rise, leading indicators top forecasts

Weekly initial jobless claims rose by 10,000 to 244,000 last week, above the Bloomberg forecast of 240,000, with the prior week’s figure being unrevised at 234,000. The four-week moving average dropped by 4,250 to 243,000, while continuing claims fell by 49,000 to 1,979,000, south of estimates of 2,024,000.

The Conference Board’s Index of Leading Economic Indicators (LEI) for March rose 0.4% month-over-month, above projections of a 0.2% increase. Support came from the components pertaining to the yield curve, ISM new orders, building permits, stock prices, and consumer expectations, while jobless claims and average workweek weighed on the index.

The Philly Fed Manufacturing Index in April declined but remained solidly at a level depicting expansion (a reading above zero) after declining to 22.0 from 32.8 in March, and compared to estimates of a decline to 25.5.

Treasuries were lower, with the yields on the 2-year note and the 30-year bond gaining 2 basis points to 1.19% and 2.89%, respectively, while the yield on the 10-year note increased 3 bps to 2.24%. Bond yields and the U.S. dollar have been under pressure as of late amid heightened geopolitical and political risks, comments about a strong dollar from President Donald Trump, and as “hard” economic data has continued to lag the “soft” data (confidence/survey-based), notably some cooler-than-expected inflation figures.

Tomorrow, the U.S. economic calendar will culminate for the week with releases expected to include the preliminary Markit Manufacturing PMI Index for April, with economists forecasting a slight uptick to 53.8 (a reading above 50 indicates expansion in activity) from the 53.3 registered for March’s final read. The March existing home sales report will round out the day, with expectations of a 2.2% month-over-month (m/m) rise to an annualized rate of 5.6 million units.

Europe gains ground and Asia mostly higher

European equities finished mostly higher, as the markets sifted through mostly positive earnings reports on both sides of the pond. Also, bond yields in the region continued to show some signs of a reprieve in the recent pressure which appeared to underpin sentiment. However, oil & gas issues modestly extended weakness on the recent softness in crude oil prices.

The markets showed some resiliency amid remaining political uncertainty as the U.K. heads for an election in June, while Brexit negotiations have begun, France is expected hold the first round of its key Presidential election this weekend, and a German election later this year looms. In economic news, Eurozone construction output rose solidly in February. The euro and British pound were higher versus the U.S. dollar.

Stocks in Asia finished mostly higher, showing some resiliency in the face of the recent weakness in crude oil prices and festering geopolitical and political uncertainty as a key French election looms and the U.K. approved a surprising snap election for June. The markets digested the mostly upbeat earnings reports in the U.S., while the yen held onto yesterday’s rebound and Japan posted stronger-than-expected trade figures that added to recent upbeat Chinese economic data. Equities trading in Japan and mainland China finished flat, while shares in Hong Kong, South Korea, Australia and India gained ground.

The international economic docket for tomorrow will yield the Nikkei Manufacturing PMI Index and the Tertiary Industry Index from Japan, retail sales from the U.K., industrial orders from Italy and preliminary Markit Manufacturing PMI reads for France, Germany and the Eurozone.

Market Insights 4/13/2017

Stocks Close at Lows Ahead of Holiday Weekend

U.S. stocks finished the last session of the holiday-shortened week lower, despite some relatively upbeat results from JPMorgan and Citigroup to unofficially kick off Q1 earnings season. Losses accelerated after news broke that the U.S. dropped the largest non-nuclear bomb on a tunnel complex in Afghanistan.

Energy issues were among the largest decliners as crude oil prices were a bit volatile before finishing nearly where they started.

Treasuries were mostly flat in an abbreviated session, the U.S. dollar extended losses and gold was higher. In economic news, wholesale inflation was cooler than expected, but consumer sentiment popped above expectations.

The Markets…

The Dow Jones Industrial Average declined 139 points (0.7%) to 20,453

The S&P 500 Index lost 16 points (0.7%) to 2,329

The Nasdaq Composite declined 31 points (0.5%) to 5,805

In moderate volume, 772 million shares were traded on the NYSE and 1.6 billion shares changed hands on the Nasdaq

WTI crude oil added $0.07 to $53.18 per barrel and wholesale gasoline was $0.01 lower at $1.73 per gallon

The Bloomberg gold spot price was $1.02 higher at $1,287.80 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 100.55

Markets were down for the week, as the DJIA was 1.0% lower, the S&P 500 Index declined 1.2%, and the Nasdaq Composite lost 1.3%

Inflation cooler than expected, jobless claims dip, consumer sentiment surprisingly improves

The Producer Price Index (PPI) showed prices at the wholesale level in March dipped 0.1% month-over-month, versus the Bloomberg expectation calling for a flat reading and compared to February’s unrevised 0.3% rise. The core rate, which excludes food and energy, came in flat, versus forecasts of a 0.2% advance and February’s unrevised 0.3% increase. Y/Y, the headline rate was 2.3% higher, below of projections of a 2.4% increase, and the core PPI rose 1.6% last month, south of estimates of a 1.8% gain. In February, producer prices were 2.2% higher and up 1.5% for the headline and core rates, respectively.

Weekly initial jobless claims dipped by 1,000 to 234,000 last week, below forecasts of 245,000, with the prior week’s figure being revised higher by 1,000 to 235,000. The four-week moving average fell by 3,000 to 247,250, while continuing claims declined by 7,000 to 2,028,000, north of estimates of 2,024,000.

The preliminary University of Michigan Consumer Sentiment Index improved this month to 98.0, from the prior month’s 96.9 level and compared to expectations of a dip to 96.5. The current economic conditions component rose solidly m/m, while the outlook portion ticked higher. The 1-year inflation and 5-10 year inflation outlooks remained at 2.5% and 2.4%, respectively.

Treasuries were little changed, with the yields on the 2-year and 10-year notes flat at 1.21% and 2.24%, respectively, while the yield on the 30-year bond ticked 1 basis point higher (bp) to 2.89%. Bond yields have fallen as of late and the U.S. dollar dropped sharply yesterday after President Trump commented that he thought the currency was getting “too strong.”

Please note: All U.S. markets will be closed tomorrow in observance of the Good Friday holiday.

U.S. stocks dipped on the week with geopolitical concerns continuing to fester toward North Korea and Syria, while lingering uncertainty regarding President Trump’s pro-business policies appeared to foster a modest unwinding of the reflationary trade that fueled some of the post-election rally. As such, the fall in Treasury yields pressured financials, while materials, industrials, technology and health care issues were all lower for the holiday-shortened week. Energy stocks edged lower despite the modest extension of the recent surge in crude oil prices. The markets also appeared to be treading lightly as earnings season shoved off against elevated growth expectations.

Much of the pick-up in economic growth, as well as the earnings turn, pre-dated the election and shouldn’t be fully credited to President Trump. Most experts believe the recent mild pullback/consolidation in stocks was driven less by Trump malaise and more by some sentiment froth which needed working off. We are likely to see another leg up for stocks courtesy of continued genuine improvement in the U.S. and global economy; not just on hope for or a bet on Trump and his pro-growth policies.

European stocks see pressure on data and geopolitics, Asia mixed

European equities finished lower, with the markets digesting comments from U.S. President Trump regarding the strong U.S. dollar, China, and interest rates.

Financials saw pressure as the markets sifted through mixed results from major U.S. companies and as Spanish bank Banco Popular SA ($3) continued to fall amid concerns about its need to raise more capital. Oil & gas issues retreated from a recent rally as crude oil prices retreated modestly from a recent surge. Geopolitical concerns remained toward North Korea and following last week’s missile strikes by the U.S. in Syria, while Brexit negotiations continued and a key French Presidential election moved closer.

Action was likely muted by market closures tomorrow and Monday for the Easter celebration. German and French consumer price inflation rose in line with forecasts. The euro dropped and the British pound dipped versus the U.S. dollar, while bond yields in the region were mixed.

The U.K. FTSE 100 Index and Spain’s IBEX 35 Index were down 0.3%, Germany’s DAX Index and Switzerland’s Swiss Market Index declined 0.4%, France’s CAC-40 Index decreased 0.6%, and Italy’s FTSE MIB Index fell 1.2%.

Stocks in Asia finished mixed, with the markets continuing to grapple with heightened geopolitical concerns, as well as digesting some Chinese trade data and comments from U.S. President Trump. Japanese equities fell as the yen rallied and the U.S. dollar fell on the heels of Trump’s comments that he thought the greenback was too strong.

Mainland Chinese stocks ticked higher and shares traded in Hong Kong declined following trade data that showed exports and imports both easily topped forecasts, with the former jumping the most in two years, per Bloomberg. Also, the markets reacted to Trump’s apparent reversal, noting that he will not brand China a currency manipulator.

South Korean stocks advanced, while the Bank of Korea left its benchmark interest rate unchanged. Noticeable weakness in basic materials issues weighed on Australian securities and Indian equities dropped following yesterday’s unexpected decline in industrial production. Indian stocks have wavered somewhat recently after a run to record highs, leading emerging markets’ strong Q1 rally.

Housing and manufacturing data set to headline next week’s calendar

Next week’s economic calendar will bring a glance at the housing market with some key reads in the form of housing starts, building permits and existing home sales. With existing homes available for sale dipping below a four-month supply, a level that has rarely been reached over the past 20 years. Meanwhile, another report that will likely garner some attention will be March retail sales. The outlook for American consumer spending appears to be improving, with consumer confidence strong and wages generally showing signs of trending higher. Plus, Easter usually kicks off the late spring/ early summer shopping season.

Manufacturing data will also make an appearance, with next Friday’s release of the preliminary Markit Manufacturing PMI Index, which will be preceded in the week by a couple of regional manufacturing reports.