U.S. stocks finished fairly flat with the Nasdaq and S&P 500 paring solid earlier gains.
Treasuries and gold were higher and the U.S. dollar and crude oil prices were mostly flat. In economic developments, an advance read on Q1 GDP topped forecasts and a report on consumer sentiment bested expectations.
The Dow Jones Industrial Average declined 11 points (0.1%) to 24,311
The S&P 500 Index added 3 points (0.1%) to 2,670
The Nasdaq Composite gained 1 point to 7,120
In moderate volume, 729 million shares were traded on the NYSE and 2.0 billion shares changed hands on the Nasdaq
WTI crude oil dipped $0.09 to $68.10 per barrel and wholesale gasoline was $0.01 higher at $2.11 per gallon
The Bloomberg gold spot price increased $6.55 to $1,323.35 per ounce
The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 91.50
Markets were mostly lower for the week, as the DJIA declined 0.6%, the S&P 500 Index was nearly unchanged, and the Nasdaq Composite ticked 0.4% to the downside
First look at Q1 GDP tops forecasts, consumer sentiment revised higher than expected
The first look (of three) at Q1 Gross Domestic Product , the broadest measure of economic output, showed a quarter-over-quarter annualized rate of expansion of 2.3%, after the unrevised 2.9% expansion in Q4, and north of the 2.0% growth forecasted by Bloomberg. Personal consumption gained 1.1%, in line with forecasts and following the unadjusted 4.0% increase recorded in Q4. Additionally, the stronger-than-expected growth came as nonresidential fixed investment, exports, private inventory investment and government spending contributed, more than offsetting an increase in imports, which are a subtraction in the calculation of the figure.
On inflation, the GDP Price Index came in at a 2.0% rise, below expectations of a 2.2% gain and the unrevised 2.3% increase seen in Q4, while the core PCE Index, which excludes food and energy, moved 2.5% higher, matching expectations, and following the unadjusted 1.9% advance in Q4.
Treasuries finished higher, with the yield on the 2-year note flat at 2.48%, while the yield on the 10-year note declined 2 basis points (bps) to 2.96% and the 30-year bond rate decreased 4 bps to 3.13%.
Treasury yields continued to retreat from a recent rally, with the yield on the 10-year note dipping further south of 3.00%, which it hit this week for the first time since early 2014. The run in bond yields has caused some uneasiness and thwarted an attempt last week for the stock market’s move into positive territory for the year. The U.S. dollar extended a grind higher, underpinned by some slightly more dovish tones from the European Central Bank and Bank of England recently, along with a solid start to earnings season and a continued strong economic backdrop.
The final April University of Michigan Consumer Sentiment Index was adjusted higher to 98.8 from the preliminary level of 97.8, versus forecasts of a revised 98.0 reading, but still below March’s near 14-year high of 101.4. upward revision came as a favorable adjustment to the expectations component of the survey overshadowed a downward adjustment to the current conditions portion of the report. Both were down versus March. The 1-year inflation forecast dipped m/m to 2.7% from 2.8% and the 5-10 year outlook remained at March’s 2.5% rate.
Europe and Asia mostly higher
European equities finished mostly higher following yesterday’s solid gain in the U.S. that came as the recent rally in Treasury yields paused. A host of data continued to pour in and geopolitical concerns cooled some more as North and South Korea pledged to end a seven-decade war this year after an historic summit between the two nations.
The mostly positive earnings reports and stronger-than-expected Q1 GDP report in the U.S. aided sentiment, while profit results on this side of the pond were mixed. The euro got a reprieve from yesterday’s decline versus the U.S. dollar that followed the ECB’s monetary policy decision. The British pound finished solidly lower to help lift U.K. markets on the heels of a softer-than-expected Q1 U.K. GDP report. Bond yields were lower. In other economic news, Eurozone economic confidence came in above estimates for April, despite the soft patch of data seen as of late.
Stocks in Asia finished higher, on the heels of yesterday’s gains in the U.S., bolstered by strong earnings results and a solid economic backdrop, while geopolitical concerns cooled with focus on an historic meeting between North and South Korean leaders. Japanese equities rose, with the yen choppy amid some mixed economic data and as the Bank of Japan (BoJ) left its monetary policy stance unchanged as expected. Japan’s retail sales unexpectedly declined in March, while industrial production last month rose more than forecasted. The BoJ pledged to continue to pursue its inflation goal of 2.0%, but omitted a mention of the projected time frame for hitting the target.
Stocks trading in both mainland China and Hong Kong advanced in the wake of some upbeat results from the nation’s banking sector. Australian, Indian and South Korean securities all finished higher.
Stocks dip as catalysts clash
U.S. stocks finished slightly lower on the week, even as earnings season heated up and were mostly positive and the economic calendar delivered more signs that the risk of a recession remains faint. However, the markets continued to be skittish, with tightening financial conditions concerns amid the 10-year Treasury note’s charge to the psychological 3.0% level and the greenback’s newfound upward momentum, replacing geopolitical and trade uneasiness, which eased a bit.
With just over half of the S&P 500 companies having posted quarterly results, about 69% have topped revenue forecasts and approximately 78% have exceeded profit projections.
Facebook Inc. was able to escape the continued scrutiny of a flood of reports from the tech sector, which pressured Google parent Alphabet Inc., and Dow member Boeing Company blew away estimates. But the risk of the high hurdle accompanying the earnings season was evident by the sharp downside reversal in the markets earlier in the week in reaction to of Dow component Caterpillar Inc’s warning that the quarter “will be the high watermark for the year.”
Utilities stocks were the best performers amid some market defensiveness, while tech, financials, materials and industrials led the downside move. Real estate issues moved nicely higher with existing home sales, new home sales and housing prices headlining the economic front, along with Consumer Confidence and Friday’s Q1 GDP report.
The closely-eyed move in bond yields sets the stage for next week’s economic calendar that is chock full of key reports that could keep stoking volatility. Personal income and spending will kick things off, followed by the ISM Manufacturing Index, monthly auto sales, preliminary Q1 non-farm productivity and unit labor costs, the trade balance and the ISM non-Manufacturing Index.
However, the main sources of choppiness will likely be Wednesday’s conclusion of the Fed’s monetary policy meeting, expected to bring no change, and Friday’s April non-farm payroll report, projected to show job growth remains solid and wage growth continues to nudge higher.