Market Insights 4/15/2019

U.S. equities finished the first trading session of the week with modest losses, led by the financial sector after Dow member Goldman Sachs and Citigroup offered mixed quarterly results.

Treasury yields were lower and the U.S. dollar was little changed, while crude oil prices and gold lost ground.

The Markets…

The Dow Jones Industrial Average fell 28 points (0.1%) to 26,385

The S&P 500 Index was down 2 points (0.1%) to 2,906

The Nasdaq Composite declined 8 points (0.1%) to 7,976

In moderate volume, 755 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq

WTI crude oil lost $0.49 to $63.40 per barrel and wholesale gasoline was $0.03 lower at $2.01 per gallon

The Bloomberg gold spot price decreased $2.29 to $1,288.14 per ounce

The Dollar Index—a comparison of the U.S. dollar to six major world currencies—was unchanged at 96.95

Regional manufacturing accelerates more than expected to start the week

The Empire Manufacturing Index showed output from the New York region moved further north of the level denoting expansion (a reading above zero) than expected for April. The index rose to 10.1 from March’s unrevised 3.7 level, with the Bloomberg forecast calling for an increase to 8.0.

Treasuries were modestly higher, as the yields on the 2-year and the 10-year notes, along with the 30-year bond, dipped 1 basis point (bp) to 2.39%, 2.55% and 2.97%, respectively.

This 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 heat up and the economic calendar will take center stage.

U.S. stocks continue to trend higher, indicating investor optimism about economic growth, while a flat/inverted yield curve has tended to herald a weakening economy—the truth may be somewhere in between. Mixed economic data continues into the second quarter, and earnings season has just begun. A negative quarter for S&P 500 earnings is expected, but it’s not only whether the bar has been set too low that will be important—but what the tone of the forward looking commentary suggests about the broader economic outlook.

Europe mostly higher as earnings focus continues, Asia mixed

European equities finished mostly higher, as sentiment seemed to continue to find support from U.S.-China trade optimism, as well as late-Friday’s stronger-than-anticipated Chinese trade and lending data. News was light, but investors keyed in on comments over the weekend from European Central Bank President Mario Draghi, who continued to express a cautiously optimistic tone and noted concerns about the independence of the Fed. The euro and British pound gained ground versus the U.S. dollar and bond yields in the region were higher.

Stocks in Asia finished mixed with an upbeat start to earnings season in the U.S., continued optimism of a U.S.-China trade deal and Friday’s stronger-than-expected China trade and lending data aiding sentiment.

Japanese equities gained ground, even as the yen showed some late-day strength and South Korean securities moved to the upside. Stocks in India also advanced, with the markets digesting some mixed earnings results, along with the continued national election process and Friday’s data that showed consumer price inflation was a bit hotter than expected for March and industrial production grew at a much smaller rate than anticipated for February. Lastly, some disappointing earnings reports appeared to hamstring Chinese equity markets, as stocks on both the mainland and in Hong Kong both declined.