Market Insights 5/17/2019

U.S. equities finished lower in a volatile session, as investors weighed the continued uncertainty surrounding U.S.-China trade tensions, as well as some earnings results and upbeat economic data.

The Leading Index improved and consumer sentiment jumped to a 15-year high.

Treasury yields were mixed after overcoming early declines and crude oil prices were lower, while the U.S. dollar saw a modest gain and gold fell.

The Markets…

The Dow Jones Industrial Average decreased 99 points (0.4%) to 25,764

The S&P 500 Index was down 17 points (0.6%) to 2,860

The Nasdaq Composite dropped 82 points (1.0%) to 7,816

In moderate volume, 867 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq

WTI crude oil inched $0.11 lower to $62.76 per barrel and wholesale gasoline was down $0.01 at $2.05 per gallon

The Bloomberg gold spot price decreased $8.58 to $1,278.14 per ounce

The Dollar Index— a comparison of the U.S. dollar to six major world currencies—was up 0.1% at 97.99

Markets were lower for the week, as the DJIA fell 0.7%, the S&P 500 Index lost 0.8%, and the Nasdaq Composite declined 1.3%

Leading Indicators rise and consumer sentiment jumps to 15-year high

The Conference Board’s Index of Leading Economic Indicators (LEI) for April rose 0.2% month-over-month, matching the Bloomberg projection and compared to March’s revised 0.3% gain. None of the ten components of the index declined, with jobless claims, stock prices, credit and consumer expectations the major positive contributors.

The May preliminary University of Michigan Consumer Sentiment Index rose to 102.4 from April’s read of 97.2, where it was expected to remain. This was the highest level since 2004 as the consumer expectations portion of the survey jumped, while the current economic conditions component ticked higher. The 1-year inflation forecast rose to 2.8% from 2.5%, and the 5-10 year inflation forecast increased to 2.6% from the previous 2.3% rate.

Treasuries finished mixed after giving up an early advance, as the yield on the 2-year note was up 1 basis point at 2.20%, while the yield on the 10-year note ticked 1 bp lower to 2.39%, and the 30-year bond rate dipped 2 bps to 2.82%.

Europe broadly lower, Asia mixed after a recovery as trade concerns remain

European equities finished broadly lower following a recovery in the past couple sessions, as U.S.-China trade concerns lingered ahead of the weekend, while Brexit uncertainty festered as talks continue to fail to deliver any new progress. The euro and the British pound came under some pressure versus the U.S. dollar, while bond yields in the region were mostly lower.

Stocks in Asia finished mixed to close out a choppy week that saw the U.S. markets post a three-day rebound to erase Monday’s selloff as economic and earnings data pleased and trade concerns cooled a bit. U.S.-China trade uncertainty festered, exacerbated by U.S. President Donald Trump signing an executive order giving the Commerce Department authority to ban telecommunications network gear and services from foreign adversaries, which weighed on the Chinese markets with those traded on the mainland and Hong Kong solidly lower.

Stocks in Japan rose, with the yen holding onto yesterday’s decline during the session. Shares in South Korea declined, but markets in Australia moved to the upside with most sectors gaining ground to overshadow a decline in the financial sector.

Stocks dip in a choppy week amid data and escalated trade tensions

U.S. stocks led a global market selloff to begin the week as the U.S.-China trade dispute escalated. Global growth concerns also flared-up, with China and the U.S. both posting softer-than-expected retail sales and industrial production reports. However, the U.S. markets rebounded with a string of gains to trim Monday’s tumble as the U.S. eased trade concerns toward Japan and Europe by delaying imposing tariffs on auto imports, while the aforementioned disappointing dose of global economic data was countered by stronger-than-expected reads on U.S. jobless claims, regional manufacturing activity, small business optimism, homebuilder sentiment and housing construction activity, which preceded Friday’s positive Leading Indicators and consumer sentiment reports.

Q1 earnings season is pretty much in the books, Dow components Walmart Inc. and Cisco Systems Inc. delivered upbeat quarterly results to solidify a better-than-feared quarter. Treasury yields extending a recent slide and the U.S. Dollar Index snapped a two-week losing streak, while crude oil prices gained ground as heightened geopolitical concerns overshadowed another larger-than-expected rise in oil inventories. As such, financials were the worst performers and real estate issues posted a solid advance.

Results from the retail sector will continue to put the finishing touches on earnings season next week, while the economic calendar will remain focused on the housing market, courtesy of the releases of existing and new home sales. The Fed will also garner attention as the Fed will release the minutes from its most recent monetary policy meeting, and Chairman Jerome Powell is scheduled to speak Monday night.