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Special Update: Quarterly Report – Weekly Update for April 8, 2019

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The Week on Wall Street

Stocks just posted their second straight weekly gain. Investors were encouraged by the latest jobs report and new signs of progress on a U.S.-China trade deal. The Dow Jones Industrial Average advanced 1.17% in five trading days; the S&P 500, 1.27%; the Nasdaq Composite, 1.72%. The MSCI EAFE index of international stocks improved 1.84%.

The economy generated 196,000 net new jobs in March, according to the Department of Labor. Monthly job growth averaged 180,000 in the first quarter. Both President Trump and Chinese Vice Premier Liu He told the media last week that the U.S. and China were getting closer to a new trade accord.

Meanwhile, a week into the second quarter, another earnings season is about to unfold. As we await results, we will take a brief look back at what happened in the first quarter.

Quarterly Update

Stocks staged an impressive comeback in Q1, recovering nearly all of the losses incurred in the last three months of 2018.

Bullish Sentiment Increased

Investors were able to set some of their recent concerns aside, at least temporarily. The Federal Reserve indicated that it would pause interest rate hikes, and while no U.S.-China trade deal was completed during the quarter, the ongoing trade dispute cooled. The economy seemed healthy: the jobless rate was under 4%, hourly pay was rising at more than 3% a year, and inflation was tame.

Add in some upside from corporate earnings, and a recipe for gains emerged.

Stocks Had Their Best Quarter Since 2009

The Dow rose 11.15%; the S&P 500, 13.07%; the Nasdaq Composite, 16.49%. Additionally, this was the best first quarter seen on Wall Street since 1998.

The Fed Held Interest Rates Steady

In March, the Federal Reserve left the benchmark interest rate alone and indicated that it would not make a rate hike this year. As recently as December, the Fed had forecast two hikes for 2019.

What’s Ahead

The first-quarter earnings season kicks off this week with three big banks reporting results. The question is whether stocks in the S&P 500 will post earnings that beat analyst expectations to the degree they have in the past few quarters. Other questions: how will consumer confidence, wage growth, and job creation fare in Q2? Will there be a Brexit or a new U.S.-China trade pact this quarter, and if so, how will global markets react? If you have questions of your own as this quarter unfolds, remember that we are always here to talk.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: Minutes from the March Federal Reserve meeting, plus the latest Consumer Price Index, tracking monthly and yearly inflation.

Friday: The initial University of Michigan consumer sentiment index for April, which assesses consumer confidence.

 

 

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Wednesday: Bed Bath & Beyond (BBBY), Delta Air Lines (DAL)

Thursday: Fastenal (FAST), Rite Aid (RAD)

Friday: JPMorgan Chase (JPM), PNC (PNC), Wells Fargo (WFC)

 

 

 

 

Gains Conclude a Great Quarter – Weekly Update for April 1, 2019

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The Week on Wall Street

Stocks ended last week higher as volatility slowed, completing their best quarter since 2009. A Friday tweet from Treasury Secretary Steven Mnuchin encouraged investors, referring to “constructive” discussions in the ongoing U.S.-China trade negotiations.

The S&P 500 gained 1.27% for the week. The Dow Industrials and Nasdaq Composite both exceeded that advance: the Dow rose 1.60%; the Nasdaq, 1.42%.

Foreign shares went the other way. The MSCI EAFE index following international stocks retreated 0.91%.

2019 Could Be a Big Year for IPOs

One of the ride-share pioneers, Lyft, closed on its initial public offering (IPO) on Friday, and a glance at the IPO calendar shows that as many as 226 companies could soon go public, with Uber and Airbnb possibly among them.

This IPO wave may be a signal of a market top, or it may point to a comeback for risk appetite, which could be healthy for the overall market.

Should some big-name IPOs stumble, it may deter others from moving ahead, which may influence the market psychology. Conversely, an enthusiastic reception may help support further market advances.

Good News for the Housing Market

The Fed’s dovish tone has also influenced home loan rates. Freddie Mac’s latest Primary Mortgage Market Survey shows an average interest rate of just 4.06% on a 30-year, fixed rate mortgage, compared with 4.28% a week earlier and 4.95% in December.

This news is especially significant given the recent pickup in existing home sales. They jumped 11.8% in February, the biggest monthly gain in more than three years.

Tax Tip

The federal income tax filing deadline is Monday, April 15, 2019. However, residents of Maine and Massachusetts have until Wednesday, April 17 to file their 2018 tax return. April 15 is Patriots’ Day, and April 16 is Emancipation Day.

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: February retail sales.

Wednesday: ADP’s snapshot of March private sector hiring.

Friday: The Department of Labor’s March jobs report.

 

 

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: GameStop (GME), Walgreens Boots Alliance (WBA)

Thursday: Constellation Brands (STZ)

 

 

 

Stocks Dip on Growth Concerns – Weekly Update for March 11, 2019

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The Week on Wall Street

As in February, investors spent most of the first full trading week of March hoping for new details in U.S.-China trade negotiations. While they waited, stock benchmarks drifted downward. From Monday’s open to Friday’s close, the S&P 500 lost 2.55%, while the Dow Industrials took a 2.66% fall, and the Nasdaq Composite weakened 3.12%. The MSCI EAFE index tracking developed markets outside the U.S. and Canada fell 1.09%.

Why did stocks lose momentum? In a hint that global economic growth might be slowing, the European Central Bank abruptly reduced its 2019 Gross Domestic Product forecast for the eurozone from 1.7% to 1.1%. A disappointing reading on U.S. hiring also raised questions.

Perplexing Jobs Data

According to the Department of Labor, the economy generated only 20,000 net new jobs in February. This was the smallest monthly gain since September 2017. Nevertheless, the unemployment rate fell to 3.8%, while underemployment declined sharply to 7.3%. (These decreases could reflect furloughed federal employees returning to work.) The average wage rose 3.4% in 12 months, the largest year-over-year increase in a decade.

Harsh winter weather may have impeded hiring last month, and February’s payroll growth could be revised in the Department of Labor’s next report.

Earnings Season Recap

The fourth-quarter reporting season is all but over. FactSet notes that the S&P 500 has seen earnings growth of 13.4% in Q4, marking the fifth straight quarter with a double-digit rise.

Final Thought

Stocks lost ground last week, breaking a long string of weekly advances. The extended rally partly reflected optimism that the U.S.-China trade dispute would soon be resolved, but a deal may or may not happen. The week offered a reminder that Wall Street sees both ups and downs. Day-to-day market fluctuations should not cause you to alter your long-term approach.

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: January retail sales.

Tuesday: The Consumer Price Index, tracking monthly and yearly inflation.

Thursday: January new home sales and February retail sales.

Friday: The University of Michigan’s initial March consumer sentiment index, measuring consumer confidence.

 

 

 

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Dick’s Sporting Goods (DKS)

Wednesday: Smart & Final (SFS)

Thursday: Adobe Systems (ADBE), Broadcom (AVGO), Dollar General (DG)

 

 

 

Dow, S&P, Nasdaq Climb Higher – Weekly Update for February 19, 2019

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The Week on Wall Street

Stocks ended a good week on a high note, as hints of progress in U.S.-China trade talks encouraged investors.

When the closing bell rang Friday, the S&P 500 settled at 2,775.60, after rising 2.50% in five days. The Dow Industrials gained 3.09%, to close Friday at 25,883.25. The Nasdaq Composite improved 2.39% to 7,472.41.

Shutdown Averted

Wall Street breathed a sigh of relief late last week as Congress passed a bill to keep the federal government funded. President Trump signed the measure on Friday.

The development is expected to have a positive effect on consumer sentiment, which may influence the financial markets. During the shutdown, consumer confidence hit an 18-month low.

Retail Sales Unexpectedly Slip

Thursday, the Census Bureau announced that retail sales fell 1.2% in December. This was the largest monthly decline in more than nine years and fell short of expectations. Economists polled by Bloomberg anticipated a small gain.

Was the slow December mostly a reflection of consumer anxieties about the shutdown and the stock market? If so, it is possible that retail spending may see an uptick. (It should be noted that these monthly numbers are often revised later.)

Inflation Holds Steady

The Consumer Price Index (CPI), the most widely followed measure of inflation, was flat in January for a third consecutive month. Year-over-year, overall inflation is running at just 1.6%.

The CPI is one of the key factors the Fed considers when assessing the economy and determining what lies ahead for interest rates.

What’s Ahead

U.S. and Chinese negotiators face a March 1 deadline to reach a deal to extend the current tariff truce. In March, tariffs on many Chinese imports could rise to 25% from 10%. President Trump said Friday that he is open to postponing the March deadline if it appears an agreement may be near.

THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: Presidents’ Day holiday (U.S. financial markets closed).

Wednesday: Minutes of the January Federal Reserve policy meeting are released.

Thursday: January existing home sales.

Friday: Federal Reserve Vice Chairman Richard Clarida speaks in New York.

Source: Econoday / MarketWatch Calendar, February 15, 2019

The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Devon Energy (DVN), Walmart (WMT)

Wednesday: Analog Devices (ADI), CVS Health (CVS)

Thursday: Dominos (DPZ), Fluor (FLR), Intuit (INTU), Kraft Heinz (KHZ)

Source: Morningstar.com, February 15, 2019

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

 

Stocks Post Small Weekly Gains – Weekly Update for February 11, 2019

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The Week on Wall Street

Major U.S. stock benchmarks eked out slight gains last week, with corporate profit reports and news about U.S.-China trade negotiations vying for investor attention over five trading sessions.

The big three ended the week little changed from where they settled the previous Friday. The Dow Jones Industrials rose 0.17% percent, while the S&P 500 Index gained 0.05% percent. The NASDAQ Composite ended the week up 0.47%. Looking at international stocks, the MSCI EAFE index retreated 0.47%.

Earnings Scorecard

As of last Friday, 66% of all S&P 500 companies had reported fourth-quarter earnings. So far, 71% of these firms have announced earnings exceeding estimates, and 62% have seen revenues top projections.

Halfway through earnings season, 2019 future guidance has been a mixed bag for S&P 500 companies. For Wall Street, future earnings can be just as important as current earnings. We keep a close eye on both.  

Tariff Tensions

March 1 is the 90-day deadline set by President Trump for a trade deal with China. If no agreement is reached, the U.S. may consider a new round of tariffs. On Thursday, news that President Trump and Chinese President Xi may not meet before the March 1 deadline added to the market volatility.

The decision by the U.S. on new tariffs may hinge on how much progress has been made toward a new agreement. We don’t expect that to become clear until the deadline nears.

State of the Service Sector

Many indicators help economists take the pulse of the overall economy. The Institute for Supply Management keeps a critical, but not widely followed, index, which helps gauge the health of the service sector.

The January reading on this index came in at 56.7. Any reading above 50 shows that the service industry is seeing solid growth.

Final Thought

Over the next several weeks, we’re expecting more volatility as the markets digest economic news, a new wave of corporate earnings, and twists and turns on the geopolitical front. We will be watching to see if anything changes our short-term and long-term view. If you have any questions, don’t hesitate to contact us.

THE WEEK AHEAD: KEY ECONOMIC DATA

Wednesday: January’s Consumer Price Index, which measures monthly and yearly inflation.
Thursday: December retail sales figures (a delayed release due to the government shutdown).
Friday: January’s preliminary University of Michigan consumer sentiment index, a gauge of consumer confidence levels.

Source: Econoday / MarketWatch Calendar, February 8, 2019
The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Monday: Loews Corp (L)
Tuesday: Activision Blizzard (ATVI), HubSpot (HUBS), Occidental Petroleum (OXY)
Wednesday: Cisco (CSCO), Hilton Worldwide Holdings (HLT), Yelp (YELP)
Thursday: Applied Materials (AMAT), CBS (CBS), Coca-Cola (KO)
Friday: Deere & Co. (DE), PepsiCo (PEP)

Source: Morningstar.com, February 8, 2019
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

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