Weekly Market Update – May 20, 2016
The Dow finished 66 points higher on Friday as the market adjusts to the heightened expectations of a June Federal Reserve interest rate hike. For the week the Dow was down 0.20% and year-to-date the index is up 0.44%.
April’s headline CPI recorded the largest increase in three years and was up 0.4% from the previous month, ahead of expectations of a 0.3% gain and was led by 8% increase in gasoline prices. Core CPI, which excludes food and energy, was up 0.2% and was in line with consensus. Industrial production rose 0.7% in April, well ahead of consensus. Jobless claims came in line with expectations at 278,000. However, May’s Philadelphia Fed manufacturing index declined 1.8 compared to consensus of 4.0 increase, with new orders decreasing for the second consecutive month.
The release of the minutes from the Federal Open Market Committee’s April 26-27 meeting was the focus of this week. The meeting noted a continued strong labor market, an increased risk sentiment, and a decline in financial market volatility. Positive rate hike comments were delivered by the regional Fed bank presidents on Tuesday and during the “Fedspeak” on Thursday. The Fed will review new economic data before making a rate decision at its June meeting. For the week, the U.S. 10 Year Treasury yield increased 0.16% and the US Preferred stock index PFF was down 0.15%.
Crude oil rallied by 3.2% for the week to $47.67 per barrel as the Canadian wildfire outages and disruptions in Nigeria and Libya chipped away an oversupply. The U.S. oil rig count remained flat at 318 after 8 weeks of consecutive declines. A stronger dollar will put downward pressure on oil prices by making the dollar-denominated commodity more expensive for investors of other currencies.
Next week’s economic calendar highlights include New Home Sales (May 24th), Crude Inventories (May 25th), Initial Jobless Claims and Pending Home Sales (May 26th), and Q1 GDP Estimate (May 27th). We expect continued discussion of a Fed interest rate increase which will insure another volatile week.
Have a great weekend,
Yansong Pang (庞岩松)
Weekly Market Update – July 17, 2015
Stocks finished the day mixed Friday despite a record day from Google. The Dow fell 34 points while the NASDAQ, buoyed by Google’s strength, surged nearly 1%, closing at a record high. For the week the Dow was up 1.8% and for the year the index is now up 1.5%.
Google rose more than 16% Friday on better-than-expected second-quarter earnings, boosting its market cap by over $65 billion, the largest single-day gain ever. Led by Google, the technology sector posted its best week since 2011. Overseas, Greek debt negotiations continued Friday as the European Council approved a short-term $7.7 billion loan to Greece while the European Central Bank announced it would increase its emergency liquidity to Greek banks, which are set to reopen Monday after being closed for the past three weeks.
The yield on the 10-year Treasury held steady at 2.35%, down 7 bps for the week and now up 18 bps for the year. Earlier in the week Fed Chairwoman Janet Yellen reiterated that interest rates would likely begin to rise later in the year, but at a slow and measured pace.
Oil fell 12 cents to $50.79 Friday, down 3.9% for the week. A stronger dollar, oversupply concerns and the fear that Iran will flood the market with additional oil on the heels of its nuclear deal contributed to the price decline.
Next week’s economic calendar highlights include June housing data on Wednesday and Friday and weekly jobless claims on Thursday. Expect the housing data to show an increase in activity from May and weekly jobless claims to again fall in the 280-290,000 range (from 281,000 this week). Second quarter corporate earnings will continue as well. To date, earnings have been better-than-expected, helping to drive markets this week.
Weekly Market Update – October 17, 2014
Positive quarterly earnings reports and economic data drove markets higher Friday, the Dow gaining 263 points to finish the week down 1.0%. For the year the index is now down 1.2%.
GE, Honeywell and Morgan Stanley all reported better-than-expected Q3 results, helping to ease concerns about the effect of weakening global demand on US companies. To date, 81 S&P 500 companies have reported third-quarter results with approximately 2/3s beating expectations. Data-wise, consumer confidence rose in October to the highest level in more than 7 years while September housing data showed an increase in activity from the prior month. Even with the rally Friday, the Dow experienced its fourth straight weekly decline, the longest such stretch in over 3 years. In Europe, stocks surged, posting one-day gains not seen in over two years.
The yield on the 10-year Treasury rose 5 bps to 2.20% Friday, down 11 bps for the week and now 83 points lower than on January 1. Oil closed at $82.75 per barrel, down 3.6% for the week but up after falling below $80 Thursday, its lowest level in nearly 4 years.
Next week’s economic calendar highlights include September existing home sales on Tuesday, inflation data on Wednesday, weekly jobless claims on Thursday and September new home sales on Friday. Expect the housing data to show a slight increase in activity from August, inflation to remain in check and weekly jobless claims to fall in the 290,000 – 300,000 range (from 264,000 this week). Q3 earnings reports will continue next week as well.
Weekly Market Update – July 11, 2014
Markets rose Friday on the strength of Amazon and eBay despite continued European financial concerns. For the week the Dow was down .7% and for year the index is now up 2.2%.
Optimism in the growth potential of Amazon and eBay pushed the two blue chips 5.6% and 2.3% higher, respectively, helping to invigorate the broader market in the process. The ‘rally’ on Friday helped pare losses in what was the S&P’s worst week since April. Contributing to the downturn this week were worries over the strength of the economic recovery in Europe as news of financial stress in Portuguese banks again injected nervousness into markets. Banco Espirito Santo, the Portuguese bank at the center of the mini-crisis that reportedly missed debt payments, insisted it is financially sound and has enough capital to meet its financial obligations. Despite the assurances, the bank’s stock fell another 5.5% Friday after a 17% tumble on Thursday.
In the US, the first bank to post second-quarter earnings, Wells Fargo, reported profit in-line with estimates. Citigroup, JPMorgan Chase and Goldman Sachs will report next week. Overall, S&P 500 companies’ profits are expected to show growth of 4.5% in the second quarter.
Interest rates fell slightly Friday with the yield on the 10-year Treasury falling 1 bps to 2.52%, down 13 bps for the week and now down 51 bps for the year. Through Thursday, July 10, our trust preferred portfolios are up over 8%, on average, versus 3.79% for the Barclays Aggregate Bond Index.
Next week’s economic calendar highlights include June retail sales on Tuesday, inflation data on Wednesday, weekly jobless claims and June housing data on Thursday and a consumer confidence reading on Friday. Expect retail sales to show a slight improvement from May, inflation to remain a non-issue, weekly jobless claims to fall in the 310,000 – 320,000 range (from 304,000 this week), housing data to show improvement from May and consumer confidence to hold steady. Second quarter corporate earnings continue next week as well.