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Weekly Market Update for May 25, 2018

The Dow finished down on Friday, falling 58 points to close at 24,753. For the week, the Dow rose 0.2% (S&P 500 +0.3%) and year-to-date is now up 0.1% (S&P 500 +1.8%). The yield on the 10-year Treasury (an important interest-rate indicator) fell four basis points on Friday to 2.93%, down 13 bps for the week.

US economic data were mostly neutral this week. Housing sales, both new and existing, were a little soft while durable goods orders were better and consumer sentiment remains strong.  Next week we will get the second revised Q1 GDP estimate as well as the May jobs report and some manufacturing data.

The price of crude oil fell 5% this week to $68 a barrel – up 12% YTD. US crude stockpiles showed a surprise build – of 5.1m barrels – while product inventories of gasoline rose (+1.9m bls) and diesel fell (-1.0m bls). Oil prices were pressured by reports that OPEC may change directions and increase production at the upcoming June meeting to partially offset reduced output from Venezuela and Iran (recall compliance with the agreement is >100% of the agreed volume cuts). While many Middle East countries, Saudi Arabia included, seasonally increase production during the summer months to meet higher domestic demand, we are skeptical that OPEC is looking to make a change to raise quotas at the June meeting.

Shares of our largest equity position, Nutanix, were volatile this week with their earnings report in focus on Thursday.  While the stock was pressured, results were strong as both revenues and bookings surpassed expectations (key metrics we watch) and guidance for the year was raised.  Near-term profitability was a bit soft given continued expansion of the sales team, but we remain confident in the company’s long-term opportunity.

We are closed on Memorial Day (Monday).  Enjoy your day outdoors!

*The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Clients or prospective clients should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All clients are strongly urged to consult with their tax advisors regarding any potential investment. Past performance does not guarantee future results; there is always a possibility of loss.


Ulland Investment Advisors

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