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Weekly Market Update for April 18, 2019

by JM Hanley

The Dow was up on Thursday, rising 107 points to close at 26,560. For the week, the Dow was up 0.6% (SP500 flat) and year-to-date is now up 13.9% (SP500 +15.9%). The yield on the 10-year Treasury (an important interest-rate indicator) was unchanged, closing at 2.56%.

The indexes have grown indifferent to the headlines that had previously powered them upward; namely, constructive trade talks, a recovery in Chinese growth, and a newly accommodative line from the European Central Bank.  The dramatic year-to-date rise in equity prices this late in an economic expansion has understandably made investors cautious, with a significant amount of cash still idle. But they have been moving invested money around. The improving outlook for global growth actually hurt relatively recession-proof industries like utility companies this week. Funds were rotated to sectors that would benefit more, like banks and computer chip companies.

The price of crude oil was flat this week at $64 a barrel – up 41% YTD. US crude stockpiles showed a surprise draw – of 1.4m barrels – while product inventories of gasoline (-1.1m bls) and diesel (-0.4m bls) both fell as well. Oil received a boost on Tuesday when the EIA revised down their April production forecast and weekly industry data was likewise bullish. But oil reversed its gains on Wednesday when the official weekly stockpile report was more muted than the preliminary industry-released number suggested.

Firms continued to report first-quarter earnings this week – most notably, the big banks. Bank of America and Citigroup did well, Goldman Sachs less so. The banks have had great success at containing overhead costs, but business seems just okay.  Because of the big banks’ scale and involvement in all areas of the economy, their earnings can provide insight into global economic health.

United Health reported strong earnings, but nonetheless declined sharply along with other health insurers. Investors have grown concerned by the healthcare proposals advanced by a few presidential candidates, some of which would do away with private health insurance. The likelihood of such proposals finding broad support and being passed into law seems implausible in the extreme. But less specialized investors, who have long viewed insurance as a safe-haven for returns, are spooked.

Next week will be busy. Earnings from Facebook, 3M, Granite Construction, Visa, Amazon, and Euronet Worldwide are all on the docket.

*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.

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