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Weekly Economic Update - 4.16.18

CONSUMER SENTIMENT INDEX DESCENDS SLIGHTLY

In its initial April edition, the University of Michigan’s survey of household sentiment saw its index decline to 97.8 from its final March reading of 101.4. The survey’s chief economist, Richard Curtin, believed that “uncertainty surrounding the evolving [U.S.] trade policy” affected the reading, but he added that “confidence still remains relatively high.”1

  

A SURPRISE RETREAT FOR THE HEADLINE CPI

Economists polled by Briefing.com assumed the Consumer Price Index would rise 0.1% in March. Instead, it fell by that amount, largely due to a dip in gasoline costs. Core consumer inflation increased 0.2% and matched their expectations. Looking at the big picture, the Department of Labor said that consumer prices were up 2.4% year-over-year through March.2,3

    

OIL SOARS AS POSSIBILITY OF SYRIA STRIKE LOOMS

Light sweet crude rose 8.6% in five days on the NYMEX, breaking a 2-week losing streak and settling at $67.39 Friday. That was oil’s best close since December 2014.4

   

StOCKS CLIMB AS EARNINGS SEASON BEGINS

Less anxiety about tariffs and renewed optimism about tech and financial shares led the market higher last week. The S&P 500 gained 1.99% in five days to settle at 2,656.30 Friday. The Dow Industrials rose 1.79% to a Friday close of 24,360.14, and the Nasdaq Composite added 2.77%, wrapping up Friday’s trading day at 7,106.65. Wall Street’s “fear index,” the CBOE VIX, declined 18.99% for the week.5

     

THIS WEEK: On Monday, Bank of America, Celanese, and Netflix present Q1 results, and March retail sales numbers also arrive. Tuesday, earnings from Comerica, CSX, Goldman Sachs, IBM, Johnson & Johnson, Northern Trust, and UnitedHealth appear, plus data on March construction activity. Wednesday’s earnings roll call includes Abbott Labs, Alcoa, American Express, Fred’s, Morgan Stanley, U.S. Bancorp, and United Rentals; investors will also consider a new Federal Reserve Beige Book.  BoNY Mellon, BB&T, Blackstone Group, E*TRADE, GATX, KeyCorp, Novartis AG, Nucor, Pentair, Philip Morris, Quest Diagnostics, Snap-On, Sonoco Products, and W.W. Grainger report earnings on Thursday, when new initial jobless claims numbers are also released. GE, Honeywell International, Procter & Gamble, Regions Financial, Schlumberger, State Street, SunTrust Banks, and Waste Management announce earnings Friday.

  

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

-1.45

+19.10

+12.78

+9.80

NASDAQ

+2.94

+22.42

+23.14

+21.23

S&P 500

-0.65

+14.06

+13.44

+10.00

REAL YIELD

4/13 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.69%

0.32%

-0.68%

1.23%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 4/13/185,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - sca.isr.umich.edu/ [4/13/18]

2 - briefing.com/investor/calendars/economic/2018/04/09-13 [4/13/18]

3 - foxbusiness.com/markets/us-consumer-prices-post-first-drop-in-10-months-on-weak-gasoline [4/11/18]

4 - marketwatch.com/story/oil-prices-post-first-weekly-gain-in-three-weeks-2018-04-13 [4/13/18]  

5 - markets.wsj.com/us [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F13%2F17&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F13%2F17&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F13%2F17&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F12%2F13&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F12%2F13&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F12%2F13&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F14%2F08&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F14%2F08&x=0&y=0 [4/13/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F14%2F08&x=0&y=0 [4/13/18]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/13/18]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/13/18]  

Weekly Economic Update - 4.9.18

HIRING WEAKENED IN MARCH

Payrolls expanded by only 103,000 net new jobs last month, according to the latest employment report from the Department of Labor. Some economists wondered if harsh weather distorted the number (job growth was also poor in March 2015 and March 2017). The main jobless rate stayed at 4.1%; the broader U-6 rate, counting the underemployed, fell 0.2% to 8.0%, an 11-year low. Yearly wage growth was at 2.7%. Lastly, February’s huge net job gain was revised up by 13,000 to 326,000.1

    

TRADE TENSIONS PERSIST

Thursday night, the Trump administration announced the possibility of $100 billion of additional tariffs on Chinese imports. In response, the Chinese government issued a statement saying it would “fight back firmly.” Earlier on Thursday, China had presented a list of U.S. goods that could face up to $50 billion in future excise taxes in that nation. Secretary of the Treasury Steven Mnuchin told the media Friday afternoon that U.S. and Chinese officials are both pursuing a resolution to the tariffs battle, stating: “We’re absolutely willing to negotiate.”2

    

ISM INDICES: ANOTHER IMPRESSIVE MONTH

The Institute for Supply Management’s two closely watched purchasing manager indices were lower in March, but their readings still indicated burgeoning U.S. service and factory sectors. ISM’s service sector PMI declined 0.7 points to a mark of 58.8, while its manufacturing industry PMI settled 1.5 points lower at 59.3.3

   

APRIL BEGINS WITH VOLATILITY

After five days of rollercoastering, the major stock indices ended the week notably lower, as investor worries about tariffs and tech giants continued. Across five trading sessions, the S&P 500 fell 1.38% to 2,604.47; the Nasdaq Composite, 2.10% to 6,915.11; the Dow Jones Industrial Average, 0.71% to 23,932.76. Oil prices fell 4.6% for the week over concerns about U.S.-China trade and a boost in the number of rigs in operation.4,5

     

THIS WEEK: Nothing major is slated for Monday. The March Producer Price Index appears on Tuesday. Minutes from the last Federal Reserve policy meeting arrive Wednesday, along with the March Consumer Price Index and quarterly results from Bed Bath & Beyond and Fastenal. On Thursday, BlackRock and Rite Aid present earnings, and investors also consider the latest initial claims figures. Earnings season is in full swing Friday with announcements from Citigroup, Infosys, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo; complementing all that, the University of Michigan releases its preliminary April consumer sentiment index.

 

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

-3.18

+15.82

+12.86

+8.98

NASDAQ

+0.17

+17.62

+23.17

+19.24

S&P 500

-2.59

+10.48

+13.54

+8.98

REAL YIELD

4/6 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.70%

0.39%

-0.74%

1.23%

 

 


Sources: wsj.com, bigcharts.com, treasury.gov - 4/6/184,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - cnbc.com/2018/04/06/nonfarm-payrolls-march-2018.html [4/6/18]

2 - usnews.com/news/business/articles/2018-04-06/the-latest-china-says-it-will-fight-us-tariffs-at-any-cost [4/6/18]

3 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=31046&SSO=1 [4/4/18]

4 - markets.wsj.com/us [4/6/18]

5 - marketwatch.com/story/oil-futures-end-23-lower-amid-trade-worries-rising-rig-count-2018-04-06/ [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F6%2F17&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F6%2F17&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F6%2F17&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F5%2F13&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F5%2F13&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F5%2F13&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=4%2F7%2F08&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=4%2F7%2F08&x=0&y=0 [4/6/18]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=4%2F7%2F08&x=0&y=0 [4/6/18]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [4/6/18]

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [4/6/18]  

Raymond Lussier is an investment adviser representative of, and securities and advisory services are offered through, USA Financial Securities Corp., Member FINRA/SIPC. www.finra.org A Registered Investment Adviser located at 6020 E. Fulton St., Ada, MI 49301. Financial Advisors Network is not affiliated with USA Financial Securities.

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