Strong start to the week; a weaker end – final tally was a modest move up. #TRADEWARS(tm) dived down this week as earnings took center stage.
Naeem Aslam, chief market analyst at Think Markets U.K., in a note to investors said fears around a potential trade war and geopolitical concerns “have faded very much.”
The yield on 10 year Treasuries rose to about a 4 year high — still low by historical levels but these have been suppressed for ages so any movement up looks gigantic. Here is one opinion… but inflation has been a non starter for years by government measures at least.
“Had bonds yields risen because the underlying economy is accelerating, then, we would see higher stock prices too. But Friday’s weakness in stocks suggests that investors sold Treasurys because they are concerned that wage pressures and protectionist policies of the White House administration would send inflation higher,” said Kristina Hooper, chief global market strategist at Invesco.
For the week the S&P 500 gained 0.4% and the NASDAQ 0.5%.
On the economic front, sales at U.S. retailers rose 0.6% in March to end a streak of three straight declines, the Commerce Department reported Monday. Sales rose a smaller 0.3% last month if autos and gas are stripped out. Auto dealers posted their best month since last September. Sales rose 2%. Internet retailers, pharmacies and stores that sell home furnishings were other big winners.
Across the Pacific, China reported forecast-beating first-quarter economic growth of 6.8% on Tuesday. That growth was lifted by surprisingly strong exports.
Crude oil remained strong for another week.
Here is the 5 day weekly “intraday” chart of the S&P 500 …via Jill Mislinski.
The type of plastic surgery most popular with Americans…
Amazon is even hurting (slightly) the most powerful force on Earth – the Kardashians.
“Opening and operating brick-and-mortar stores in this changing retail environment, without multiple distribution channels, is tricky at best,” said Jeff Green, an independent retail consultant based in Phoenix, Ariz. “In the case of Dash, it was tough to build and maintain a brand whose price points were not accessible to the masses.”
The week ahead…
More huge names on the earnings front.
Will Treasury yields bust north of 3% and create some fun?
Government bond yields climbing and a shrinking gap between short-term and long-term Treasury rates have prompted some consternation on Wall Street, driving equity prices lower as investors fret about what these dynamics mean for U.S. economic growth as it enters its ninth year of expansion.
Fears about a so-called flattening yield curve have taken center stage, with investors fixated on the gap between the 2-year and 10-year Treasuries, which on Tuesday touched the narrowest point—41 percentage points—in more than a decade. The yield curve is often tracked as a measure of sentiment about the economy’s overall health. In a normal environment, the yield curve steepens because investors tend to demand a higher yield for lending further into the future, while a flattening curve is read as a sign that investors are worried about the longer-term outlook. An inverted curve, where shorter-dated yields exceed those for longer-dated debt, a dynamic known as yield-curve inversion, rings alarms because it has faithfully preceded all recessions since 1960.
Short term: Essentially the same spots we were as last week on these 2 charts.
The Russell 2000 is back over its 50 day moving average.
The NYSE McClellan Oscillator was positive this week so a feather in cap for the bulls, but it’s not aggressively above 0.
Long term: Still very positive for the “buy and never sell” crowd.
Charts of interest / Big Movers:
Tuesday, Netflix (NFLX) shot up 9.2% and closed at a record a day after the streaming-media company reported first-quarter results that blew past Wall Street forecasts. The stock is up >60% YTD!
Netflix said it added 7.4 million new subscribers in the first quarter, when it had profit of $290.1 million, or 64 cents a share, on revenue of $3.7 billion. Analysts on average expected 6.6 million new subscribers, with earnings of 63 cents a share on revenue of $3.69 billion. Netflix reported $290.1 million in net income for the first quarter, more profit in three months than the streaming giant had for the entire year of 2016. Its international segment reached 50% of revenue, and 55% of its total memberships.
Twitter (TWTR) jumped 11% Tuesday after Morgan Stanley analysts upgraded the stock to equal-weight from underweight.
Wednesday, IBM (IBM) fell 7.5%, marking its worst one day decline since April 19, 2013, as analysts noted its earnings beat late Tuesday was driven by a one-time tax gain. In addition, IBM Chief Financial Officer James Kavanaugh told analysts on the tech titan’s conference call that they shouldn’t count on a continued boost from new mainframe sales.
Very rare to see this type of stock tumble as it is considered low volatility, but Philip Morris (PM) tumbled 16% Thursday after the company posted weaker-than-expected revenue, along with a stronger-than-anticipated adjusted profit.
Aceto (ACET) dropped 64% Thursday after the developer of health products and pharmaceutical ingredients maker said it was negotiating credit agreement waivers with its lenders, cutting its dividend, taking a large impairment charge and initiating an evaluation of strategic alternatives. But other than that….
Friday, Apple (AAPL) tumbled 4.1% after a pair of analysts issued cautious notes ahead of the company’s second-quarter earnings report, due out in early May.
Have a great week and we’ll see you back here Sunday!