The second week in a row of low volatility which is usually advantage bulls. Monday saw a nice spike up for indexes and then the other four days of the week the range was very narrow. Monday’s rally was due to the lessening chance of TRADE WARS!!(tm):
Treasury Secretary Steven Mnuchin said over the weekend that the Trump administration would delay implementation of tariffs on Chinese goods and “put the trade war on hold” while working out details of a deal between the countries. At the end of trade negotiations that weekend, China agreed to buy larger amounts of U.S. goods to help narrow the trade deficit between the two economies, but didn’t agree to the specific U.S. target of $200 billion.
News was generally quiet but we did get the Fed minutes late Wednesday which were considered market positive.
Federal Reserve officials in their meeting in early May confirmed they planned to raise interest rates in June and were not concerned they were behind the curve on inflation.
“Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the FOMC to take another step in removing policy accommodation,” the minutes said
Although inflation hit the Fed’s 2% target in the latest reading for March, for the first time in a year, officials were not convinced it would remain there for long.
“It was noted that it was premature to conclude that inflation would remain at levels around 2%, especially after several years in which inflation had persistently run below the Fed’s 2% objective,” the minutes said. Only a “few” officials thought inflation might move “slightly” above the 2% target.
For the week the S&P 500 closed up 0.3% while the NASDAQ added 1.1%.
Outside of some housing reports, economic news was sparse.
Treasury yields dropped back down the 2.9% range this past week after popping to 3.1% the week before.
The dollar chart continues to strengthen.
After FIVE+ weeks of great action in the oil chart we finally saw some stumble Thursday, and then a sharp reversal Friday as there were reports that OPEC and Russia may increase production.
Here is the 5 day weekly “intraday” chart of the S&P 500 …via Jill Mislinski.
Apparently there are 101 people with over $1M in student loans….
Due to escalating tuition and easy credit, the U.S. has 101 people who owe at least $1 million in federal student loans, according to the Education Department. Five years ago, 14 people owed that much. While the typical student borrower owes $17,000, the number of those who owe at least $100,000 has risen to around 2.5 million, nearly 6% of the borrowing pool, Education Department data show.
Warren Buffet’s empire in one infographic (click to enlarge)
The week ahead…
Markets will be closed Monday in observance of Memorial Day. Friday brings ISM manufacturing and the May employment report with 190K jobs expected to have been created.
Short term: The S&P 500 is consolidating while the NASDAQ tipped its head over this trend line connecting highs of the year.
The Russell 2000 held its breakout.
The NYSE McClellan Oscillator remains in a positive spot.
Long term: Still very positive for the “buy and never sell” crowd.
Charts of interest / Big Movers:
Tuesday, home builder Toll Brothers (TOL) slumped 9.6% after the building company posted a 10% fall in second-quarter profit on higher impairment charges, and said gross margin fell.
Micron Technology (MU) rallied 6.4% Tuesday after the company raised its third-quarter outlook and announced a large stock-buyback program.
It was a good week for “luxury” as Tiffany & Co (TIF) jumped 23% Wednesday after it reported first-quarter results that came in above expectations . Meanwhile Ralph Lauren (RL) rallied 14% after it posted fourth-quarter earnings and revenue that topped analyst forecasts.
Friday, Foot Locker (FL) soared nearly 20.2% after profit and sales for the sportswear maker beat forecasts.
Zoes Kitchen (ZOES) plunged 40% after the restaurant chain posted a bigger-than-expected first-quarter loss.
Have a great week and we’ll see you back here Sunday!