Telemus Weekly Market Review

January 15 – January 19, 2018

Last week was another good one on Wall Street; the Dow Jones Industrial Average jumped 1.04%, the Nasdaq Composite also climbed 1.04%, and the S&P 500 added 0.86%. However, the bulls looked somewhat fatigued, at least in comparison to the first two weeks of the year; the S&P 500 rose 2.6% in the first week of 2018 and 1.6% in the second. This week, the S&P 500 posted losses in two of four sessions (markets were closed on Monday for Martin Luther King Jr. Day).

Maybe it’s the beginning of the end for the New Year rally? What is certain is that 2018 has been a great year, so far, for the stock market. The Dow, the Nasdaq, and the S&P 500 have advanced between 5.1% and 6.3% year to date and have notched a handful of new records along the way.

Financials dominated the earnings front this week with Citigroup, Bank of America , Goldman Sachs, U.S. Bancorp, Charles Schwab, Morgan Stanley, and American Express reporting their fourth quarter results. All seven companies beat earnings estimates, but revenues came in mixed; Goldman Sachs, Morgan Stanley, and American Express reported above-consensus revenues, while Bank of America missed estimates. The S&P 500’s financial sector finished roughly in line with the broader market.

Meanwhile, the health care sector was among the top-performing groups this week. Within the space, UnitedHealth rose after reporting better-than-expected earnings for the fourth quarter, and Merck jumped after announcing that its drug Keytruda was successful, in combination with two chemotherapy drugs, as a first line treatment for lung cancer.

The consumer staples and technology sectors finished alongside health care at the top of the sector standings. The tech group’s largest component by market cap, Apple, announced that it will make a one-time tax payment of $38 billion to repatriate cash holdings overseas and will invest over $30 billion in the U.S. over the next five years, creating 20,000 new jobs. Apple said its decision was the result of recent changes to the U.S. tax law. Meanwhile, IBM shares despite reporting year-over-year revenue growth for the first time in 23 quarters.

The industrial sector slid this week with General Electric pacing the retreat. GE shares tumbled, hitting a six-year low, after the industrial giant said its legacy reinsurance business will take a larger-than-expected charge of $6.2 billion for the fourth quarter. In addition, the company was reported to be considering a major breakup.

The energy sector also underperformed as crude oil retreated from a three-year high; West Texas Intermediate crude futures dropped 1.6% to $63.30 per barrel.

In Washington, the House of Representatives passed a one-month spending measure on Thursday evening, but there was some concern that the bill wouldn’t find enough support in the Senate. Investors didn’t appear to be shaken though, pushing the S&P 500 and the Nasdaq to new records on Friday. The federal government partially shut down for the first time since 2013 early Saturday, after the House-passed bill failed to garner enough votes to clear the Senate amid a bruising battle over immigration and spending.

In the credit markets the 10 year U.S. Treasury closed at 2.66% on Friday, its highest yield in over 3 years.

January 22 – January 26 Economic Calendar

  • Monday
  • Chicago Fed National Activity Index
    8:30 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • Charles Evans Speaks
    6:30 PM E
  • Existing Home Sales
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • New Home Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Redbook
    8:55 AM ET

  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • Charles Evans Speaks
    6:30 PM E
  • Existing Home Sales
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • New Home Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • FHFA House Price Index
    9:00 AM ET
  • PMI Composite Flash
    9:45 AM ET
  • Existing Home Sales
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • New Home Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • International Trade in Goods
    8:30 AM ET

  • Jobless Claims
    8:30 AM ET
  • Retail Inventories [Advance]
    8:30 AM ET
  • Wholesale Inventories [Advance]
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • New Home Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Durable Goods Orders
    8:30 AM ET

  • GDP
    8:30 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Existing Home Sales
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • New Home Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This market commentary is a matter of opinion and is for informational purposes only.  It is not intended as investment advice and does not address or account for individual investor circumstances.  Investment decisions should always be made based on the client’s specific financial needs, goals and objectives, time horizon and risk tolerance.  The statements contained herein are based solely upon the opinions of Telemus Capital, LLC.  All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.