Telemus Weekly Market Review

April 16 – April 20

The U.S. stock market notched its second consecutive weekly advance last week, but big losses on Thursday and Friday left a sour taste in investors’ mouths going into the weekend. The S&P 500 added 0.52% for the week, while the Dow Jones Industrial Average and the Nasdaq Composite climbed 0.42% and 0.56%, respectively.

Wall Street kicked off the week on a positive note, breathing a sigh of relief after a U.S. led strike on Syria over the weekend turned out to be less dramatic than many had feared. Russian President Vladimir Putin condemned the attack, saying additional strikes could invite chaos in global affairs, but made no mention of a military response to this particular incident leading investors to believe that the dust has settled for now.

The bullish bias carried over into Tuesday’s session, as investors turned their attention to the earnings front. Netflix soared nearly 10% on Tuesday, hitting a new all-time high, after crushing subscriber growth estimates for the first quarter and issuing upbeat guidance for Q2. Goldman Sachs had a blow-out first quarter, easily beating both earnings and revenue estimates, but its shares struggled to advance on Tuesday, putting the investment bank on a long list of financial names that have failed to rally on upbeat results.

Stocks moved higher once again on Wednesday, but only modestly so, as IBM weighed on investor sentiment. Shares of the tech giant tumbled 7.5% in the midweek session after the company’s above-consensus first quarter profits and revenues were overshadowed by its disappointing gross margin rate, the quality of its revenue, and its relatively conservative profit guidance for fiscal year 2018. Meanwhile, energy shares outperformed as crude oil futures returned to their highest level in more than three years.

On Thursday, the market registered its first loss of the week, with consumer staples shares pacing the retreat. Shares of tobacco giant Philip Morris plunged 15.6% after the company reported a decline in cigarette shipment volume for the first quarter and slower-than-expected growth for its IQOS product which heats tobacco instead of burning it. Meanwhile, Apple supplier Taiwan Semi led a broad tech retreat after its first quarter earnings and revenues came in below estimates; the chipmaker also lowered its guidance for Q2.

Wall Street ended the week with another disappointing performance on Friday. The technology sector showed relative weakness once again, with its top component by market cap Apple sliding 4.1% after several analysts raised concerns about the prospect of iPhone sales being weaker than expected. Financials provided some relief though. Financial giant Wells Fargo was particularly strong, adding 2.0%, after agreeing to pay $1 billion to settle loan abuse allegations.

In the end, seven S&P sectors finished with weekly gains, while four finished with weekly losses. The energy group was the top-performing group, as WTI crude futures advanced 1.5% over five sessions, closing Friday at $68.38 per barrel. Conversely, the consumer staples sector was the worst performer by a large margin, extending its 2018 loss to 11.8%; for comparison, the S&P 500 has slipped 0.1% year to date. In general, growth-sensitive sectors outperformed defensive ones, although the top-weighted technology group bucked this trend.

The yield curve ultimately steepened this week, but not before the 2s versus 10s spread hit a 10-year low. Fed officials generally don’t appear to be worried about a still low spread which closed at 51 basis points on Friday leading the market to still believe that there will be at least three rate hikes this year in total. The 10-year yield rose on Friday to 2.949%, the highest closing yield since January 2014.

April 23 – April 27 Economic Calendar

  • Monday
  • Chicago Fed National Activity Index
    8:30 AM ET
  • PMI Composite Flash
    9:45 AM ET
  • Existing Home Sales
    10:00 AM ET
  • New Home Sales
    10:00 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 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

  • S&P Corelogic Case-Shiller HPI
    9:00 AM ET

  • FHFA House Price Index
    9:00 AM ET

  • New Home Sales
    10:00 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 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
  • EIA Petroleum Status Report
    10:30 AM ET
  • Existing Home Sales
    10:00 AM ET
  • New Home Sales
    10:00 AM ET
  • Consumer Confidence
    10:00 AM ET
  • Richmond Fed Manufacturing Index
    10:00 AM ET
  • State Street Investor Confidence Index
    10:00 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
  • Durable Goods Orders
    8:30 AM ET

  • 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
  • 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
  • GDP
    8:30 AM ET

  • Employment Cost Index
    8:30 AM ET
  • Chicago PMI
    9:45 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • Farm Prices
    3:00 PM ET
  • State Street Investor Confidence Index
    10:00 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.