Telemus Weekly Market Review

April 30 – May 4, 2018

Stocks finished last week mixed, with the S&P 500 down 0.24%, the Dow losing 0.20% and the tech-heavy Nasdaq gained 1.26% for the week. Investors digested the latest policy directive from the Fed, the employment report for April, and another big batch of corporate earnings including Apple’s latest quarterly report.

The stock market kicked off the week on a lower note Monday, with telecoms leading the retreat after Sprint and T-Mobile US agreed to an all-stock merger over the weekend. The deal, which capped four years of on-again, off-again talks, is aimed at creating a larger carrier to better compete with wireless giants AT&T and Verizon.

Wall Street bounced back a bit on Tuesday, led by technology shares, which rallied ahead of Apple’s quarterly earnings release. Apple’s results crossed the wires on Tuesday evening, showing a better-than-expected bottom line. In addition, the tech giant raised its profit guidance for the current quarter, increased its share repurchase program by $100 billion, and raised its dividend by 16%.

Apple shares rallied more than 4.0% on Wednesday in reaction to the upbeat results/guidance, but the broader market struggled, a somewhat concerning signal considering Apple was among the top performers during last year’s rally and considering it’s the largest component in the S&P 500 by market cap.
The Fed’s latest policy directive was released on Wednesday afternoon, but contained few surprises. Fed officials unanimously decided to leave the federal funds target range unchanged at 1.50% to 1.75%, as expected. In addition, officials laid the groundwork for a rate hike at the June meeting and left the door open for another one to two hikes before the end of the year.

Equity indices shot lower at the start of Thursday’s session, with the S&P 500 busting through its 200-day moving average, but eventually rebounded to finish little changed. Tesla received a lot of attention in the media on Thursday after its controversial CEO, Elon Musk, unconventionally dismissed analysts’ questions in the company’s earnings call, calling them “boring.”

The Employment Situation report for April crossed the wires on Friday morning, showing a lower-than-expected increase in nonfarm payrolls, an in-line reading for average hourly earnings, and a lower-than-expected 3.9% unemployment rate, its lowest level since 2000. The key takeaway from the report is that there weren’t a lot of big surprises in it, which effectively means the Fed is apt to stay on course for at least two more rate hikes this year.

Apple reemerged in the headlines on Friday after Warren Buffet revealed his company, Berkshire Hathaway, bought an additional 75 million shares of Apple in the first quarter. Apple jumped 3.9% in reaction, leading a broad-based rally that made a significant dent in the S&P 500’s weekly decline. The tech group was the top-performing sector on Friday, extending its weekly gain to 3.2%.

The technology sector closed at the top of the sector standings by a decent margin, while health care, telecom services, and consumer staples finished at the back of the pack. In total, seven S&P 500 sectors settled the week in negative territory, while four groups settled in the green.

The 10 year U.S. Treasury note ended the week at 2.95% virtually unchanged from last week’s close. Crude oil closed Friday at $69.72 versus $67.97 the previous week, on fears that Iranian sanctions will disrupt supply.

May 7 – May 11 Economic Calendar

  • Monday
  • TD Ameritrade IMX
    12:30 PM ET
  • Tom Barkin Speaks
    2:00 PM ET
  • JOLTS
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • 10-Yr Note Auction
    1:00 PM ET
  • Raphael Bostic Speaks
    1:15 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • NFIB Small Business Optimism Index
    6:00 AM ET

  • Redbook
    8:55 AM ET

  • JOLTS
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • 10-Yr Note Auction
    1:00 PM ET
  • Raphael Bostic Speaks
    1:15 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • PPI-FD
    8:30 AM ET
  • Wholesale Trade
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • 10-Yr Note Auction
    1:00 PM ET
  • Raphael Bostic Speaks
    1:15 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Consumer Price Index
    8:30 AM ET

  • Jobless Claims
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Treasury Budget
    2:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • James Bullard Speaks
    8:30 AM ET

  • Import and Export Prices
    8:30 AM ET
  • Consumer Sentiment
    10:00 AM ET
  • Baker-Hughes Rig Count
    1:00 PM ET
  • 10-Yr Note Auction
    1:00 PM ET
  • Raphael Bostic Speaks
    1:15 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.