Telemus Weekly Market Review

May 7 – May 11, 2018

Stock buyers returned to the market last week following a three-week absence. For the week the S&P 500 added 2.41%, the Dow gained 2.34%, and the Nasdaq finished up 2.68%. Last week’s gain was enough to put the S&P 500 and the Dow back into positive territory for the year. The tech-heavy Nasdaq is leading the charge, up 7.24% year-to-date.

The market got off to a slow start on Monday as investors digested President Trump’s decision to pull the U.S. out of the Iran nuclear agreement and restore economic sanctions against Iran. The president was scolded by our European allies, which wanted the U.S. to remain in the agreement, while Iran’s response was more violent with lawmakers burning the American flag in parliament.

Tensions in the Middle East were further escalated later in the week when Israel reportedly struck nearly Iran’s entire military infrastructure in Syria in response to an Iranian missile attack on Israeli-held territory in the Golan Heights.

Outside of a brief pause, stocks had a mostly muted reaction to the headlines, but crude oil futures took off, with WTI crude establishing a new three-and-a-half year high, as the restoration of U.S. sanctions on Iran, which is OPEC’s third-largest oil exporter, and the looming threat of conflict within the oil-rich region prompted investors to bet on a disruption to crude supply on the global market.

The S&P’s energy sector benefited from the rise in oil prices, adding 3.8% for the week, but the industrials, technology, and financials sectors finished with similar weekly gains, adding between 3.4% and 3.6%. In total, nine sectors finished the week in the green, while two, consumer staples and utilities, finished in the red.

Stocks started taking off on Wednesday and carried that momentum into Thursday’s session. The S&P 500 added roughly 1.9% in those two days alone, catapulting above its 50-day moving average to a nearly two-month high. Technology shares rallied over that same stretch, reminiscent of last year’s tech-charged surge, with Apple extending its streak of record closes to five in a row on Thursday. The streak however was then broken with a small loss on Friday.

Investors received some important inflation data on Thursday, namely the Consumer Price Index for April, which helped further fuel the bullish market bias, coming in slightly below estimates, further tempering concerns that the Fed might have to be more aggressive in its path to interest rate normalization.

Overseas, the Bank of England voted 7-2 in favor of keeping its official bank rate and its asset purchase program unchanged on Thursday, but Bank of England Governor Mike Carney added that interest rates will likely rise by the end of the year. Separately, President Trump announced that his summit with North Korean leader Kim Jong Un will be held on June 12th in Singapore, a positive development in the quest for global peace.

The stock market ended the week with a flat performance on Friday. Volatility picked up temporarily in the afternoon when President Trump released a blueprint for lowering drug prices, but order was restored after it became clear that the blueprint still lacked many specific details.

The 10 year U.S. Treasury note ended the week at 2.96% or nearly unchanged from the last two week’s close as inflation fears continue to subside. Crude oil finished Friday at $70.51 after reaching nearly $72 during the week, its highest level since 2014, as fears of an oil market disruption gripped the market.

May 14 – May 18 Economic Calendar

  • Monday
  • Loretta Mester Speaks
    2:45 AM ET
  • James Bullard Speaks
    9:40 AM ET
  • Redbook
    8:55 AM ET
  • Business Inventories
    10:00 AM ET
  • Housing Market Index
    10:00 AM ET
  • John Williams Speaks
    1:10 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Tuesday
  • Retail Sales
    8:30 AM ET

  • Empire State Mfg Survey
    8:30 AM ET
  • Redbook
    8:55 AM ET
  • Business Inventories
    10:00 AM ET
  • Housing Market Index
    10:00 AM ET
  • John Williams Speaks
    1:10 PM ET
  • Treasury International Capital
    4:00 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • Housing Starts
    8:30 AM ET
  • Raphael Bostic Speaks
    8:30 AM ET
  • Industrial Production
    9:15 AM ET
  • Atlanta Fed Business Inflation Expectations
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • James Bullard Speaks
    6:30 PM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Thursday
  • Jobless Claims
    8:30 AM ET
  • Philadelphia Fed Business Outlook Survey
    8:30 AM ET
  • Bloomberg Consumer Comfort Index
    9:45 AM ET
  • E-Commerce Retail Sales
    10:00 AM ET
  • Leading Indicators
    10:00 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Neel Kashkari Speaks
    10:45 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
  • Friday
  • Loretta Mester Speaks
    3:00 AM ET

  • Baker-Hughes Rig Count
    1:00 PM ET
  • Redbook
    8:55 AM ET
  • Business Inventories
    10:00 AM ET
  • Housing Market Index
    10:00 AM ET
  • John Williams Speaks
    1:10 PM ET
  • Treasury International Capital
    4:00 PM 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.