Month: May 2017

The S&P 500 Index hit a new all-time high on Monday to close at 2402.32. The Nasdaq made a new high on Monday as well, while the Dow Jones Industrial Average gained 0.41 percent and the Russell 2000 climbed 0.81 percent on the day.

Homebuilder confidence hit 70 in May, up from 68 in April. The Empire State Index, a measure of manufacturing activity in the New York region, fell to negative 1 in May. The index made a 12-month high at 18.7 in February. April’s housing starts and building permits, industrial production, and capacity utilization data will be available on Tuesday. Industrial production is expected to reflect a 0.5 percent rise in April, capacity utilization a 0.2 percent increase.

Only 9 percent of S&P 500 companies are left to report earnings. Retailers will dominate this week, with several major firms reporting. Last week, Macy’s (M) and J.C. Penny (JCP) disappointed investors and sent SPDR S&P Retail (XRT) 4.5 percent lower on Thursday and Friday. Home Depot (HD), TJX Companies (TJX), Staples (SPLS), Urban Outfitters (URBN), Target (TGT), L Brands (LB), American Eagle Outfitters (AEO), Gap (GPS), Children’s Place (PLCE) and Foot Locker (FL) are all scheduled to report this week.

Analysts expect 53 cents per share, up from 50 cents a year ago from Cisco (CSCO). Semiconductor equipment supplier Applied Materials (AMAT) will report on Thursday. The consensus calls for profits of 76 cents per share, more than double last year’s 34 cents.  Alibaba (BABA) will also report on Thursday. Analysts expect earnings rose to 49 cents per share from last year’s 20 cents.

Oil prices climbed above $49 on Monday after Saudi Arabia and Russia agreed to extend production cuts for nine additional months, pending the cooperation of other OPEC nations.

On Sunday night, China reported fixed asset investment and industrial production numbers below expectations. Eurozone consumer price inflation and Japanese first-quarter GDP are due later in the week.

The S&P 500 Index breached 2400 for the first time early in the week and finished slightly lower on Friday at 2390.90.  The Nasdaq had a slight gain of 0.09 percent while, the Dow Jones Industrial Average lost 0.11 percent.  For the week, the S&P 500 and Dow Jones Industrial Average lost 0.50 and 0.40 percent, respectively.  The Nasdaq had a small gain of 0.30 percent.

Retail sales increased 0.4 percent in April, 0.3 percent ex-autos. Gasoline sales climbed 12.3 percent versus last year. Non-store retail sales are up 10.7 percent in 2017, while department store sales are down 5.2 percent. Retail earnings and share prices reflect this dichotomy. Shares of Macy’s (M) tumbled 17 percent on Thursday to a new multi-year low after the firm reported a larger-than-expected decline in same-store sales. The news battered other department store shares. On Friday, J.C. Penney (JCP) fell more than 10 percent, to its lowest point since 1988, after it too missed on sales.

Dillard’s (DDS), Kohl’s (KSS), and Nordstrom (JWN) all suffered sizable losses as well. SPDR S&P Retail (XRT) fell more than 2 percent on the week. Amazon (AMZN) shares hit a new all-time high this week. Shares of Priceline (PCLN) fell 4.5 percent after it missed sales estimates and guided analysts lower on second-quarter earnings.

Consumer prices increased 0.2 percent in April, due partially to higher energy prices. Core CPI increased 0.1 percent. Producer prices rose 0.5 percent versus an expected 0.2 percent increase. Inflation reports increased the expectations for a June rate hike, but failed to spark an interest rate rally. The 10-year Treasury yield finished the week flat at 2.3 percent.

Consumer sentiment increased in May, according to the University of Michigan Survey. Its index hit 97.7, ahead of expectations of 97. Shares of Fidelity Select Leisure (FDLSX) hit a new all-time high this week as the consumer discretionary sector moved higher.

Disney’s (DIS) ESPN division weighed on its shares this week. Snap (SNAP), maker of the Snapchat app, fell 20 percent after the company reported a higher-than-expected cash burn rate. Nvidia (NVDA) shares gained more than 20 percent on the week after an 18 percent earnings beat, lifting the technology sector and the Nasdaq to new all-time highs. Shares of iShares Semiconductors (SOXX) and Fidelity Select Semiconductors (FSELX) also hit new all-time highs. Technology outperformed all other sectors on the week.

Energy rebounded from the prior week’s losses. West Texas Intermediate crude climbed as high as $48 a barrel after a larger-than-expected decline in inventory. Rising shale production in the U.S. remains a concern for the market, however.  OPEC raised its 2017 growth estimate of U.S. oil production to 6 percent, fastest in the world among major non-OPEC producers. The U.S. accounts for 86 percent of non-OPEC production growth in 2017.

The S&P 500 Index is hovering just below 2400, closing today at 2,339.63. The Nasdaq made a new all-time high on Tuesday, while the Russell 2000 and Dow Jones Industrial Average remain near all-time highs.

Nvidia (NVDA) beat earnings estimates as semiconductors led the tech sector higher. Consumer cyclicals have also enjoyed recent outperformance among major sectors.

Healthcare and industrials continue to outpace the S&P 500 Index, while energy has been the worst year-to-date performer by a wide margin.

Technology has also lifted emerging markets. Taiwan, South Korea and PowerShares Golden Dragon (PGJ) all have recently hit new all-time highs due to tech overweighting, offsetting weakness in commodities. It’s also notable that the South Korea ETF and the domestic KOSPI are at new all-time highs, despite rising tensions on the Korean peninsula.

China’s PPI fell 0.4 percent in April, ending the reflation it started a year earlier. Both copper and A-shares are also on the verge of breaking to new 6-month lows.

The tech-heavy small-cap index (CNXT) already broke to a new 18-month low. Bond issuance is also down significantly for corporations and local governments. Mortgage lending was down sharply in April in Beijing, the city with the most stringent real estate restrictions. Beijing’s policies are expected to roll out nationally over the next few months. Copper, coal, steel, iron ore and other industrial commodities will follow A shares lower.

Oil rebounded on Wednesday after big drops in inventory. U.S. oil imports dropped as domestic production satisfied a larger share of domestic demand.

Although crude prices fell sharply over the past month, the February uptrend is still intact. Energy shares also bounced after bottoming last Thursday.

Relative to SPDR S&P 500 (SPY), XLE matched its 2016 lows last week. Energy should improve its relative performance in the weeks ahead as value investors test the waters.

Fidelity Corporate Bond (FCBFX) is near its 52-week high. FCBFX is also higher than it was in February.

Vanguard Short Term Corporate Bond (VCSH) hit a new 52-week high in April, but it has moved slightly lower as rate hike expectations increased. The 2-year Treasury yield is approaching its highest level since 2009.

Finally, high-yield bonds are back at a new all-time high.

The sharp rally in Eurozone markets following the French election should consolidate in the weeks ahead. Japanese markets are trading near a 52-week high. Canada and Australia are showing some relative weakness as the slowdown in China hits commodities markets.