Month: June 2017

Google (GOOGL) joined Amazon (AMZN) at $1000 per-share on Monday, but overall the market was flat with the major indexes finishing with very small losses. This week will be light on economic and earnings data. The Federal Reserve is in its blackout period ahead of next week’s meeting, rate hike odds are at 96 percent, and one-month Libor rates have accelerated since mid-May.

Technology, consumer staples, energy and financials rose on Monday, while other sectors traded lower. Energy saw the largest gain, while technology and staples climbed to new 52-week highs.

The service PMIs from Markit and ISM both indicated service sector expansion in May. Factory orders in April fell 0.2 percent, in-line with expectations.

Australia’s central bank is expected to hold rates at 1.5 percent on Tuesday. The U.S. Job Openings and Labor Turnover Survey for April is expected to reflect 5.65 million openings, down from 5.743 million in March. Economists expect the European Union will report first quarter GDP growth of 0.5 percent for the quarter, and 1.7 percent over the last year. Later this week, Chinese trade figures and inflation for May will be out. Followed by U.S. wholesale inventories for April  on Friday.

Crude oil held steady on Monday despite a diplomatic spat between Gulf States and Qatar. Last week, OPEC agreed to extend production cuts until the end of March 2018. The energy sector saw a small rebound on the day after hitting new 2017 lows on Friday.

The U.S. dollar was up slightly on Monday. The U.S. Dollar Index closed at its lowest point since October last week. Both the iShares MSCI EAFE Index (EFA) and iShares MSCI Emerging Markets Index (EEM) fell on Monday, but they are up 16 and 19 percent this year, ahead of the SPDR S&P 500’s (SPY) gain of nearly 10 percent. State Street reported that half of ETF inflows this year have gone to foreign funds.

The 10-year Treasury yield moved higher on Monday, hitting 2.18 percent. Unlike the U.S. dollar, there’s not much support for the 10-year yield if it continues trading lower. The next major support level is at 1.9 percent. Bond funds such as Fidelity Corporate Bond (FCBFX) are approaching 52-week highs as long-term rates slide.

President Trump is expected to nominate two individuals to fill vacancies at the Federal Reserve. Fed policy has crimped bank profitability by shrinking interest rate spreads. A more favorable monetary policy would be welcome news for the banking sector.

J.M. Smucker (SJM) and Brown Forman (BF.B) will headline a very quiet earnings week. Analysts are looking for $1.73 per share in earnings from Smucker and $0.40 from Brown Forman.

The Dow Jones Industrial Average joined the S&P 500 and Nasdaq at all-time highs. The Russell 2000 led the week’s performance, however, with a 1.67-percent gain. The Nasdaq climbed 1.54 percent, the S&P 500 0.96 percent, and the Dow 0.59 percent. Shares of Amazon (AMZN) closed above $1000 for the first time.

Healthcare led the S&P 500 with a 2-percent advance, followed by consumer discretionary shares at 1.7 percent, and technology and consumer staples both climbing 1.4 percent. Of the healthcare related subsectors, Biotech rose 2.6 percent, edging out the 2.3-percent advance in medical devices.

Energy fell with crude oil prices, which finished the week at $47.80 from $49.80 last Friday. Energy and energy production shares closed at new 2017 lows. Energy services fell to a new 52-week low.

The financial sector slipped mid-week after J.P. Morgan (JPM) and Bank of America (BAC) reported lower-than-expected second-quarter trading revenue, citing low volatility in financial markets. The 10-year Treasury yield fell to 2.16 percent on Friday.

The Conference Board’s measure of consumer confidence fell to 117.9 in May. Confidence remains near two-decade highs, but it is off the peak set in February. The May Chicago PMI, Markit and ISM manufacturing PMIs all showed an improvement in the manufacturing sector. The ADP Employment report was far stronger than expected, with private payrolls estimated to have risen 253,000 last month.

Auto sales were flat. Although the major automakers beat estimates, the sales pace eased to 16.6 million vehicles. Unemployment fell to 4.3 percent in May, but job creation stalled with only 138,000 new jobs, below the consensus forecast of 185,000. Odds of a June rate hike finished the week at 96 percent, nonetheless.

Dollar General (DG) beat on sales and earnings and raised guidance. Shares jumped on the news. Another discount retailer, Five Below (FIVE), also delivered strong earnings.

Palo Alto Networks (PANW) beat estimates by more than 10 percent, and delivered earnings growth of 45 percent. Shares gained 17 percent following the news. Shares of Workday (WDAY) rallied nearly 3 percent after the firm nearly doubled earnings estimates. Analog Devices (ADI) also advanced on stronger-than-expected earnings, sales, and guidance, and shares of Broadcom (AVGO) popped 8.6 percent to a new all-time high on Friday.