Year: 2018

The Nasdaq led the major indexes with a gain of 1.45 percent this week. Consumer discretionary pulled the index higher after a judge approved the AT&T (T) Time Warner (TWX) merger. The decision opened the door to further consolidation in the media and telecom industry. Comcast (CMCSA) immediately announced a $65-billion offer for Fox assets, topping the prior bid from Disney (DIS). Fox may postpone a planned shareholder vote on Disney’s offer.  Netflix (NFLX), the third largest holding in SPDR Consumer Discretionary (XLY), rallied nearly 10 percent to a new all-time high as a result. XLY gained 2.24 percent on the week.

Consumer inflation met expectations and producer inflation growth was faster than expected. Jobless claims fell to 218,000 last week and the number of people on unemployment fell to a 43-year low. Retail sales beat expectations in May, rising 0.8 percent and 0.9 percent ex-autos. The University of Michigan consumer confidence survey for early June increased and the NFIB small business index showed optimism at its highest since 1983. The Atlanta Federal Reserve’s GDP Now model hiked its second-quarter GDP forecast to 4.8 percent.

The Federal Reserve hiked interest rates as expected this week. The accompanying economic and interest rate projections showed a majority of Federal Open Market Committee officials expect two more rate hikes in 2018. The odds of four rate hikes this year climbed above 50 percent in the futures market.

The European Central Bank will end its quantitative easing program at the end of 2018, as expected. However, ECB chief Mario Draghi sent the euro sliding after he said interest rates would remain unchanged until at least the middle of 2019. With European economic data weaker than the U.S., traders and economists are skeptical.

The ECB pushed the U.S. Dollar Index to a new high for 2018 and near a 52-week high. SPDR S&P 500 (SPY) returned 0.07 percent on the week, while iShares MSCI EAFE (EFA) fell 0.57 percent and iShares MSCI Emerging Markets (EEM) slid 2.33 percent. European stocks rallied following the ECB meeting. WisdomTree Europe Hedged Equity (HEDJ) gained 1.80 percent on the week, while iShares EMU Index (EZU) saw a much smaller increase of 0.23 percent.

President Trump announced tariffs on $50 billion worth of Chinese imports on Friday. China responded with $50 billion in tariffs on U.S. goods. Soybeans, a major Chinese import form the U.S., have fallen over the past two weeks in anticipation of the move and hit a 52-week low on Friday. Some industrial shares with exports to China, such as Boeing (BA) and Caterpillar (CAT) underperformed on the day.

Equities climbed across the board on Monday, led by strong rallies in consumer staples and energy shares. Utilities declined in the face of rising interest rates.

The Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday will highlight a busy week for economic data. The Fed is expected to hike the Fed funds rate 25 basis points to 2.00 percent, the second increase in 2018.

Small business confidence and the consumer price index will be out on Tuesday. Analysts forecast 0.2 percent headline inflation in May and 0.1 percent core inflation, with the 12-month CPI ticking up to 2.2 percent. Headline producer price inflation, out Wednesday, is forecast to rise 0.3 percent and core 0.2 percent.

Economists expect 0.4 percent growth in retail sales for May. The week will end with the initial June reading from the University of Michigan’s consumer confidence survey.

Overseas economic data will be heavy this week as well. The European Central Bank and Bank of Japan also meet. Both are expected to keep rates unchanged. Eurozone inflation will be out on Thursday. Economists predict a one-month increase of 0.5 percent, but for 12-month inflation to hold steady at 1.9 percent. Analysts forecast Chinese new loans, fixed-asset investment and industrial production for May will be similar to April figures.

The U.S. Dollar Index rose slightly on Monday. The greenback was stronger against emerging-market currencies after the Argentine peso fell to fresh 52-week lows despite last week’s mammoth $50 billion bailout from the International Monetary Fund (IMF).

Crude oil closed at $66 a barrel. Natural gas climbed to $2.95. It last traded above $3 in early February.

H&R Block (HRB), Caseys General Stores (CASY), and Lands’ End (LE) will highlight a light week for earnings news.

The Dow Jones Industrial Average ended a bout of relative underperformance this week and led major indexes with a 2.77-percent climb. The S&P 500 and Russell 2000 both climbed more than 1 percent.

The Nasdaq slipped early Friday after reports claimed Apple (AAPL) reduced orders with iPhone suppliers, but the Nasdaq Composite still finished the week with a gain of 1.21 percent.

SPDR Technology (XLK) rallied 0.83 percent this week. SPDR Consumer Discretionary (XLY), Financials (XLF) and Healthcare (XLV) climbed 3.17, 2.18 and 2.02 percent, respectively. SPDR Consumer Staples (XLP) rallied 2.36 percent. SPDR Utilities (XLU) declined 3.03 percent.

The U.S. Dollar Index retreated from recent highs this week, but the domestic market outperformed foreign shares nonetheless. SPDR S&P 500 (SPY) gained 1.68 percent and iShares MSCI EAFE (EFA) 0.59 percent, while iShares MSCI Emerging Markets (EEM) returned 0.00 percent. Currency volatility weighed on emerging markets. Argentina received a $50 billion bailout from the IMF on Thursday, but the peso fell to a fresh 52-week low on Friday. Brazil’s real fell sharply through Thursday trading, then erased most of its losses on Friday.

The 10-year Treasury yield saw a small gain on the week but failed to breach the 3.0 percent level. It closed at 2.94 percent. Falling credit risk lifted high-yield credit. iShares iBoxx High Yield Corporate Bond (HYG) gained 0.55 percent. Rising Libor rates ahead of next week’s Federal Reserve meeting lifted floating-rate bonds.

Crude oil had a volatile week but finished close to where it started. Natural gas prices fell about 3 percent. Copper gained 6 percent. This week’s move erased all of the losses in 2018 and left copper on the cusp of a new 52-week high.

The Atlanta Federal Reserve adjusted its second-quarter GDP Now growth forecast to 4.6 percent on Friday.  The New York Fed and economist consensus both forecast growth of more than 3 percent.  Job opening for April hit a new all-time high of 6.7 million. The ISM and Markit services PMIs beat expectations, signaling a stronger expansion in the economy’s largest sector. Initial claims for unemployment fell to 222,000 in the first week of June.