Year: 2018

The Russell 2000 led the market this week with a 1.23-percent gain. SPDR Industrials (XLI) advanced 0.83 percent, but SPDR Technology (XLK) lost 1.45 percent. Brent crude oil topped $80 for the first time in years. SPDR Energy (XLE) advanced 1.80 percent.

Treasury yields made important technical breakouts over the past week. The 10-year peaked at 3.12 percent and the 30-year 3.25 percent before settling back on Friday. Utilities struggled against long-term interest rates. SPDR Utilities (XLU) fell 2.76 percent.

SPDR S&P Retail (XRT) rallied 2.11 percent this week on strong retail sales and a big earning surprise. The government revised March retail sales higher to 0.8 percent and reported 0.3 percent growth in April. Rising consumer spending buoyed some retail stocks, with Macy’s (M) own management surprised by its strong earnings and sales last quarter. Macy’s gained 14.57 percent on the week. It wasn’t all roses for retail with both Nordstrom (JWN) and JCPenney (JCP) suffering setbacks. Wal-Mart (WMT) beat forecasts due to improving online sales.

Homebuilder confidence climbed in May according to the National Association of Homebuilders. Builders have continued to combat tight labor markets and rising material costs. Housing starts and building permits missed expectations but rose from year-ago levels. Jobless claims rose to 222,000 in the week ended May 12, still close to 40-year lows. Industrial production climbed 0.7 percent in April. Household debt grew 3.8 percent in the first quarter, down from 4.6 percent in the prior quarter.

Boeing (BA) pulled the aerospace and industrial sector higher this week. Shares rallied 2.56 percent after it was rumored China offered a $200 billion reduction in the bilateral trade deficit. China quickly denied the rumor but Boeing shares held their gains.

Applied Materials (AMAT) fell 8.25 percent on Friday after reporting earnings. Third-quarter guidance was below expectations. Applied Materials supplies chip and display makers. The company sees softer demand from the smartphone market. Cisco (CSCO) beat earnings, but guidance was in line with estimates. Shares dipped 5.92 percent on the week.

The U.S. Dollar Index climbed another 1 percent this week. It has gained nearly 5 percent since the start of the rally in mid-April. The greenback has risen for five consecutive weeks.

iShares MSCI EAFE (EFA) fell 0.61 percent on the week, nearly matching the SPDR S&P 500’s (SPY) 0.56-percent decline. iShares MSCI Emerging Markets (EEM) fell 2.81 percent as EM currencies remained stressed.

The Russell 2000 Index flirted with a new all-time high on Monday. Energy and healthcare were the strongest sectors. Utilities and real estate lost ground as traders sold rate-sensitive stocks.

Crude oil opened the week above $70 a barrel. Bulls are looking for a rally past $73.25, an advance that would open up triple-digit price targets for the bulls.

Analysts forecast a 0.3-percent increase in April retail sales and a 0.5-percent rise in sales ex-autos.

April industrial production is expected to rise 0.6 percent. Economists see weekly jobless claims at 215,000, close to last week’s 211,000.

The homebuilder confidence index for May, as well as housing starts and building permits for April will be out this week.

Several Fed officials will speak this week. Congress will hold hearings on Richard Clairda, President Trump’s nominee for vice chairman at the Fed, along with Michelle Bowman, a nominee for one of the open governor seats. Both would be voting members. The odds of a June rate hike are 100 percent in the futures market.

Chinese fixed-asset investment, real estate investment, home prices and industrial production for April will be out this week. European industrial production, inflation, and first-quarter GDP, as well as Japan’s first-quarter GDP will also be out this week.

Interest rates rose on Monday. The 10-year Treasury traded at 2.99 percent, the 30-year at 3.12 percent. Short-term rates such as one- and three-month Libor, along with the 2-year Treasury, have held steady for several weeks. With the Fed expected to raise rates in less than a month, short-term rates could begin rising this week.

Home Depot (HD) will also report earnings; analysts are looking for $2.06 per share, an increase of 23 percent over last year.  Cisco (CSCO) is expected to deliver 9 percent earnings growth.

Retail earnings will include Macy’s (M), J.C. Penney (JCP), Children’s Place (PLCE) and Nordstrom (JWN). Campbell Soup (CPB) and Deere & Co. (DE) will also report this week.

Analysts forecast 13 percent earnings growth for Wal-Mart (WMT) this week.

Equities rallied strongly this week, led by a 2.68-percent gain in the Nasdaq. SPDR Financials (XLF) advanced 3.67 percent, while SPDR Utilities (XLU) retreated 2.17 percent. The 10-year Treasury yield traded above 3 percent on Wednesday before finishing the week at 2.97 percent.

Energy was the best performing sector this week after President Trump announced the United States would exit the Iran nuclear deal, paving the way for new sanctions. West Texas Intermediate crude touched $72 a barrel in Thursday trading before settling back. SPDR Energy (XLE) gained 3.90 percent. Technology and industrials were also strong. SPDR Industrials (XLI) and Technology (XLK) rallied 3.39 and 3.37 percent. iShares U.S. Aerospace & Defense (IAT) climbed 4.35 percent.

The National Federation of Independent Business’ small business confidence index for April reflected increasing optimism. The Job Openings and Labor Turnover Survey reported 6.6 million job openings in March, a substantial increase of 0.5 million from February.

Consumer confidence held steady in early May according to the University of Michigan survey. Consumers’ assessment of current conditions dipped slightly but were offset by rising expectations. Initial claims for unemployment held near four-decade lows at 211,000. The 4-week moving average of initial claims is at a 39-year low.

Consumer and producer inflation rose less than expected in April, lifting stocks midweek. Strong employment data lifted the odds of a fourth rate hike in the futures market from 44 to 47 percent. 

The U.S. Dollar Index was flat on the week after hitting a new high for 2018. The index has gained more than 3 percent in the past three weeks. Argentina accepted an IMF bailout this week, but the peso resumed its slide on Friday.

Investors sold $3.7 billion of emerging-market funds over the past week, the most since the end of 2016.  Global X MSCI Argentina (ARGT) fell 3.55 percent, iShares MSCI Turkey (TUR) 2.84 percent.

SPDR S&P 500 (SPY) advanced 2.57 percent on the week, iShares MSCI EAFE (EFA) 1.20 percent and iShares MSCI Emerging Markets (EEM) 2.09 percent.

Disney (DIS) rallied this week after strong earnings. Comic book movies helped drive results. SPDR Consumer Discretionary (XLY) gained 0.84 percent.

Anheuser-Busch (BUD) wasn’t the medicine the consumer staples sector was looking for. The brewer missed first quarter earnings forecasts even as global sales beat expectations. Shares fell 2.44 percent on the week, SPDR Consumer Staples (XLP) slid 0.36 percent.

The other big earnings report came from chipmaker Nvidia (NVDA). Shares gained 6.53 percent this week and helped pull iShares PHLX Semiconductors (SOXX) higher by 4.22 percent. Even though the company crushed earnings and revenue forecasts, shares declined from their highs on the week after management forecast a large decline in cryptocurrency miner demand.