Month: February 2019

Equity returns were mixed on Monday with the Russell 2000 Index gaining 0.84 percent and the Dow Jones Industrial Average slipping 0.21 percent. Sector performance on the day were led by the 0.53 percent rally in SPDR Industrials (XLI).

This will be a busy week for economic data.  The National Federation of Independent Businesses will release its small business confidence index for January. The Job Openings and Labor Turnover Survey (JOLTS) for December will also be released.

Economists predict the government will report consumer inflation rose 0.1 percent in January. Core CPI is forecast to rise 0.2 percent. They see producer prices rising 0.2 percent. Retail sales for December, will be out this week. The University of Michigan’s advanced report on February consumer sentiment is out on Friday.

The U.S. Dollar Index advanced 0.4 percent on Monday, its highest level since December. The stronger dollar weighed on commodity prices. Crude oil slipped 0.51 percent on the day, after rebounding from a 2.2 percent decline in early trading.

Government, investment grade and corporate bonds also traded lower on the day, but high-yield bonds managed a small increase. iShares iBoxx High Yield Corporate Bond (HYG) returned 0.04 percent.

Coca-Cola (KO), Pepsi (PEP), Cisco (CSCO) and Nvidia (NVDA) headline earnings reports this week. Also reporting are Eli Lilly (LLY), Marathon Oil (MRO), Occidental Petroleum (OXY), TripAdvisor (TRIP), Under Armor (UAA), Applied Materials (AMAT), Duke Energy (DUK), CME Group (CME), Baidu (BIDU), Kraft Heinz (KHC) Deere & Co. (DE) and Newell Brands (NWL).

The Nasdaq led the market higher with a gain of 0.42 percent for the week. The Dow Jones Industrial Average returned 0.17 percent. Technology and industrials powered the gains. SPDR Technology (XLK) rose 1.95 percent, while SPDR Industrial (XLI) advanced 1.64 percent. Falling interest rates boosted SPDR Utilities (XLU), SPDR Real Estate (XLRE) and SPDR Consumer Staples (XLP) by 2.09, 1.35 and 1.05 percent, respectively.

Earnings season was solid this week, despite mixed investor reaction. Alphabet (GOOGL) boosted the Internet sector early in the week and Snap (SNAP), creator of SnapChat rallied midweek. However, Twitter (TWTR) pulled the subsector lower after it reported on Thursday.

Disney (DIS) beat earnings and revenue estimates and indicated its streaming subscription service is off to a strong start. Its shares ended the week with a small gain of 0.19 percent. The direct-to-consumer streaming division experienced $136 million in losses as the firm remains committed to its streaming service. It will also lose $150 million in sales as it cuts its licensing agreement with Netflix (NFLX).

The U.S. Dollar Index rose throughout the week. The U.S. Dollar Index gained 1.3 percent, while the euro fell 1.21 percent. The rising dollar helped SPDR S&P 500 (SPY) outperform its international competition. It returned 0.16 percent while iShares MSCI EAFE (EFA) and iShares MSCI Emerging Markets (EEM) fell 1.02 and 1.43 percent, respectively.

Crude oil fell 4.6 percent this week and natural gas 5.5 percent as the strong dollar weighed on prices. SPDR Energy (XLE) slid 3.01 percent.

The 10-year Treasury yield fell to 2.63 percent this week. iShares iBoxx High Yield Corporate Bond (HYG) advanced 0.13 percent, Fidelity Corporate Bond (FCOR) 0.17 percent, PowerShares Senior Loan (BKLN) 0.53 percent and iShares 20+ Year Treasury (TLT) 1.15 percent.

Equities continue to extend their gains. The Nasdaq has outperformed as technology subsectors accelerated.

Communication services and industrials have also been market leaders this week.

Semiconductors and Internet stocks gained more than 4 percent after solid earnings reports. Semiconductors underperformed in the 4th quarter of 2018 but are now leading the rally.

Aerospace and defense lifted the industrial sector with shares of Boeing (BA) rising more than 6 percent. Boeing is now trading at a new all-time high. Transports also achieved solid gains.

SPDR S&P 500 (SPY) is beating both developed and emerging market funds. The U.S. dollar rallied 1 percent, which has helped domestic stocks.

Commodities have also rallied in 2019. SPDR S&P Metals & Mining (XME) has been a strong subsector leader. Copper, steel and coal ETFs are all up double-digits.

SPDR Financial (XLF) has traded sideways since mid-January. Rising interest rates and widening spreads benefit banks who earn more from lending. Regional banks, insurance and capital markets subsectors have moved on to new highs for 2019.

Rebounding energy and technology shares has boosted solar energy stocks. The rest of the clean energy space has also advanced in early 2019. Long-term, the sector remains far below its 2008 high.