Month: April 2019

Disney’s (DIS) unveiling of its Disney+ streaming service lifted shares 11.54 percent on Friday and helped send the Dow Jones Industrial Average higher by 1.03 percent on the day. Disney plans a rollout of its streaming service later this year at a cost of $7.99 per month, a 33 percent discount from Netflix’s (NFLX) popular streaming option. Shares of Netflix fell 4.49 percent on Friday. The Disney+ division could lose money for 5 or more years, but it’s also expected to see a huge surge in customers who will have access to all Disney content ranging from classics such as Snow White, the Star Wars and Marvel universes, as well as new properties recently acquired from Fox such as The Simpsons.

Despite Disney’s gains, the Dow Jones Industrial Average wasn’t the best performing index this week. The Nasdaq led with an increase of 0.55 percent, followed by the 0.51-percent gain in the S&P 500 Index. The Dow Jones Industrial Average fell less than 0.1 percent, while the Russell 2000 gained 0.1 percent.

Earnings season started strong with Delta (DAL), J.P. Morgan (JPM) and Wells Fargo (WFC) beating earnings estimates.

J.P. Morgan delivered $2.65 per share, 30 cents more than the consensus forecast. J.P. Morgan rallied 5.60 percent on the week, with most of the gains coming on Friday.

Wells Fargo also beat estimates at $1.20 versus $1.09 per share expectations. However, the firm slipped 2.62 percent on Friday after it lowered forward looking guidance.

Analysts expected gains of 9 cents per share from Delta, but it delivered 96 cents per share.

SPDR Financials (XLF) climbed 1.84 percent on Friday following J.P. Morgan’s report. It gained 2.05 percent on the week and hit a new high for 2019. SPDR Communication Services (XLC) advanced 1.45 percent thanks to Disney. SPDR Technology (XLK) and SPDR Consumer Staples (XLP) returned 1.17 percent and 1.03 percent, respectively. SPDR S&P Regional Banking (KRE) increased 1.67 percent.

Economic data showed the economy picking up steam. Consumer price inflation increased 0.4 percent, in line with expectations. Producer prices jumped 0.6 percent, doubling estimates.

Weekly jobless claims fell to 196,000, a 50-year low. The Job Openings and Labor Turnover Survey (JOLTS) showed 7.1 million openings in February.

Consumer confidence eased in April according to the University of Michigan’s preliminary survey. This was mainly due to consumers reacting to higher prices, itself a sign economic growth is robust.

U.S. Dollar Index eased lower by 0.40 percent for the week.

Results for the broad indexes were mixed today. The S&P 500 finished with a gain of 0.10 percent, while the NASDAQ increased 0.19 percent.  The Dow Jones Industrial Average and Russell 2000 lost 0.32 and 0.22 percent, respectively. SPDR Energy (XLE) gained 0.44 percent, SPDR Consumer Staples (XLP) 0.41 percent and SPDR Technology (XLK) 0.38 percent. However, analysts downgraded General Electric (GE) and Boeing (BA) cut production of its 737 MAX jet.

Earnings season kicks off with Delta Air Lines (DAL), Bed, Bath & Beyond (BBBY) and Fastenal (FAST) will report over the coming days. On Friday, Wells Fargo (WFC), JPMorgan (JPM) and PNC Financial (PNC) will deliver results. Analysts are optimistic about JPM earnings, forecasting $2.35 per share. Wells Fargo is still dealing with fallout from its accounting scandal.

Analysts have set the market to exceed expectations as the consensus S&P 500 earnings growth forecast is currently at negative 4.2 percent. Major components have driven the move, such as the consensus Apple (AAPL) forecast falling from $2.96 per share at the end of 2018 to $2.36. Exxon Mobil (XOM) forecasts have fallen from $1.22 to $0.86 per share.

The minutes of the March Federal Reserve meeting will be released this week. Along with a pause in the rate hike cycle at the prior meeting, Fed officials also announced an end to balance sheet reduction.

Consumer and producer price inflation for March will also be released. Economists predict consumer prices to have risen 0.4 percent and producer prices 0.3 percent. Rising oil prices are a major factor in those higher forecasts. The University of Michigan will publish the advance reading for its April consumer sentiment survey. The Job Openings and Labor Turnover Survey (JOLTS) should show more job openings than unemployed Americans, once again.

Britain will likely get a Brexit extension when it meets with the European Union this week. The latest reports indicate Prime Minister Theresa May is considering a second referendum. There’s also some fear that another delay could greatly benefit populists across Europe in the upcoming European Parliamentary elections. All 27 member states must approve an extension or Britain leaves on April 12 under current law.

Crude oil extended its winning streak on Monday, trading above $64 per barrel.

The U.S. Dollar Index held at 97 this week, near its 52-week high.

Equities extended their gains, led by small-caps, financials and transportation stocks. The Russell 2000 Index advanced 2.78 percent, the Nasdaq 2.69 percent and the S&P 500 2.14 percent.  The Dow Jones Industrial Average gained slightly less than 2 percent.

SPDR Financial (XLF) increased 3.44 percent on the week as banking shares rebounded along with interest rates. One of our preferred holdings, SPDR S&P Regional Banking (KRE), jumped 5.03 percent.

SPDR Materials (XLB) climbed 4.16 percent after positive comments from President Trump and President Xi regarding trade negotiations boosted commodity producers. A rebound in Boeing (BA) helped lift iShares U.S. Defense & Aerospace (ITA) 2.44 percent.

SPDR Consumer Discretionary (XLY) advanced 3.23 percent, boosted by Amazon (AMZN), which returned 3.21 percent. Amazon shares rallied after the firm slashed prices on hundreds of products at Whole Foods.

Economic data showed the economy is again accelerating. The manufacturing and service PMIs showed expansion. Motor vehicle sales climbed to an annualized pace of 17.5 million in March, up 1 million from February.

The March employment report showed 196,000 new jobs, beating forecasts of 177,000. Unemployment held at 3.8 percent and hourly wages grew 0.1 percent. Education, professional services, leisure and hospitality, construction and government saw the greatest increases. Weekly jobless claims plunged to 202,000, back near 50-year lows.

The U.S. Dollar Index ended with a small gain of 0.20 percent, driven by uncertainty surrounding next week’s Brexit deadline. The U.S. dollar is positioned for a major bullish breakout if Britain does not get an extension from the European Union.

Emerging markets rallied with China’s manufacturing PMI showing expansion in March. iShares MSCI Emerging Markets (EEM) climbed 3.44 percent and iShares MSCI EAFE (EFA) 2.12 percent.

It was a light and mixed week for earnings reports. Constellation Brands (STX) rose 10.18 percent.  Walgreen’s (WBA) sank 13.53 percent after it missed profit and revenue forecasts, while also lowering forward guidance.