The Investor Guide to Vanguard Funds for May 2019

The Investor Guide to Vanguard Funds for May is AVAILABLE NOW!  Links to the May data files are posted below. Market Perspective: China Trade Deal Spooks Equities The S&P 500 […]

Market Perspective for May 18, 2019

Equities moved lower after trade talks between the United States and China deteriorated this week. The Dow Jones Industrial Average fell 0.69 percent for the week, the S&P 500 Index 0.76 percent, the Nasdaq 1.26 percent and the Russell 2000 Index 2.37 percent.

SPDR Utilities (XLU) and SPDR Consumer Staples (XLP) were the best performing sectors on the week. They gained 1.43 percent and 0.77 percent thanks in part to lower interest rates.

iShares Edge MSCI Minimum Volatility USA (USMV) continued its stretch of outperformance. It rose 0.52 percent for the week.

Small business confidence jumped in April according to the National Federation of Independent Business. Consumer confidence beat expectations; the University of Michigan Index hit 102.4, well ahead of the 97.1 consensus forecast.

Housing starts and building permits increased faster than anticipated in April. Weekly jobless claims held near 40-year lows. The Philly Fed’s measure of regional manufacturing activity nearly doubled from 8.5 in April to 16.6 in May.

Crude oil was steady this week, trading between $60 and $64 per barrel. The 10-year Treasury yield slipped to 2.39 percent. The U.S. Dollar Index rose 0.7 percent as the dollar made new 52-week highs against major currencies including the Chinese yuan, Australian dollar and Korean won.

Earnings data was strong this week. Wal-Mart (WMT) saw a 5.5 percent increase in U.S. operating income and beat earnings estimates. Cisco (CSCO) delivered strong earnings; shares rallied 5.64 percent for the week.

Nvidia (NVDA) beat expectations, but forward-looking guidance concerned investors. Shares slipped 7.23 percent.

Chip supplier Applied Materials (AMAT) also beat estimates, sending shares up 4.68 percent on the week.

Market Perspective for May 13, 2019

China put tariffs on $60 billion worth of U.S. imports on Monday, with rates ranging from 5 percent to 25 percent. The S&P 500 Index declined 2.41 percent on the day.

Apple (AAPL) led the technology sector lower when the Supreme Court allowed an antitrust lawsuit to proceed against the firm. Apple slid 5.82 percent on Monday. iPhone users sued the company saying its 30 percent fee charged to app providers was abusing its monopoly power over the store. Apple claimed that users didn’t have standing to bring the case, only developers could sue over the fees, but the Supreme Court disagreed. SPDR Technology (XLK) slipped 3.77 percent.

Defensive sectors outperformed. SPDR Utilities (XLU) gained 1.07 percent and SPDR Consumer Staples (XLP) dipped only 0.94 percent.

Low volatility ETFS continued their relative strength. iShares Edge MSCI Minimum Volatility USA (USMV) declined 1.21 percent, far less than the broader market. Vanguard Dividend Appreciation (VIG) also held up well.

April economic data, including retail sales, industrial production, housing starts and building permits will be released this week. Economics forecast retail sales will have increased 0.7 percent and 0.2 percent ex-autos. They predict industrial production dipped 0.1 percent. Analysts see housing starts hitting an annualized 1.209 million pace and permits at 1.296 million.

The National Federation of Independent Business will report its April small business confidence index on Tuesday. The National Association of Homebuilders releases its homebuilder confidence index and the University of Michigan will release its preliminary consumer sentiment reading.

Alibaba (BABA), Nvidia (NVDA), Cisco (CSCO), Macy’s (M), Children’s Place (PLCE), Jack in the Box (JACK), Wal-Mart (WMT), Baidu (BIDU), Applied Materials (AMAT) and Deere & Co (DE) headline earnings this week.