Medical providers led the healthcare sector last week, aided by solid earnings reports. Aetna (AET) is scheduled to report earnings tomorrow. Medical devices remain the strongest subsector from a momentum standpoint.
Biotechnology and pharma have traded sideways for three weeks, consolidating the rally that began in late March. The largest holding in iShares Nasdaq Biotechnology (IBB), Gilead (GILD) will report tomorrow, as will Amgen (AMGN) and Celgene (CELG). Pharmaceutical blue chips including Pfizer (PFE) and Merck (MRK) will report next week.
Microsoft (MSFT), Alphabet (GOOG) and Apple (AAPL) have dented the technology sector and dragged the Nasdaq lower with disappointing earnings. The S&P 500 Index, Dow Jones Industrial Average, as well as mid- and small-cap indexes, all marched higher.
The Nasdaq’s underperformance broke an uptrend in relative performance versus the S&P 500 that stretches back to 2013.
WisdomTree Bloomberg USD Bullish (USDU)
CurrencyShares Euro Trust (FXE)
CurrencyShares British Pound (FXB)
CurrencyShares Canadian Dollar (FXC)
CurrencyShares Japanese Yen (FXY)
WisdomTree Emerging Market Currency (CEW)
The British pound has advanced versus the U.S. dollar and the euro as sentiment has shifted against a “Brexit.”
The Bank of Japan is expected to increase asset purchases at Thursday’s policy meeting and has led to a tumble for the yen. If FXY falls through 85 it will be bearish for the yen, but advantageous for global equities.
Oil prices reached $45 a barrel over the past week, fully shaking off the failed OPEC meeting. The industry outlook would brighten considerably above $50.
China increased steel production in March and plans to increase exports in 2016, which is likely to invite more retaliatory tariffs. China is also fueling the commodities rally with a futures market bubble there. Iron ore was more heavily traded than oil on Chinese futures exchanges in April.
SPDR Utilities (XLU)
SPDR Pharmaceuticals (XPH)
SPDR Materials (XLB)
SPDR Consumer Staples (XLP)
SPDR Consumer Discretionary (XLY)
SPDR Healthcare (XLV)
SPDR Technology (XLK)
SPDR Financials (XLF)
SPDR Retail (XRT)
Energy and materials led the past week’s performance as commodity prices edged higher.
New home sales fell slightly below expectations (511,000 versus 518,000 expected), but pending home sales increased 1.4 percent, double the estimate. Shares pulled back last week after landing in the middle of ITB’s 2015 trading range.
Industrials broke out to a new all-time high over the past week. Unlike defensive sectors, industrial strength is typical of early bull markets and improving economic conditions.
High-yield credit continued to edge higher for a second week even as investment grade credit corrected. With the Fed statement edging in a hawkish direction, a 10-year treasury yield pullback is possible.
Amazon (AMZN) will report earnings tomorrow. Analysts expect the company’s web services to power its revenues, but Amazon’s investment spree could impact profitability.
Value stocks have extended their 2016 outperformance and are now in a relative bull market versus growth leaning counterparts. SPYV counts financials as its largest sector holding, while SPYG is dominated by technology.