Market Perspective for April 5, 2019

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.


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