Market Perspective for May 21, 2018

Equities rebounded on Monday after weekend trade negotiations between the U.S. and China. Boeing (BA) and Caterpillar (CAT) both jumped on the news. SPDR Industrials (XLI) was by far the best performing sector fund on the day, and the Dow led major indexes.

The consensus forecast for April new home sales is an annualized pace of 678,000, down slightly from March’s 694,000. Existing home sales are also expected to have dipped in April to an annualized pace of 5.5 million. Economists see weekly jobless claims holding steady around 220,000. May consumer sentiment and April durable goods orders will be out later in the week.

The U.S. Dollar Index advanced in overnight trading before pulling back on Monday. The greenback has risen in four of the past five weeks. The euro was under pressure on Monday as Italy’s new government takes shape. Italian 2-year bond yields rose 500 percent on Monday, from 0.05 percent to 0.25 percent. Over the past two weeks, iShares MSCI Eurozone (EZU) was flat, but iShares MSCI Italy (EWI) has lost 6 percent.

The 10-year and 30-year Treasuries started the week with small gains. Both made new multi-year highs last week. Thompson Bond (THOPX) gained last week and Virtus Seix Floating-Rate High Income (SAMBX) held steady, but most bond funds lost ground.

Retail earnings season is in full swing this week. TJX Companies (TJX), Advance Auto Parts (AAP), AutoZone (AZO), Cracker Barrel (CBRL), Kohl’s (KSS), Lowe’s (LOW), Target (TGT), Tiffany & Co. (TIF), L Brands (LB), Ross Stores (ROSS), Best Buy (BBY) and Foot Locker (FL) are among the many retailers reporting.

Medtronic (MDT), Royal Bank of Canada (RY), Toronto Dominion Bank (TD) Intuit (INTU), Hewlett Packard Enterprise (HPE), Toll Brothers (TOL) and NetApp (NTAP) will also report.


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