Market Perspective for May 5, 2017

Equities finished the week higher following Fed optimism and a better-than-expected jobs report. The Dow closed the week at 21,006.94, up 0.26 percent on the day. The S&P 500 Index gained 0.41 percent and the Nasdaq climbed 0.42 percent. For the week, the Dow gained 0.30 percent, and the S&P 500 gained 0.60 percent. The Nasdaq closed the week up 0.90 percent.

211,000 jobs were created in April, beating estimates of 190,000, and more than double March’s 79,000 new jobs. The U-3 unemployment rate fell to 4.4 percent and average hourly earnings increased 0.3 percent. The U-6 unemployment rate fell to 8.6 percent, down from 9.7 percent one year ago and 9.4 percent in January. The leisure and hospitality sector led with 55,000 new jobs. Healthcare added 37,000 workers and financials 19,000. Government added 17,000.

The April employment data pushed the odds of a June rate hike as high as 83 percent on Friday. Odds of a rate hike also rose earlier in the week following the Federal Open Market Committee (FOMC) meeting.

West Texas Intermediate crude slumped to $45 a barrel before bouncing to $46 on Friday. The slide comes amid rising U.S. production and elevated inventories. Speculators could keep oil below $50 for the near future. Weakness in oil was largely contained within the energy sector, but some high-yield funds declined in sympathy.

The April manufacturing PMIs were lower than expected, but still reflect expansion in the manufacturing sector. The services PMI came in at 57.5, above the estimate of 56 and March’s 55.2 reading. Weekly unemployment claims fell to 238,000, below expectations of 245,000. The March trade deficit was also below expectations at $43.7 billion. Productivity fell 0.6 percent in the first quarter, below the 0.0 percent forecast. Unit labor cost rose 3.0 percent.

Apple (AAPL), Pfizer (PFE), Merck (MRK), Facebook (FB) and Mastercard (MA) all beat earnings estimates this week. Apple shares initially dipped on disappointing iPhone sales, but pushed to another new all-time high on Friday.

Financials led sector performance this week, followed by industrials and healthcare. Energy was by far the worst performer, losing about 1.5 percent on the week.

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