After the prior week’s relative “fireworks”, last week returned to the action we’ve seen much of 2017 – relative calm with an upward skew. Very minor losses Monday and Friday book-ended 3 days of gains, with Tuesday being the one day where indexes moved significantly in any direction. The S&P 500 gained 0.80% for the week and 5.5% for quarter 1. Tuesday’s gains were buoyed by news consumer confidence in March soared to the highest level in more than 16 years, and U.S. house prices jumped to their highest in nearly three years.
We’ve been noting the lack of volatility in many of our weekly posts; to that end:
Stocks are coming off their least volatile quarter in decades with the Dow industrials averaging a 0.3% change per day, the most steady quarter since the fourth quarter of 1965, according to Dow Jones data. The S&P 500 also averaged a daily change of 0.3% during the quarter, its least volatile since the third quarter of 1967.
Apple had a good week as it jumped 2.1% Tuesday to close at a record $143.80 after a UBS analyst said he could see the stock rise another 22% in his “most likely scenario.” It is worth noting as this stock is so influential on the NASDAQ which is currently outperforming the S&P 500.
You can see similar great action in NASDAQ heavyweights such as Facebook (FB) and Amazon (AMZN).
Here is the weekly “intraday” chart of the S&P 500 via Jill Mislinksi.
April is a great month for stocks; maybe it is all that last minute IRA money trying to get in before the annual deadline!
Over the past six decades, the Dow Jones Industrial Average has produced an average gain of 1.2% in the first half of April. The comparable average for the other 11 months is 0.2%.
What is the Baltic Dry Index and should you care?
The week ahead…
A lot of interesting economic reports with both the manufacturing and non manufacturing ISM set to report. Friday brings the monthly employment data.
- Monday – ISM Manufacturing
- Wednesday – ISM Non Manufacturing
- Wednesday: FOMC Minutes
- Friday – Employment Data: ~180,000 jobs expected to be created
Presidents Trump and Xi Jinping are set to meet. Looks like China is greasing the skids nicely…
China has also looked favorably on Mr Trump’s business. Since his inauguration it has approved dozens of pending trademark applications by The Trump Organization. The volume of applications to market Ivanka Trump’s brand in China has also soared. This week, Kushner Companies — the family property group from which Jared has stepped back — ended talks to sell a prime piece of Manhattan real estate on very favorable terms to Anbang, a Chinese company, after members of Congress alleged a conflict of interest.
And we are soon to embark on earnings season!
First-quarter earnings are expected to grow by 9.1%, in what would be the largest year-over-year quarterly gain since the fourth quarter of 2011, according to John Butters, senior earnings analyst at FactSet.
Short term: A bit of bifurcation here as the S&P 500 is in a bit of a short term downtrend here while the NASDAQ is approaching highs set a month earlier.
The Russell 2000 has been stuck in this same range for all of 2017!
An interesting turn of events here on the NYSE McClellan Oscillator which had been negative most of March; it turned positive this week. So this is a feather in bull’s cap. We have to respect that if we are being consistent and say the outlook is now better for the bulls than it has been the past month.
Long term: Here are 5 year charts on the major indexes; if your trading timeline is measured in years rather than days or weeks, you are just in “sit and smile” mode.
Charts of interest:
Darden (DRI) rallied 9.3% Tuesday after the Olive Garden parent reported earnings that topped expectations.
This week in the biotech lottery: Vertex Pharma (VRTX) surged Thursday after the company’s drug for cystic fibrosis met endpoints in two late-stage clinical studies.
Part 2 of the biotech lottery happened Friday when Akari Therapeutics (AKTX) soared 59% to $11.07 after the U.S. Food and Drug Administration granted one of its treatments a “fast-track” designation.
Restoration Hardware parent RH (RH) jumped 15% Thursday a day after the home furnishings retailer posted better-than-expected earnings.
It really wouldn’t be a proper week without a disaster in the retail space, now would it? So this week’s presentation: Lululemon (LULU) tumbled more than 23% Thursday as several analysts cut price targets on the retailer, which forecast lower profit and sales in the first quarter and missed fourth-quarter earnings expectations.
Again, I am not sure who owns a Blackberry (BBRY) who is not in government but apparently they are still around… and the stock jumped 12% Friday after trimming losses and stating that it expects to be profitable on an adjusted earnings-per-share basis in fiscal 2018.
Have a great week and we’ll see you back here Sunday!