A quiet grinding rally marked the week and really could be a symbol for almost all of 2017. Four days of minimal movement, led to a bit of a rally late Friday. And there was your week! The S&P 500 finished up 0.6% on the week, and the NASDAQ continues to outperform, pushing up 0.9%. The theme of the year has been very little volatility. That continued!
As of Friday, the S&P 500 moved less than 20 points in either direction eight days in a row, the longest streak since the Beatles first visited North America.
Economic news came in “well enough” (the very bad employment data of March saw some rubber band effect in April), the government kicked the can on federal funding until September, and the Federal Reserve did what everyone expected it to do – nothing. With expectations for something in June.
In a statement, the Fed’s rate-setting Federal Open Market Committee said a slowdown in first-quarter economic growth was “likely to be transitory” and described job gains as “solid.”
“They view the weak first-quarter GDP as ‘transitory’ and not something likely to impact policy. That officially puts two more interest-rate increases on the table,” said Matthew Peterson, chief wealth strategist at LPL Financial, who characterized the Fed’s stance as “pretty much as expected.”
Earnings have been on point:
Roughly 80% of S&P 500 companies that have reported so far are beating earnings estimates and posting earnings per share growth of more than 10% year on year while revenue is up 6% year on year, according to Emmanuel Cau, an equity research analyst at J.P. Morgan Cazenove.
Economic data we are interested in:
- Monday – the ISM manufacturing index fell to 54.8 in April, while construction spending declined 0.2% in March.
- Wednesday – ISM reported a nonmanufacturing index of 57.5, indicating growth, which was above the consensus of 56 of economists. (Readings over 50 indicate expansion)
- Friday – a nice “bounce back” number after a disaster data point in March. 211,000 jobs added and a 4.4% unemployment rate.
In April, restaurants and hotels hired 55,000 people. Professional and business jobs increased by 39,000. Health-care and social-work firms boosted employment by 37,000. Financial companies added 19,000 workers. And retailers, who shed jobs in March and February, increased payrolls for the first time in three months.
Job growth in prior months was little changed, revisions show. The government cut its estimate of new jobs created in March to 79,000 from 98,000, which was the smallest increase in more than a year. The low level of hiring in March was likely affected by poor weather, however, and economists dismissed it as one-off that disguised the true strength of the U.S. economy.
Facebook (FB) and Apple (AAPL) reported earnings but the movement of the stocks wasn’t material enough to get a mention here.
Here is the 5 day weekly “intraday” chart of the S&P 500 via Jill Mislinksi!
Metal credit cards are the new status symbol?
The week ahead…
As of our publication, the French election has gone as expected so no black swan there. Earnings season will start to slow down but still some interesting companies. Economic data also slows – retail sales Friday will be of interest; another “bounce back” number is being predicted with 0.6% growth after prior month shrinkage of 0.2%.
Snap (SNAP) parent company of Snapchat will have it’s first earnings report as a public company so that should be interesting.
Short term: NASDAQ continues to lead with the S&P 500 lagging some even as it rallies.
The Russell 2000 continues it’s inability to get out out his long standing range in yellow.
The NYSE McClellan Oscillator continues to be salty of late, not sticking to one side of the ledger for very long.
Long term: Here are 5 year charts on the major indexes; we are a broken record here but it would take a very severe selloff to change prospects here. Short term the NASDAQ is riding ABOVE this channel we’ve marked – that feels like an extreme overbought condition.
Charts of interest:
Oil had a rough week.
Lottery pick of the week Neurotrope (NTRP) bombed Monday as shares plummeted 63% after the company released mid-stage clinical trial results for an Alzheimer’s disease drug that were criticized by investors.
Some good news in the retail sector Tuesday as Coach (COH) popped 11% after it reported results that topped analyst forecasts.
(And then not so good retail news Thursday as Avon Products (AVP) reported a surprise loss, sending shares down 22%.) Knew it couldn’t last!
(Did I mention it couldn’t last? Revlon (RVP) shares dropped nearly 24% Friday after the beauty company reported quarterly results.) Is there a bear market in makeup I am unaware of?
Also Tuesday, chip maker Advanced Micro Devices (AMD) tumbled 24% a day after it announced a $73 million quarterly loss.
Congrats to those who held out hope in Angie’s List (ANGI) as it soared 62% Tuesday after IAC/InterActiveCorp. late Monday confirmed it is buying the consumer-recommendation website for $8.50 a share.
And congrats to Oprah who put a nice sum into the company a while back – Weight Watchers (WWT) jumped 9.3% Wedneday after it swung to a first-quarter profit. The at it’s peak this week was up almost 100% since February! (Stock was below $7 when Oprah announced her investment)
FireEye (FEYE) soared nearly 13% Wednesday after reporting better-than-expected first-quarter earnings.
Have a great week and we’ll see you back here Sunday!