Another great week for the bulls as a rallies Tuesday and late Friday pushed markets back to the all time high levels! Earnings “beats” (off lowered expectations) are helping out here:
More than a fifth of the S&P 500 constituents have reported results, with nearly 80% of those companies producing earnings results that topped analysts’ consensus estimates, compared with about 65% in the fourth quarter. To be sure, that reflects lowered estimates heading into the quarter amid worries about a recession and anemic growth outside of the U.S., amplified by a trade spat between Washington and Beijing.
“Earnings are driving stocks this week, and while we’re seeing better-than-expected earnings overall, it’s clear that expectations were lower than they should have been,” said Kate Warne, investment strategist at Edward Jones.
Not much on the economic front that the market cared about but let’s do a quick talk about GDP.
The U.S. economy grew at an annual rate of 3.2% in the first quarter, well above the 2.3% estimated by economists polled by MarketWatch and faster than the 2.2% rate seen in the fourth quarter. The unusual strength in Friday’s report can be attributed, in part, to a rise in inventories and exports that analysts say aren’t likely to continue in the year ahead, potentially setting the stage for weaker economic growth in the quarters to come.
For the week, the S&P 500 gained 1.2% and the NASDAQ 1.9% – that is the 5th straight up week for the NASDAQ.
Here is the 5 day weekly intraday chart of the S&P 500 … via Jill Mislinski.
The week ahead…
Investors will get an update on Fed policy and thinking this week, when the central bank concludes a two day policy meeting on Wednesday. Wednesday also brings ISM Manufacturing. Friday is the payroll report for April.
Earnings season continues with monster reports from companies such as Apple & Google!
Short term: The S&P 500 and NASDAQ both hit all time highs – it’s been quite a run since Powell said “patience”.
The Russell 2000 remains quite mediocre in light of the other indexes.
The NYSE McClellan Oscillator stayed red all week – these divergences are always interesting.
Long term: Things are definitely looking up again.
Charts of interest / Big Movers:
Monday, KeyW Holding (KEYW) rallied 42% after the engineering and technology company announced it will be acquired byJacobs Engineering (JEC) in a deal valued at $815 million, including $272 million in debt.
Twitter (TWTR) rallied 16% Tuesday after the social media company reported user growth well beyond analyst forecasts.
Hasbro (HAS) jumped 14% Tuesday after the firm reported a surprise profit and growth in revenue.
Thursday, the diversified industrial giant 3M (MMM) slashed its full-year 2019 guidance and said it would cut 2,000 jobs. 3M’s stock skidded 13%.
Facebook (FB) gained 5.9% after the social-media company reported revenue and profit that topped Wall Street estimates. However, Facebook did set aside some $3 billion for a potential regulatory fine related to its handling of client data.
Semiconductor company Xilinx (XLNX) slumped 17% Thursday after the chip maker beat lowered expectations for fiscal fourth-quarter earnings and revenue.
United Parcel Services (UPS) skidded 8.1% after the delivery company reported quarterly results that disappointed Wall Street on earnings and revenue.
Friday, Intel (INTC) sank 9%, after the chip maker’s outlook fell way below Wall Street estimates.
Have a great week and we’ll see you back here Sunday!