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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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The Week In Review

5/4/18

 

U.S. equities rallied on Friday following the publication of the monthly jobs report, with technology names leading the charge -- including Apple (AAPL 183.83, +6.94), which rallied 3.9% after Warren Buffet revealed his company, Berkshire Hathaway (BRK.B 195.64, +4.03), bought an additional 75 million shares of Apple in the first quarter. The Russell 2000 jumped 1.2%, the S&P 500 advanced 1.3%, the Dow climbed 1.4%, and the Nasdaq rose 1.7%.

Equity indices opened the session modestly lower, but things turned around quickly after the S&P 500 found support at its 200-day moving average. Stocks climbed steadily into the late afternoon, finishing near their best marks of the day. Friday's gains brought the S&P 500 and the Dow within 0.2% of their flat lines for the week and left the Nasdaq with a weekly gain of 1.3%.

The Employment Situation report for April was released on Friday morning, but didn't contain many surprises, reinforcing the notion that the Fed is on course for at least two more rate hikes this year. The report showed a lower-than-expected increase in nonfarm payrolls (164K actual vs 190K Briefing.com consensus), an in-line reading for average hourly earnings (+0.2% actual/Briefing.com consensus), and a lower-than-expected unemployment rate (3.9% actual vs 4.0% Briefing.com consensus).

Gains were broad-based on Friday, with all 11 S&P sectors settling in the green. The top-weighted technology sector (+2.0%) closed at the top of the day's leaderboard, but seven groups in total finished with gains of at least 1.0%. The energy and utilities sectors finished at the back of the pack, but still added 0.4%-0.5% apiece.

Several well-known consumer names rallied after reporting better-than-expected quarterly earnings and revenues, including Pandora (P 6.89, +1.14), GoPro (GPRO 5.45, +0.49), and Shake Shack (SHAK 55.95, +8.54), which spiked between 9.9% and 19.8%, and CBS (CBS 53.17, +4.43), which climbed 9.1%. However, V.F. Corp (VFC 76.27, -2.19) -- which owns brands like The North Face, Lee, Wrangler, JanSport, and Dickies -- declined 2.8% despite also beating top and bottom line estimates.

U.S. Treasuries saw some intraday movement on Friday, but ended mostly flat, with the yield on the benchmark 10-yr Treasury note closing unchanged at 2.94%. Meanwhile, WTI crude futures jumped 1.9% to $69.72/bbl, their highest close since November 2014, and the U.S. Dollar Index climbed 0.2% to 92.45 -- a new 2018 high.

In geopolitics, two days of trade negotiations between the U.S. and China ended without a deal, as expected, but the two sides did agree to keep talking.

  • Nasdaq Composite: +4.4% YTD
  • Russell 2000: +2.0% YTD
  • S&P 500: -0.4% YTD
  • Dow Jones Industrial Average: -1.9% YTD

Week In Review: Mixed Week Ends On A Positive Note

Equity indices finished the week mixed, with the S&P 500 and the Dow losing 0.2% apiece and the tech-heavy Nasdaq adding 1.3%. Investors digested the latest policy directive from the Fed, the Employment Situation report for April, and another big batch of corporate earnings -- including Apple's (AAPL) quarterly report.

The stock market kicked off the week on a lower note Monday, with telecoms leading the retreat after Sprint (S) and T-Mobile US (TMUS) agreed to an all-stock merger over the weekend. The deal, which capped four years of on-again, off-again talks, is aimed at creating a larger carrier to better compete with wireless giants AT&T (T) and Verizon (VZ).

Wall Street bounced back a bit on Tuesday, led by technology shares, which rallied ahead of Apple's quarterly earnings release. Apple's results crossed the wires on Tuesday evening, showing a better-than-expected bottom line. In addition, the tech giant raised its profit guidance for the current quarter, increased its share repurchase program by $100 billion, and raised its dividend by 16%.

Apple shares rallied more than 4.0% on Wednesday in reaction to the upbeat results/guidance, but the broader market struggled -- a somewhat concerning signal considering Apple was among the top performers during last year's rally and considering it's the largest component in the S&P 500 by market cap.

The Fed's latest policy directive was released on Wednesday afternoon, but contained few surprises. Fed officials unanimously decided to leave the federal funds target range unchanged at 1.50% to 1.75%, as expected. In addition, officials laid the groundwork for a rate hike at the June meeting and left the door open for another one to two hikes before the end of the year.

Equity indices shot lower at the start of Thursday's session, with the S&P 500 busting through its 200-day moving average, but eventually rebounded to finish little changed. Tesla (TSLA) received a lot of attention in the media on Thursday after its CEO, Elon Musk, unconventionally dismissed analysts' questions in the company's earnings call, calling them "boring."

The Employment Situation report for April crossed the wires on Friday morning, showing a lower-than-expected increase in nonfarm payrolls (164K actual vs 190K Briefing.com consensus), an in-line reading for average hourly earnings (+0.2% actual/Briefing.com consensus), and a lower-than-expected unemployment rate (3.9% actual vs 4.0% Briefing.com consensus).

The key takeaway from the report is that there weren't a lot of big surprises in it, which effectively means the Fed is apt to stay on course for at least two more rate hikes this year.

Apple reemerged in the headlines on Friday after Warren Buffet revealed his company, Berkshire Hathaway (BRK.B), bought an additional 75 million shares of Apple in the first quarter. Apple jumped 3.9% in reaction, leading a broad-based rally that made a significant dent in the S&P 500's weekly decline. The tech group was the top-performing sector on Friday, extending its weekly gain to 3.2%.

The technology sector closed at the top of the sector standings by a decent margin, while health care (-3.0%), telecom services (-4.6%), and consumer staples (-2.0%) finished at the back of the pack. In total, seven S&P 500 sectors settled the week in negative territory, while four groups settled in the green.

Headlines provided by Briefing.com