Market Recap - Mixed Week on Wall Street as Continued Weakness in Health Care Curbs Earnings Enthusiasm

The S&P 500 declined 0.1% in this abbreviated trading week, as heavy selling in the health care sector (-4.4%) outweighed a round of generally positive earnings reports.

Overall price action was tame, though, which was reflective of a tired market after a massive rally this year. Despite the decline, the S&P 500 finished just above the 2900 level.

The Dow Jones Industrial Average increased 0.6%, and the Nasdaq Composite increased 0.2%. The Russell 2000 underperformed with a loss of 1.2%.

The first full week of the first quarter earnings-reporting season provided investors with a slew of earnings beats from widely-held companies. Most stocks reacted favorably, but the overall market response to the good news was muted, likely due to the sense that much of the good news had already been priced in.

Investors, meanwhile, continued to reduce exposure to the The S&P 500 declined 0.1% in this abbreviated trading week, as heavy selling in the health care sector (-4.4%) outweighed a round of generally positive earnings reports. Week Ending 4/19/19 beaten-up health care sector, which fell into negative territory for the year. The space remains under political pressure to curb rising health care costs, which is likely to continue throughout the 2020 presidential campaign trail. The sense that there would be an opportunity cost in remaining in the sector overshadowed positive earnings reports from UnitedHealth (UNH), Johnson & Johnson (JNJ), and Abbott Labs (ABT).

The semiconductor industry, though, continued to be an area of strength for the stock market. The Philadelphia Semiconductor Index rose 4.1%, and many of its components also contributed to the outperformance of the S&P 500 information technology sector (+1.3%).

The semiconductor space received a boost from news that Apple (AAPL) and Qualcomm (QCOM) settled their royalty dispute and agreed to a six-year licensing deal on Tuesday. Shares of Qualcomm surged 39.7% from Monday’s closing price. Intel (INTC) followed up with a well-received announcement that it will drop out of the 5G smartphone modem business.

The S&P 500 industrials sector (+1.3%) outperformed alongside the tech sector following a batch of earnings beats. Some of those beats came from Union Pacific (UNP), Honeywell (HON), Danaher (DHR), United Rentals (URI), and CSX Corp. (CSX).

U.S. Treasuries finished lower this week, pushing yields higher across the curve. The 2-yr yield increased four basis points to 2.38%, and the 10-yr yield increased six basis points to 2.56%. The U.S. Dollar Index increased 0.5% to 97.46. WTI crude increased 0.2% to $64.03/bbl.

Market Recap - S&P 500 Breaks Above 2900 With A Little Help From JPMorgan Chase And Walt Disney

The S&P 500 Increased 0.5% This Week, As A Strong Earnings Report From JPMorgan Chase (JPM) And A Positive Response To Walt Disney's (DIS) Upcoming New Streaming Service Helped The Broader Market Overcome Weakness From The Health Care Stocks.

The Nasdaq Composite increased 0.6%, and the Russell 2000 increased 0.1%. The Dow Jones Industrial Average declined 0.1%, pulled lower by shares of UnitedHealth (UNH) and Chevron (CVX).

The broader market appeared to be in limbo leading up to the start of the first quarter earnings-reporting season on Friday. The market received a persistent reminder about slowing growth from the International Monetary Fund, but moderating inflation data and assurance from the Federal Reserve and the European Central Bank to keep rates on hold kept stocks steady.

The lack of new catalysts also kept the S&P 500 drifting below the 2900 level, which had been an area of resistance for the benchmark index. Fortunately for the S&P 500, Friday came with the firepower necessary to finally break, and close, above the level for the first time since early October.

JPMorgan reported record revenue and net income for the first quarter. Disney surged to a new-all time high after impressing investors with its new Disney+ streaming service the evening prior. Chevron announced plans to acquire Anadarko Petroleum (APC) for $33 billion, fueling gains in many of the smaller energy companies. Lastly, solid export activity out of China for March helped contribute to the notion the Chinese economy has bottomed.

JPMorgan's strong earnings report was a major contributor to the renewed leadership from the S&P 500 financial sector (+2.1%). Disney's 11.5% gain on Friday was an added boost to the outperformance of the S&P 500 communication services sector (+1.6%).

On the downside, the S&P 500 health care sector (-2.4%) remained out of favor. Continued uncertainty about the fate of the Affordable Care Act and increasing threats from lawmakers to curb rising drug costs weighed heavily on the space.

U.S. Treasuries lost ground this week, pushing yields higher across the curve. The 2-yr yield increased five basis points to 2.39%, and the 10-yr yield increased six basis points to 2.56%. The U.S. Dollar Index lost 0.5% to 96.96. WTI crude rose 1.3% to $63.91/bbl.

Market Recap - Stock Rally Carries Over Into Second Quarter

The S&P 500 Gained 2.1% To Start The Second Quarter This Week, Extending Its Winning Streak To Seven Straight Sessions And Setting A New Closing High For The Year. Investor Sentiment Was Boosted By Positive Manufacturing Data, Progressing U.S.-China Trade Talks, And A Goldilocks Employment Situation Report For March.

The Dow Jones Industrial Average gained 1.9%, the Nasdaq Composite gained 2.7%, and the Russell 2000 gained 2.8%.

The S&P 500 materials (+4.3%), financials (+3.3%), and consumer discretionary (+3.2%) sectors led the broader market higher. Conversely, the defensive-oriented consumer staples (-1.0%) and utilities (-0.2%) sectors were the lone groups that finished lower.

Stocks rallied to begin the week, catalyzed by better-than-expected manufacturing activity for March out of the U.S. and China. The data helped reinforce the idea that global economic activity could be close to, or near, a bottom, which could potentially lead to a pickup in earnings growth later in the year.

The broader market drifted higher throughout the week while U.S.-China trade talks appeared to progress favorably in Washington. Key issues like forced technology transfers and enforcement mechanisms have yet to be resolved, though. President Trump said it will be known probably in the next four weeks or so if a deal gets done.

Friday's release of the Employment Situation Report for March showed job growth rebound without stirring concerns about inflation, which provided more fuel for the rally. Overall, the report exposed February's weak payrolls data as an aberration and helped drive the notion that the economic expansion in the U.S. still has room to run.

Leadership from the growth-oriented Dow Jones Transportation Average (+3.1%) and the Philadelphia Semiconductor Index (+5.9%) reflected this growth optimism. Delta Air Lines (DAL) led the airline, and transport, stocks higher after providing upbeat results and guidance. Semiconductor stocks received a boost from a Digitimes report suggesting Taiwan Semi (TSM), which is the largest contract semiconductor foundry, is seeing a rebound in chip orders.

Walgreens (WBA) and Tesla (TSLA), on the other hand, were left out of the rally. Walgreens disappointed investors with its earnings results and guidance; Tesla, meanwhile, reported a steep decline in Q1 deliveries and said the results will negatively affect the company's Q1 net income.

U.S. Treasuries pulled back this week, driving yields higher across the curve. The 2-yr yield increased seven basis points to 2.34%, and the 10-yr yield increased nine basis points to 2.50%. The U.S. Dollar Index increased 0.1% to 97.40. WTI crude rose 4.9% to $63.10/bbl, hitting a five-month high.

Market Recap - Investors Look Past Growth Worries, Wall Street Mounts Historic Quarter

The S&P 500 bounced back this week, gaining 1.2% to cap off its best quarter (+13.1%) since 2009. Leadership from the recently-battered industrial sector (+2.9%) helped the market overcome lingering growth concerns.

The Dow Jones Industrial Average (+1.7%), the Nasdaq Composite (+1.1%), and the Russell 2000 (+2.3%) finished with quarterly gains of 11.2%, 16.5%, and 14.2%, respectively.

The S&P 500 industrials (+2.9%), consumer discretionary (+1.9%), and consumer staples (+1.6%) sectors led the broader market higher. Conversely, the utilities (-0.5%) and communication services (-0.5%) sectors were the lone groups to finish with losses.

Continued weakness in the eurozone contributed to a slow start for the broader market. Burgeoning concerns about growth sent the yield on the benchmark 10-yr German bund into negative territory. Dwindling growth expectations, and the hunt for yields, likely sent investors flocking to the U.S. Treasury market, sending yields even lower.

The 2-yr yield and the 10-yr yield declined five basis points each to 2.27% and 2.41%, respectively. Strikingly, the 2-yr yield dropped 23 basis points this month, while the 10-yr yield dropped 30 basis points this month. The U.S. Dollar Index advanced 0.6% to 97.27.

It should be noted, though, that the 2-yr yield was at 2.16% at its low, and the 10-yr yield was at 2.34% at its low this week. Once Treasuries cooled off in the back half of the week, equities tacked on a bulk of their gains.

The relatively low yields appear to be helping the U.S. housing market, which should offer a measure of support for the economy. Mortgage applications continued to increase, new home sales increased last month, and homebuilders KB Home (KBH) and Lennar (LEN) provided investors with an upbeat outlook for the sector.

In other key news, U.S. and China held "constructive" trade talks in Beijing; UK Prime Minister Theresa May's Brexit deal was shut down for the third time; and Fed Governor Randal Quarles believes further rate hikes may be necessary, as he remains optimistic about economic growth.

Separately, Uber Technologies (UBER), Centene (CNC), and Thermo Fisher (TMO) were some of the more notable companies that made sizable acquisitions this week. Lyft (LYFT), meanwhile, made its highly-anticipated market debut on Friday.

Market Recap - Fed Leans More Dovish, U.S. Treasury Yields Drop, Growth Concerns Grow

The S&P 500 lost 0.8% this week in a tale of two trading narratives. The first narrative lifted the S&P 500 to a new 2019 high on the notion that low U.S. Treasury yields and a dovish Fed were a boon for risk assets.

However, the week's gains were wiped out on Friday amid renewed worries that the market continues to get ahead of itself in pricing in a better economic outlook than what economic data indicate.

The Dow Jones Industrial Average lost 1.3%, and the Nasdaq Composite lost 0.6%. The Russell 2000 underperformed with a steep loss of 3.1%

The S&P 500 financial sector (-4.9%) was the week's outright laggard, pressured by concerns that the compression in spreads will lead to weak net interest margins for lenders. Conversely, the consumer discretionary (+1.2%), real estate (+0.9%), and consumer staples (+0.7%) sectors outperformed.

On Wednesday, the Federal Open Market Committee left the target range for the fed funds rate unchanged at 2.25-2.50%; signaled that it does not expect any rate hikes now in 2019 versus two rate hikes expected at the time of the December 2018 meeting; and said it will begin tapering its balance sheet runoff in May with an end date of Sept. 30.

The Fed's pivot to an even more dovish mindset made it clear that the market doesn't have to fear the Fed like it did in the fourth quarter. At the same time, however, some viewed the pivot as a dim outlook for economic growth that won't translate well for earnings growth.

Nevertheless, the indication for no rate hikes in 2019 (and only one in 2020) sent U.S. Treasury yields noticeably lower across the curve, which was further accentuated by growth concerns.

The 2-yr yield dropped 12 basis points to 2.32%, and the 10-yr yield dropped 13 basis points to 2.46%. The U.S. Dollar Index increased 0.1% to 96.65. WTI crude increased 0.8% to $59.01/bbl.

Growth concerns were reinforced by an earnings warning from FedEx (FDX), disappointing manufacturing data out of Europe, and declining exports out of Japan and South Korea. FedEx called attention to slowing international macroeconomic conditions and weaker global trade growth trends. Nike (NKE) didn't help ease concerns after reporting underwhelming growth in North American sales.

In other macro developments, China confirmed trade negotiations with the U.S. will continue in Beijing next week and in Washington in early April. EU leaders offered to delay the Brexit date until May 22 if British lawmakers approve Prime Minister Theresa May's deal next week.

Market Recap - Risk Assets in Favor as Fed Remains Sidelined

The S&P 500 gained 2.9% this week in a buy-the-dip trade that was supported by a sidelined Federal Reserve, persistently low U.S. Treasury yields, and a weakening dollar. In addition, key leadership from Apple (AAPL) and semiconductor stocks helped the S&P 500 set a new high for 2019 and close at its highest level since Oct. 10.

The Dow Jones Industrial Average gained 1.6%, Nasdaq Composite gained 3.8%, and the Russell 2000 gained 2.1%.

10 of the 11 S&P 500 sectors finished notably higher with gains ranging from 1.7% (materials) to 4.9% (information technology). The industrials sector underperformed with a gain 0.3%.

Fed Chair Jerome Powell set the tone for the week after he reiterated the Fed's patient stance in an interview with 60 Minutes on Sunday. Although not "new" news for the market, reassurance from the Fed, along with talk of policy support in China and actual policy support in Japan later in the week, helped soothe fears about slowing growth.

Soft economic data throughout the week contributed to the belief the Fed will stay put, which helped keep U.S. Treasury yields at persistently low levels.

The 2-yr yield remained unchanged at 2.44%, and the 10-yr yield declined four basis points to 2.59% -- both near their lows for the year. The lower rates, along with a patient Fed, remained a supportive consideration for risk assets.

Similarly, investors seemed to like the idea that a weakening dollar, should it persist, could provide some earnings-based relief for multinational companies. The U.S. Dollar Index lost 0.8% to 96.56.

Positive analyst coverage on Apple contributed to the stock's 7.6% gain this week. Separately, the Philadelphia Semiconductor Index, which was aided by Broadcom's (AVGO) call that the industry will hit bottom in the second quarter, jumped 5.6%. Many of its components also helped contribute to the outperformance of the tech sector and the Nasdaq.

In key corporate news, Boeing (BA) and Facebook (FB) were under pressure amid some company-specific issues.

Boeing was under public scrutiny following the fatal crash involving its 737 MAX-8 in Ethiopia. Concerns about the safety of the aircraft prompted the forced grounding of its 737 MAX fleet; Boeing announced it will roll out a software upgrade for the plane in the coming weeks. Shares of Boeing fell 10.3% this week, weighing heavily on the Dow and S&P 500 industrials sector.

In Facebook's case, The New York Times reported the company is under criminal investigation for some of its data deals that it arranged with tech companies. In addition, Facebook announced the departure of its chief product officer.

Elsewhere, UK Prime Minster May's plan for Brexit did not win approval in the British Parliament, yet Parliament did vote in favor of extending the Brexit deadline until June 30 at the latest. Lawmakers still need to agree on an alternate deal, and the delay still needs to be approved by all 27 member states of the European Union.

Market Recap - Growth Concerns and Profit Taking

The S&P 500 lost 2.2% this week, as concerns about global growth underpinned a risk-off mindset. With few catalysts to justify further gains, and a confluence of discouraging data, news, and technical drivers, the market succumbed to profit-taking interest after its strong start to the year.

The Dow Jones Industrial Average lost 2.2%, the Nasdaq Composite lost 2.5%, and the Russell 2000 lost 4.3%. 

Nine of the 11 S&P 500 sectors finished lower, led by the energy (-3.9%), health care (-3.9%), and industrial (-2.9%) sectors. Conversely, the real estate (+0.5%) and utilities (+0.7%) sectors were the lone groups to finish higher.

The leading narrative for the market this week was that global growth is slowing and that the market got ahead of itself pricing in economic prospects.

Major developments reinforcing this belief included (1) a surprisingly weak U.S. nonfarm payroll figure, which grew by just 20,000 (Briefing.com consensus 173,000); (2) the European Central Bank (ECB) issuing a dovish-minded policy stance; (3) 2019 GDP growth forecast cuts from the OECD, ECB, and China; and (4) slight-to-moderate growth for 10 of the 12 Fed districts, indicated in the Fed's Beige Book for March.

Likewise, there were growing concerns about the prospects for a U.S.-China trade deal.

U.S. Ambassador to China, Terry Branstad told The Wall Street Journal that a date has not yet been set for a summit because neither side feels an agreement is imminent. Separately, President Trump said if a China trade deal is "not a great deal," he will not make one, and that the U.S. will do well with or without a China trade deal.

There were some technical drivers in play, too. The S&P 500's inability to sustain a retest of its November high and stay above the 2800 level exacerbated selling efforts that sent the benchmark index below its 200-day moving average. The Nasdaq Composite, Russell 2000, and Dow Jones Transportation Average also fell below their 200-day moving averages. 

The U.S. Treasury market exhibited a flight-to-safety trade, which drove yields notably lower after making notable moves higher in the prior week. The 2-yr yield dropped 11 basis points to 2.44%, and the 10-yr yield dropped 13 basis points to 2.63%. The U.S. Dollar Index Index rose 0.9% to 97.36. WTI crude lost 0.6% to $56.14/bbl.

Market Recap - Financials, Information Technology Lead Broader Market Higher

The S&P 500 increased 0.4% this week, extending its yearly gain to 11.8%, as shares of financial and technology companies outperformed. There was a lot of news for the market to digest, which included economic data, U.S-China trade updates, and geopolitics.

The Nasdaq Composite rose 0.9%. The Dow Jones Industrial Average and the Russell 2000, meanwhile, finished flat.

The S&P 500 financials (+0.8%), information technology (+1.0%), and energy (+1.1%) sectors outperformed the broader market. Conversely, the materials (-1.6%), real estate (-1.2%), and consumer staples (-0.4%) sectors underperformed.

Several key economic indicators helped tame buying interest this week, though.

December housing starts increased at the slowest pace (1.078 million) since September 2016; the advance estimate of Q4 GDP increased 2.6% (Briefing.com consensus 2.3%) but was still below the growth registered in the second and third quarters; and the ISM Manufacturing Index for February decreased to 54.2 (Briefing.com consensus 56.0) from January's reading of 56.6.

The positive news for investors, though, is that consumer confidence increased in February; moreover, the softer data could reinforce the Fed's "patient" stance on monetary policy.

Fed Chair Jerome Powell upheld that view in his semi-annual Congressional testimony on the economy this week. He also acknowledged the Fed is close to agreeing on a plan to end the balance sheet runoff.

In U.S-China trade news, President Trump officially delayed the March 1 deadline, as was anticipated, due to reported progress being made. Bloomberg reported Friday that the U.S. and China are in the process of preparing a document that lays out the provisions of a trade deal that could be signed perhaps as early as mid-March.

There were also some geopolitical developments that garnered some attention. President Trump abruptly ended a two-day summit with North Korean leader Kim Jong-un, unable to reach an agreement on the denuclearization effort. Separately, Pakistan shot down two Indian fighter jets over their contested border but returned a captured Indian pilot in goodwill.

In earnings news, retailers had a pretty good showing. Macy's (M), AutoZone (AZO), Lowe's (LOW), TJX (TJX), Best Buy (BBY), Gap (GPS), and Foot Locker (FL) all climbed on better-than-expected results. Home Depot (HD), too, had a solid fourth quarter but issued downside earnings guidance. The SPDR S&P Retail ETF (XRT) increased 2.3% this week.

U.S. Treasuries declined noticeably this week, sending yields higher across the curve. The 2-yr yield increased seven basis points to 2.55%, and the 10-yr yield increased 10 basis points to 2.76%. The U.S. Dollar Index lost 0.1% 96.46. WTI crude lost 2.5% to $55.81/bbl.

Market Recap - U.S. - China Trade Talks, Federal Reserve Keep Investors at Ease

The S&P 500 increased 0.6% this holiday‐shortened trading week. This week featured the seventh round of U.S.‐China trade talks and some reassurance from the Federal Reserve. The benchmark index increased its rally from the December 24 low to 18.8%.

The Dow Jones Industrial Average gained 0.6%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 1.3%.

The S&P 500 utilities (+2.4%), materials (+2.3%), and information technology (+1.4%) sectors outperformed the broader market. Conversely, the energy (‐0.5%), and consumer staples (‐0.3%) sectors were the lone groups that finished with losses this week.

Investors received several updates from U.S‐China trade talks in Washington: (1) The two sides made an agreement on currency, but no specifics were provided; (2) China reportedly committed to purchase $1.2 trillion in U.S. goods, but the two sides reportedly remained far apart on forced technology transfers; and (3) President Trump said he will work out the final points on trade with China's President Xi most likely in March.

The Federal Open Market Committee (FOMC) released its minutes from the January meeting on Wednesday, which came in mostly in‐line with expectations.

The main takeaway from the FOMC Minutes was that the Fed is going to be patient in raising rates and is likely to stop reducing the assets on its balance sheet later this year. The surprise ‐ or maybe the important revelation ‐ for the market to consider was the implication that the Fed could turn away from a "patient" mindset with raising interest rates if market uncertainty abates.

With the Fed maintaining its market‐friendly position and U.S.‐China trade talks seemingly progressing, or not getting worse, investors continued to not be too bothered by disappointing economic data.

Strong earnings results from Wal‐Mart (WMT) also helped temper concerns about a slowdown in consumer spending that were fueled by the lousy Retail Sales report for December in prior week.

Kraft Heinz (KHC) and CVS Health (CVS), however, provided investors with disappointing results and their stocks sank as a result.

U.S. Treasuries increased this week in a curve‐steepening trade. The 2‐yr yield decreased four basis points to 2.48%, and the 10‐yr yield decreased one basis point to 2.66%. The U.S. Dollar Index declined 0.4% to 96.55. WTI crude rose 3.0% to $57.25/bbl.

Market Recap - U.S. - China Trade Talks Advance While Government Avoids Another Shutdown

The S&P 500 gained 2.5% this week, as the market was enthused by progressing U.S‐China trade talks, Congress averting another government shutdown, and the Federal Reserve maintaining its dovish‐minded stance.

The Dow Jones Industrial Average gained 3.1%, the Nasdaq Composite gained 2.4%%, and the Russell 2000 gained 4.2%.

10 of the 11 S&P 500 sectors finished higher this week with energy (+4.8%), industrials (+3.5%), and materials (+3.4%) leading the advance. Conversely, the utilities sector (‐0.3%) was the lone group to finish with a loss this week.

The U.S. and China concluded a week‐long round of trade negotiations this week, although structural issues ‐‐ forced technology transfers, enforcement oversight, and China subsidizing domestic industries ‐‐ were unresolved. Mid‐level talks will continue next week in Washington while President Trump considers a possible 60‐day extension to the March 1 deadline.

Also, on Capitol Hill, President Trump signed a bipartisan funding resolution to avoid another government shutdown, although the $1.375 billion allotted for border security fell short of the $5.7 billion that was requested. As a result, President Trump declared a national emergency, setting up a likely legal battle, in order to secure funding from other departments to build a border wall.

The Fed, meanwhile, continued to assure investors that they need not fear tighter monetary policy at this juncture. Fed Governor Brainard (FOMC voter) said she thinks the balance sheet normalization effort should come to an end later this year.

These developments served to increase investor confidence in the face of slumping retail sales data and downside corporate guidance. Strikingly, the week's gains lifted the S&P 500 above its 200‐day moving average, which traders consider an important technical level, for the first time since December 4.

Retail sales for December declined 1.2% (Briefing.com consensus +0.2%) ‐‐ the market's biggest monthly decline in nearly 10 years. There was a belief, however, that the December retail sales numbers were aberrant and would give way to better retail sales data for January.

Separately, Coca‐Cola (KO), PepsiCo (PEP), NVIDIA (NVDA), Applied Materials (AMAT), Activision Blizzard (ATVI), and Mattel (MAT) were some of the companies this week that issued downside guidance. Cisco Systems (CSCO), however, provided investors with positive results.

U.S. Treasuries retreated this week, driving yields higher in a curve‐flattening trade. The 2‐yr yield increased eight basis points to 2.52%, and the 10‐yr yield increased four basis points to 2.67%. The U.S. Dollar Index gained 0.3% to 96.90. WTI crude rose 5.4% to $55.56/bbl.