• Broad domestic equity markets are up on the week
• Banks report strong earnings; shares decline
• Fundamentals continue to take a back seat to "noise"
• Large institutions report Q1 earnings in abundance next week

Domestic equity markets were up in aggregate last week as trading volatility continues. The broad market advanced around 2% but year to date results hover around breakeven. Bond markets remain pretty much in a trading range and returns year to date are also around zero. High Yield debt continues to outperform investment grade bonds and the broad fixed income market in general. The yield on the 10-year Treasury rose modesty for the week but remains below 2.9%.

Investment Earnings season commenced late last week with a few large banks reporting. Results in general exceeded expectations but shares sold off. The sell off was due to myriad reasons but to a large degree questions around future loan growth and the run up in share prices over the last 15 months are major factors. Earnings guidance was positive. More banks and financial firms report next week as Q1 earnings season swings into full gear.

The more defensive sectors in the S&P 500 (Utilities, Staples, Telecom) underperformed the broad market this past week after outperforming over the last few weeks.

Market volatility continues to be driven by noise out of Washington. As mentioned previously earnings should continue to be solid throughout 2018 and into next year. Hopefully, as we get further into earnings season results and guidance will begin to dominate news flow. The forward P/E on the S&P 500 continues to hover around 16x earnings which is not extreme within the context of market valuations over the past 35 years.

The economic calendar includes a release Monday of retail sales for March. Industrial production is reported Tuesday. Leading economic indicators are reported Thursday.       

Next week is dominated once again by earnings reports from large financial institutions; no fewer than eight report during the course of the week. Many other larger companies report as well.

Monday – Bank of America, M&T Bank, and Netflix

Tuesday – Comerica, Goldman Sachs, Northern Trust, Johnson & Johnson, United Health Group, and LAM Research

Wednesday – Morgan Stanley, U.S. Bancorp, American Express, Abbott Labs, and Alcoa

Thursday – BB&T, Bank of New York Mellon, Danaher, Philip Morris, and Snap-on

Friday – Honeywell, Procter & Gamble, and GE

Indices for the week and YTD are as follows:

S & P 500 up 1.99% for the week; YTD index return is -.65%

NASDAQ Composite up 2.77% for the week; YTD index return is +2.94%

Dow Jones Industrial Average up 1.79% for the week; YTD index return is -1.45%

Benchmark 10-year Treasury bond yield stands at 2.83% - up 5 basis points on the week