- Solid Q1 GDP reported
- 10-year Treasury temporarily breaks through 3%
- Equity markets flat for the week
- Federal Open Market Committee meets next week
The yield on the benchmark 10-year Treasury bond rose above 3% during the week but closed lower by week’s end due in part to a weak Q1 consumer spending number released Friday. The initial Q1 estimate for GDP (also released Friday as part of the same report) came in at 2.3% better than the consensus estimate of 2%. Broad domestic equity markets were essentially flat on the week. Returns for the S&P 500 and the Dow Jones Industrial Average remain slightly negative for the year; the NASDAQ is up 3%.
The more defensive sectors (Utilities, Health Care, and Telecommunications) turned in the best performance for the week while more economically sensitive sectors (Industrials and Basic Materials – down 2%+ each, respectively) turned in the worst. Corporate earnings for Q1 continue to be strong in aggregate.
Expect the equity market to continue to be volatile and consolidate next week. No clear catalyst – positive or negative – is driving the market currently - just a lot of cross currents.
The Federal Open Market Committee will announce whether it will raise short term interest rates once again on Wednesday. No rate hike is expected at this meeting. At least two more hikes are expected this year with market consensus leaning towards three.
The economic calendar includes the release of March pending home sales on Monday. Nonfarm payrolls are released Friday. Consensus estimates are for an increase of 187,500 and for the unemployment rate to come in at 4%.
Earnings season continues; some of the companies investment reporting next week include:
Monday – Allegan and McDonald’s
Tuesday – Aetna, Apple, Cummins, Ecolab, Emerson, Gilead, Marathon Petroleum, Merck, Mondelez, and Pfizer
Wednesday – ADP, CVS, Marathon Oil, MetLife, Prudential Financial, and Zoetis
Thursday – Becton Dickinson, Cigna, DowDupont, and Monster Beverage
Friday – Berkshire Hathaway, Alibaba, and Celgene
Indices for the week and YTD are as follows:
S & P 500 down .01% for the week; YTD index return is -.14%
NASDAQ Composite down -.37% for the week; YTD index return is +3.13%
Dow Jones Industrial Average down .62% for the week; YTD index return is -1.65%
Benchmark 10-year Treasury bond yield stands at 2.96% - up 1 basis point on the week
