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Investor Sentiment - Market Fundamentals Remain Strong

by Caldwell Trust
CTC_Canva_2018_Week of May 14
  • Equity markets turn positive for the year
  • NASDAQ stocks continue to lead; up over 7% year-to-date
  • Q1 earnings season drawing to a close
  • Market fundamentals remain strong

Broad domestic equity markets were up for the week in relatively quiet trading. The S&P 500, Dow Jones Industrial Average, and NASDAQ all posted gains of over 2% for the week. All three indices are now positive for the year and the NASDAQ is up over 7% year-to-date. The NASDAQ has lead the other two indices for quite a while.

All S&P 500 sectors were up for the week except for utilities investments which declined a bit over 2%. As has been the case, the more defensive S&P sectors continue to under perform. Energy and technology shares were the best performers for the week, and the best two performing sectors year-to-date. Technology stock performance has been strong over the last few years where as the energy sector has turned in the most volatile performance. The current recovery in crude prices has been a positive for the sector.

Q1 earnings season is winding down with over 90% of companies reporting results thus far. The number of companies beating earnings and revenue estimates is running slightly above normal.

The 10-year Treasury bond yield continues to trade just under 3%. The most recent inflation number was relatively soft. Consensus expectations continue to favor two more rate hikes this year.

As we move towards summer the norm is for markets to quiet a bit through Labor Day. So far May has been a good month for domestic capital markets. It appears the news flow out of Washington has less impact on market action of late. Market fundamentals remain strong.

The economic calendar includes the release of April retail sales Tuesday; May housing starts on Wednesday; leading economic indicators are reported Thursday.

Earnings season continues, several retailers report during the week:

Monday – Agilent Technologies, Nissan, and Samsonite

Tuesday – Home Depot

Wednesday – Tencent Holdings, Cisco Systems, and Macy’s

Thursday – J.C. Penny, Nordstrom’s, Wal-Mart, and Applied Materials

Friday – Astra Zeneca, Campbell Soup, and Deere

Indices for the week and YTD are as follows:

S & P 500 up 2.41% for the week; YTD index return is 2.02%

NASDAQ Composite up 2.68% for the week; YTD index return is +7.24%

Dow Jones Industrial Average up 2.34 % for the week; YTD index return is .45%

Benchmark 10-year Treasury bond yield stands at 2.97%


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