For the week ending 4-20-18
Stocks rose for the second consecutive week as first-quarter earnings season picked up momentum. The week saw earnings reports from 69 of the companies in the S&P 500 Index, along with several hundred reports from smaller firms. As always, these reports brought a range of upside and downside surprises, although their overall tone was markedly positive. According to analytics firm FactSet, 80 percent of the S&P 500 companies that have reported so far have posted earnings that came in ahead of what analysts were expecting. By the time all 500 companies in the S&P 500 index have reported, which will take another five weeks, it is estimated that profits for this quarter will be 18.3 percent higher than they were this time last year. And, if those estimates are met, it will mark the highest year-over-year earnings growth since 2011.
The energy sector led the rest of market higher, boosted by a strong rise in oil prices. Demand for gasoline hit a record level of 9.7 million barrels-per-day last week, while inventories of crude oil fell. The price of a barrel of West Texas Intermediate crude, the U.S. benchmark, approached $70 midweek before backing off somewhat to settle at $68 a barrel. The combination of higher demand and tighter supply is a trend that is likely to continue and, as a result, some analysts are predicting that a gallon of gasoline will approach $3 at the pump this summer.
The economic outlook also helped drive sentiment during the week. Investors appeared to be encouraged by data showing that retail sales had increased in March, breaking a three-month streak of declines. Housing starts also rose, and a regional gauge of manufacturing activity indicated healthy expansion.
The markets might have had a better week but for concerns that demand for iPhones may be slipping. Morgan Stanley gave a downbeat assessment of Apple stock, citing softer iPhone demand in China. Shares of Apple, Inc. fell on the news and that weighed on the broader market.
For the week, the Dow Jones rose 103 points to 24,463 (0.4 percent); the NASDAQ was up 39 points to 7,146 (0.5 percent); and the S&P 500 added 14 points to 2,670 (0.5 percent)
Oil rose $1 to $68/bbl. Gold was off $10 to 1,338/oz.
The yield on the 10 year Treasury ticked up 0.1 to 2.9 percent.
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Disclaimer: It is worth noting that the opinions in this commentary are Christian Peterson’s and may occasionally vary somewhat from the opinions of the Winch Financial investment team as a whole. Client recognizes that any opinions or analysis described in this commentary involve the Advisor’s judgment and good faith and do not constitute investment advice. All recommendations or observations are subject to various market, currency, economic, political and business risks. Client recognizes that no party to this alert has made any guarantee, either oral or written, that Client’s investment objectives will be achieved. Advisor shall not be liable for any action performed or omitted to be performed or for any errors of judgment or mistake, except in the case of Advisor’s gross negligence, willful misconduct, or violation of applicable law. Advisor shall not be responsible for any loss incurred by reason of any act or omission of Client, custodians, broker-dealers, or any other third party. Nothing in this commentary shall constitute a waiver or limitation of any rights that Client may have under applicable state or federal law, including without limitation the state and federal securities laws.