Friday, 20 April 2018
After three days of gains, U.S. stocks finished lower Thursday amid some weaker than expected earnings reports; earnings have been a main focus for investors since first quarter announcements began last week.
In general, most companies that have reported have come in ahead of expectations, but there have been a few disappointments. Philip Morris tumbled as much as 17 percent in intraday trading Thursday after poor earnings results and forward guidance. Proctor & Gamble reported disappointing sales, spreading pessimism to the market about the consumer staples sector. Consumer staples were the biggest losers of the day following the poor earnings results. Technology stocks were also lower, particularly in chip makers, which put the NASDAQ in the red for the day. Oil rallied Thursday following a decline in U.S. inventories and expectations OPEC will continue to restrict supply at their meeting on Friday.
U.S. government bonds weakened Thursday amid concerns that economic growth and government policies are beginning to induce inflationary pressures. The yield on the benchmark 10-year U.S. government note rose to 2.91 percent versus 2.87 percent on Wednesday. The benchmark 30-year U.S. government bond, which is more sensitive to inflation expectations, rose to 3.10 percent.
U.S. economic leading indicators, which measure business trends, increased in March for the sixth consecutive month. Demand for homes jumped in March as housing starts were 2 percent higher and 10.9 percent higher than they were a year ago. Housing permits, which foreshadows future housing starts, were up 2.5 percent from February and 7.5 percent higher year over year. Builders, though, have been constrained due to higher input prices. The Philadelphia Fed manufacturing index edged up slightly in April suggesting continued growth in the manufacturing sector. However, the outlook for the next six months declined to 40.7 from 47.9 in March; any reading above 0 indicates improving conditions.
The Weekly Market Update is prepared by our Global Wealth Investments team to help explain changes in major market indices during the previous week and provide context for economic data.
Read the full April 19 report with accompanying charts and graphs.
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