Friday, 17 May 2019
Equities fell early in the week as investors processed the impact of renewed trade tensions with China.
However, major indices reversed course Wednesday after news that President Donald Trump would delay auto tariffs by up to six months.
The rally continued Thursday after a slew of positive economic data releases. Additionally, strong earnings results from companies such as Cisco Systems and Walmart helped lift the S&P 500 and the Dow. The upbeat domestic data also led to a strengthening in the U.S. dollar, pushing the Emerging Markets Index to finish in the red. Despite a 5.4 million-barrel buildup in crude oil inventories, the price of WTI crude rose over 2% to $63.05 as concerns over global supply chain disruptions were prompted after saber rattling between the US and Iran, helping to lift Energy stocks.
U.S. government bond yields fell through most of the week, with the yield on the 10-year Treasury note hitting as low as 2.35%, but rebounded due to improved optimism toward the domestic economy following a number of economic releases. The yield on the 10-year note closed at 2.40% and the yield on the 2-year note ended at 2.19%.
The mostly positive week of economic data began with a number of subpar economic reports. Retail sales missed estimates for both headline and core (less autos & gas) indicating a deceleration in consumer spending. Industrial production for April was below consensus, with particular weakness in motor vehicles and parts which posted a 4.4% year-over-year decline. To counterbalance that report, both the Empire State and Philadelphia Fed surveys for May point to improved optimism in the industrial sector, even in the face of the recently heightened trade tensions with China.
Additionally, the housing sector improved, with the Housing Market Index topping estimates as home builders appear positive about the condition of the sector and point to strength for the Spring sales season. To complement the index report, housing starts were up 5% in April and permits edged up 0.6% in the best reading so far this year.
Read the full May 16th report with accompanying charts and graphs.
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