Nasdaq Hits New Highs

WEDNESDAY – Stocks rose on Wednesday, boosted by dealmaking activity and potentially improving trade relations between the U.S. and the European Union.

The Nasdaq composite rose 1 percent and hit an all-time high, led by Facebook and Netflix, which also reached record levels. The S&P 500 gained 0.4 percent, with technology stocks outperforming.

The Dow Jones industrial average, meanwhile, rose 10 points as it tired to snap its longest losing streak since March 2017.

Disney raised its bid for Twenty-First Century Fox assets to $38 per share, or $71.3 billion, surpassing an offer made by rival and NBCUniversal parent Comcast. Last week, Comcast bid $65 billion in cash for Fox assets which include FX, Star TV and stakes in Sky.

The bid sent Fox shares higher by 7.3 percent.

Stocks fell on Tuesday as trade tensions between the U.S. and China intensified. The Dow led the way lower, sliding nearly 300 points and erasing its gains for 2018.

Small cap and penny stock index Russell 2000 also jumped higher Wednesday.

Small Cap Stocks Lead The Markets Higher

Size doesn’t matter when it comes to US stocks, because investors seem to prefer small companies over big ones in 2018.

That’s a sign of the continued strength of America’s economy as small-caps tend to move earlier than later stocks whether up or down.

The Russell 2000, an index that includes shares of mostly smaller US companies, is up nearly 7% this year and is trading at an all-time high this week.

The Dow and S&P 500, both of which are home for industry giants like Apple, Disney, Coca-Cola and Boeing are up just 1% and 2% respectively. They are both still trading about 5% below their record highs.

Why?

To start, many smaller businesses in the Russell 2000 are growing their profits at a faster rate than the giants of the Dow and S&P 500.

Earnings for the Russell 2000 companies are expected to increase more than 40% this year and another 23% in 2019. That’s much better than analysts’ forecasts of a 20% jump in earnings for S&P 500 companies this year and 10% next year.

We see this continuing throughout the rest of 2018. Investors would be wise to consider smaller stocks as they tend to move higher faster when things are going well and lead the overall markets.

3.9% Unemployment Can’t Keep Stocks Up

U.S. stocks fell Friday morning after the government’s monthly jobs report missed Wall Street expectations.

The Dow Jones industrial average fell more than 100 points shortly after the opening bell, as large industrial components like Boeing and Caterpillar weighed down the other blue-chip stocks.

The S&P 500 fell about 0.4 percent in early trading as a decline in interest rates pulled financial and banking stocks down; shares of J.P. Morgan fell 0.8 percent while Bank of America lost about 1 percent.

The Labor Department reported that the economy added 164,000 jobs in the month of April, lower than the 195,000 expected by economists polled by Reuters. Average hourly earnings growth also missed, rising only 0.15 percent against expectations of a 0.2 percent gain.

Despite the miss in the number of jobs added, the government said the unemployment rate fell to 3.9 percent, an 18-year low.

Despite a broader slip in equities, Apple jumped after longtime investor Warren Buffett revealed that he bought 75 million shares during the first quarter, which added to the conglomerate’s already massive stake in the tech giant, “brought down our cash position moderately.”

The early moves in U.S. stocks came as markets across the globe showed a mixed picture. On Thursday, U.S. stocks finished relatively mixed, after the Dow Jones industrial average erased a nearly 400-point loss during the session, on the back of strong earnings.

Trade Deficit Shrinks! First Drop in 7 Months

Record exports reduced the U.S. trade deficit in March, the first drop in seven months in a massive gap that President Trump has been determined to shrink with an aggressive America first policy.

The Commerce Department says the trade deficit slid to $49 billion, down from $57.7 billion in February and lowest since last September.

The President has vowed to bring down America’s massive deficits, which he blames on bad trade agreements and abusive practices by U.S. trading partners.

Exports rose in March to a record $208.5 billion, led by shipments of civilian aircraft and soybeans. Imports slipped 1.8 percent to $257.5 billion.

The United States ran a $20.5 billion surplus in the trade of services such as education and banking. But that was offset by a $69.5 billion deficit in the trade of goods.

Dow Down On US-China Trade Fears

Stocks traded lower on Thursday as investors worried about US Trade relations and ignored positive earnings releases.

The Dow Jones industrial average fell 374 points, with Caterpillar as the worst-performing stock. The 30-stock index also dropped below its 200-day moving average for the first time since April 2. The S&P 500 declined 1.5 percent, pushing below its 200-day moving average, with health care and financials lagging. The Nasdaq composite also pulled back 1.5 percent.

Tesla did report better-than-expected quarterly results Wednesday after the close. However, the stock fell after CEO Elon Musk dismissed questions from analysts regarding gross margins and Model 3 production and gross margins.

Treasury Secretary Steven Mnuchin is leading a group of Trump administration officials to meet with Chinese Vice Premier Liu He and discuss trade between the two nations.

Shortly before the talks were set to take place in Beijing, the mood between the world’s two largest economies worsened amid reports the U.S. administration is considering taking executive action to restrict some Chinese firms’ ability to sell telecoms equipment.

Crude futures briefly spiked before trading 0.8 percent lower at $67.39 per barrel. Gold futures jumped 0.7 percent to $1,314.10 per ounce. The precious metal is often seen as a safe-haven trade.

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Stocks: The Week Ahead

After a hectic week that saw Amazon (AMZN), Facebook (FB), and Alphabet (GOOGL) all report earnings, the week ahead will continue the abundance of headline earnings reports and blockbuster economic data.

The busy week of earnings will be punctuated by results from Apple (AAPL) after the market close on Tuesday.

And the economics calendar will bring us the monthly jobs report, which should show the U.S. economy continues to create jobs in the 10th year of the economic recovery. Economists expect the economy added 185,000 jobs in April, a rebound from March’s disappointing headline jobs gain while the unemployment rate is expected to drop to 4% after it held at 4.1% for a sixth-straight month in March.

The Federal Reserve will also announce its latest monetary policy decision on Wednesday, though this announcement should come and go without fanfare as the central bank is widely expected to keep its benchmark interest rate policy unchanged in a range of 1.5%-1.75%.

These reports follows last week’s first estimate on first quarter GDP, which showed the economy grew at an annualized pace of 2.3% in the first three months of the year, better than had been expected by economists but a deceleration from the economic growth seen at the end of last year.

Economic calendar

Monday: Personal income, March (+0.4% expected; +0.4% previously); Personal spending, March (+0.4% expected; +0.2% previously); “Core” PCE, year-on-year, March (2% expected; 1.6% previously); Pending home sales, March (+0.5% expected; +3.1% previously); Dallas Fed manufacturing, April (25 expected; 21.4 previously)
Tuesday: Markit manufacturing PMI, April (56.5 previously); Construction spending, March (+0.5% expected; +0.1% previously); ISM manufacturing PMI, April (58.5 expected; 59.3 previously); Auto sales, April (17.15 million vehicles annualized expected; 17.4 million previously)
Wednesday: ADP private payrolls, April (+193,000 expected; +214,000 previously); Federal Reserve interest rate decision (1.5%-1.75% fed funds range previously, no change expected)
Thursday: Initial jobless claims (209,000 previously); Nonfarm productivity, first quarter (+0.9% expected; 0% previously); ISM non-manufacturing PMI, April (58 expected; 58.8 previously); Markit non-manufacturing PMI, April (54.4 previously)
Friday: Nonfarm payrolls, April (+185,000 expected; +103,000 previously); Unemployment rate, April (4% expected; 4.1% previously); Average hourly earnings, month-on-month, April (+0.2% expected; +0.3% previously); Average hourly earnings, year-on-year, April (+2.7% expected; 2.7% previously)

Stocks Mixed On Huge Earnings Day

U.S. stocks traded mixed on Tuesday as one of the busiest days of the earnings season got under way.

The Dow Jones industrial average traded slightly lower, with Procter & Gamble contributing the most gains to the tune of 20 points, but Home Depot shaved off approximately 20 points. The S&P 500 fell 0.1 percent, with consumer discretionary leading decliners. The Nasdaq composite held around breakeven.

More than 90 companies were scheduled to post quarterly results on Tuesday. Dow components 3M, Caterpillar and DuPont reported earnings before the bell. Caterpillar and 3M posted mixed results, as both beat estimates on the bottom line, while missing on revenues. Caterpillar also lowered its 2016 earnings per share guidance.

Coming Up:

Tuesday

Earnings:

ATB: Apple, AT&T, Chipotle Mexican Grill, Capital One, Discover Financial, Express Scripts, Juniper Networks, Vertex Pharma, iRobot, Pandora Media, Panera Bread, Owens-Illinois

9 a.m.: Case-Shiller Home Price Index

9 a.m.: FHFA Home Price Index

10 a.m.: Consumer confidence

1 p.m.: $26 billion two-year Treasury note auction

Wednesday

8:30 a.m.: U.S. trade deficit

9:45 a.m.: Markit services PMI

10 a.m.: New home sales

1 p.m.: $34 billion five-year Treasury note auction

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Stock Market Higher on Positive Banking Earnings

U.S. equities rose on Friday as investors parsed through quarterly results from several big banks and economic data.

The Dow Jones industrial average rose more than 150 points before holding about 110 points higher, with Goldman Sachs contributing the most gains. The S&P 500 rose approximately 0.4 percent, with information technology and financials leading advancers.

The Nasdaq composite gained 0.4 percent.

JPMorgan Chase, Wells Fargo and Citigroup all posted better-than-expected quarterly results, beating estimates on both the top and bottom lines.

In economic news, U.S. retail sales rose 0.6 percent in September, matching expectations. Meanwhile, the Labor Department said its producer price index for final demand increased 0.3 percent after being unchanged in August.

Other data released Friday included business inventories, which rose 0.2 percent in August. Meanwhile, October consumer sentiment came in at 87.9, well below an estimate of 92, as concerns over the U.S. presidential election weighed.

Investors have been heavily scrutinizing U.S. economic data recently, trying to gauge the likelihood that the Federal Reserve raises interest rates later this year. According to the CME Group’s FedWatch tool, market expectations for a December rate hike are more than 60 percent.

The dollar rose 0.43 percent against a basket of currencies, with the euro near $1.099 and the yen around 104.18.

In oil markets, U.S. crude traded about 1 percent lower at $49.96 per barrel.

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Stocks Lower After Data

MONDAY – U.S. stocks traded lower on Monday, the first trading day of the fourth quarter, as investors digested key economic news and kept an eye on oil prices.

The Dow Jones industrial average fell about 100 points in midmorning trade before holding about 50 points lower, with UnitedHealth contributing the most losses. The S&P 500 fell 0.25 percent, with real estate and utilities leading decliners, as both fell 1 percent. The Nasdaq composite slid approximately 0.1 percent.

In economic news, the September Markit Manufacturing PMI came in at 51.5, a three-month low. “U.S. manufacturers signalled another moderate upturn in both production volumes and incoming new work during September, but the latest survey indicated a further loss of growth momentum from July’s recent peak,” Markit said.

The ISM Manufacturing index for September came in at 51.5, up from 49.4 in the previous month. Construction spending fell 0.7 percent in August, with analysts expecting a 0.2 percent increase.

This Week:

Monday

Auto sales

Wednesday

8:15 a.m.: ADP payrolls
8:30 a.m.: Trade deficit
9:45 a.m.: Markit services PMI
10 a.m.: ISM non-manufacturing
10 a.m.: Factory orders

Thursday

8:30 a.m.: Jobless claims

Friday

8:30 a.m.: Employment report
10 a.m.: Wholesale trade
3 p.m.: Consumer credit

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