Market Perspective for April 3, 2017

The S&P 500 Index gained 5.53 percent in the first quarter and the Nasdaq climbed 9.82 percent. The technology sector rose 12.16 percent in the first quarter. Healthcare advanced 7.89 percent, consumer climbed 5.64 percent, and industrials rallied 5.64 percent. Although oil rallied above $50 a barrel in the last week of March, the energy sector finished the quarter with a loss of 7.30 percent. U.S. shale production continues to rise, even as prices remain flat.
The U.S. Dollar Index fell 2 percent in the first quarter as it consolidated fourth-quarter gains. The greenback rallied 2 percent versus the rand on Monday, however, after S&P cut South Africa’s debt to junk. The 10-year Treasury yield moved in a tight trading range and finished nearly unchanged for the quarter. It starts the second quarter near the bottom of that range. A test of support at 2.30 percent could come as soon as this week.
Purchasing Manager Indexes started the week on a positive note. The Markit and ISM PMIs came in at 53.3 and 57.2 respectively, signaling continued expansion in the manufacturing sector. Canada, the United Kingdom the Eurozone all showed strong results as well, with the Eurozone PMI hitting a six-year high.
February construction spending reached its highest level since 2006, climbing 0.8 percent in the month. Residential home construction grew 1.8 percent in February alone. Analysts project March auto sales will hit levels last seen in 2000. Initial reports were mixed, however with General Motors missing sales estimates and Ford beating.
Later this week, factory orders for February are expected to increase 1.0 percent. Economists forecast the March ISM-nonmanufacturing PMI will hit 57.2, down slightly from February.
Weekly unemployment claims are projected to hold steady at 251,000. Weekly crude oil inventory is forecast to rise nearly 900,000 barrels. Minutes from the last Federal Open Market Committee (FOMC) meeting will be out on Wednesday.
Friday brings the big jobs report, March non-farm payrolls, and the unemployment rate. Economists are looking for 178,000 new jobs and a steady unemployment rate of 4.7 percent. They’re also expecting average hourly earnings growth increased 0.1 percent, to 0.3 percent in March. Finally, wholesale inventories and consumer credit for February will be released. Both will affect first quarter GDP growth forecasts.
First quarter earnings season is a week away, but some familiar names are scheduled to report in the interim. Walgreen Boots Alliance (WBA) reports earnings on Wednesday; analysts expect $1.36 per share. The consensus calls for $2.76 per share from Monsanto (MON), $0.35 from Yum China (YUM), and $1.77 at Bed Bath & Beyond (BBBY). Consensus forecasts predict Constellation Brands (STZ) will report $1.37 per share in earnings on Thursday.

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