Month: January 2019

Earnings season has been positive for stocks to begin 2019. Apple (AAPL) and Boeing (BA) were the latest firms to boost the market with better-than-expected results. The economically sensitive Dow Transports has outperformed over the past week, followed by the Russell 2000.

Boeing (BA) was one of several industrial stocks that reported solid earnings this week. Transportation and defense subsectors were also strong. Materials and energy performed well.

A drilldown into the industrial subsectors shows airlines, defense and housing all boosting the sector.

A slightly weaker U.S. dollar helped foreign shares outperform over the past week. Emerging markets rallied with trade talks between China and the U.S. beginning. If there is a trade deal that can rescue the Chinese economy, weaken the U.S. dollar and unleash another inflationary growth cycle, emerging market performance could improve. Without a deal however, the U.S. will potentially impose tariffs on March 2.

Bonds have rallied along with stocks since the market began to rebound in December. Even long-term treasuries have seen small gains. High-yield bonds have outperformed. Corporate and investment grade bonds have also seen advances over the past few weeks.

Growth-oriented dividend ETFs including Vanguard Dividend Appreciation (VIG) and WisdomTree U.S. Quality Dividend Growth (DGRW) were strong performers over the past week. iShares Edge MSCI Min Vol USA (USMV) also provided an excellent return. USMV has outperformed the S&P 500 Index going back to September 2018.

Equities finished in negative territory on the day after a disappointing earnings report from Caterpillar (CAT) and negative guidance from Nvidia (NVDA). The Russell 2000 was the best performing of the major indexes. It slipped 0.63 percent.

SPDR Technology (XLK) fell 1.33 percent on Monday, making it the weakest sector on the day. SPDR Real Estate (XLRE) gained 1.01 percent and SPDR Consumer Staples (XLP) rose 0.44 percent.

Earnings season is now in high gear. The most meaningful report will come from Apple (AAPL), which will announce earnings after the bell on Tuesday. Analysts forecast $4.17 per share in earnings. 3M (MMM), Advanced Micro Devices (AMD), Amgen (AMGN), eBay (EBAY), Pfizer (PFE) and Verizon (VZ) also report on Tuesday.

Wednesday earning reports will come from Visa (V), Alibaba (BABA), AT&T (T), Duke Realty (DUK), Facebook (FB), McDonald’s (MCD), Microsoft (MSFT) and Tesla (TSLA).

Thursday brings reports from Amazon (AMZN), Yum China (YUMC), Northrop Grumman (NOC), Mastercard (MA), General Electric (GE), Dow Dupont (DWDP) and Altria (MO).

Honeywell (HON), Merck (MRK), Exxon Mobil (XOM) and Chevron (CVX) round out the week on Friday.

The end of the government shutdown will soon bring a backlog of economic data tabulated by the Commerce Department’s Bureau of Economic Analysis and Census divisions. November data including new home sales, construction spending, factory orders and wholesale inventories are on the way.

On Friday, the Bureau of Labor Statistics’ employment report for January will be announced. Economists forecast 175,000 new jobs, a 3.9 percent unemployment rate and 0.2 percent wage growth.

The Case-Shiller home price index for November will be released tomorrow, along with the Conference Board’s consumer confidence index for January.

The Dow Jones Industrial Average gained 0.8 percent on the day, providing a positive return of 0.1 percent for the week. This is now the 5th consecutive week the Dow has increased. The Index was boosted by United Technologies (UTX), International Business Machines (IBM) and Proctor & Gamble (PG). The stocks saw their share prices rise 1.68, 8.20 and 2.38 percent, respectively on the week.

The Nasdaq increased 0.1 percent on the week, while the S&P 500 lost 0.2 percent.

Technology firms Lam Research (LRCX), Texas Instruments (TXN) and Xilinx (XLNX) powered a broad-based rally. iShares PHLX Semiconductor (SOXX) climbed 4.20 percent. The boost from semiconductors helped SPDR Technology (XLK) gain 0.92 percent for the week. The outlier was Intel (INTC), which disappointed investors with its earnings report.

Economic data continues to show healthy expansion. For months we’ve referenced four-decade low unemployment claims. Last week, claims hit their lowest level since November 1969 at 199,000, nearly 20,000 below forecasts. The flash Markit manufacturing and service PMIs show the economy is gaining momentum.

The U.S. government will end its temporary shutdown for three weeks after a short-term deal was reached to ensure numerous federal employees will be paid. If no deal is reached by February 15, the shutdown will resume.

iShares MSCI EAFE (EFA) gained 0.14 percent.  iShares MSCI Emerging Markets (EEM) increased 1.52 percent. Optimism over a potential trade deal and monetary easing in China sent iShares China Large Cap (FXI) higher by 2.01 percent.

The 10-year Treasury yield was flat on the week, finishing at 2.75 percent. The Federal Reserve hinted that its balance sheet reduction might end sooner than expected. More information could be forthcoming at next week’s meeting, although a major announcement may be delayed. Stocks jumped on the report.

Crude oil reached $54 a barrel midweek but ended with a small loss of 0.50 percent. Natural gas pulled back from recent highs as Midwest and Northeast temperatures rose. SPDR Energy (XLE) slipped 1.43 percent.

Colgate-Palmolive (CL), Starbucks (SBUX) and Ford (F) provided earnings. The healthcare sector saw a solid report from Johnson & Johnson (JNJ), but a miss at AbbVie (ABBV) weighed on the healthcare sector.