Month: March 2019

Equities rallied to end one of the strongest quarters in years. The S&P 500 Index gained 1.20 percent on the week and finished the quarter with a return of 13.58 percent.  The NASDAQ gained 1.13 percent on the week to finish the quarter with a 16.49 percent advance. The Dow Jones Industrial Average and Russell 2000 have increased 11.15 percent and 14.18 percent year-to-date, respectively.

Dividend funds came on strong as interest rates fell in March. iShares Edge Minimum Volatility ETF (USMV) advanced 12.69 percent and Vanguard Dividend Appreciation (VIG) climbed 12.46 percent. After March 18, USMV and VIG bested SPDR S&P 500 (SPY) by 1.0 and 0.60 percentage points, respectively.

Technology was the best performing sector over the past 3 months. SPDR Technology (XLK) advanced 19.52 percent. iShares Expanded Tech Software (IGV) and iShares Semiconductor (SOXX) climbed 21.50 percent and 21.16 percent, respectively.

SPDR Energy (XLE) returned 16.20 percent, though the gains came iin the first 6 weeks of the year. Strength in energy and technology boosted the solar sector. Invesco Solar (TAN) rose 24.85 percent. SPDR Industrial (XLI) rallied 17.16 percent.

Economic data was solid. The University of Michigan reported an increase in consumer confidence. New home sales jumped to an annualized pace of 667,000 in February, much higher than forecasts and January’s pace. Weekly jobless claims fell to 211,000, below estimates and one of the lowest totals over the past several weeks.

The U.S. Dollar Index gained 0.72 for the week and 2.3 percent year-to-date. The pound and euro sank as the Brexit debacle continues.

Investors were unimpressed with Apple’s (AAPL) shift towards additional services. It unveiled a streaming media service called Apple+ and a credit card within its Apple Pay app. They also created an Apple News service.   The stock returned 0.58 percent for the week.

Earnings reports were largely positive this week. Lululemon (LULU) advanced 14.43 percent on strong earnings and CarMax (KMX) climbed 13.26 percent. Homebuilders Lennar (LEN) and KB Home (KBH) advanced 6.34 percent and 2.61 percent, respectively.

Crude oil gained more than 2 percent on the week, while natural gas slumped nearly 4 percent. Palladium dropped more than 11 percent after increasing substantially in 2019.

Equities opened the week flat with the Dow Jones Industrial Average gaining 0.06 percent and the Russell 2000 Index 0.46 percent. The S&P 500 and Nasdaq each fell less than 0.10 percent. Consumer discretionary, industrials and consumer staples were two of the strongest sectors: SPDR Consumer Discretionary (XLY) climbed 0.59 percent, SPDR Industrials (XLI) 0.25 percent and SPDR Consumer Staples (XLP) 0.20 percent.

iShares Edge MSCI Min Vol USA (USMV) gained 0.12 percent on the day as Waste Management (WM) and Newmont Mining (NEM) outperformed the broader market.

Apple (AAPL) shares dipped 1.44 percent today and generated the bulk of the tech sector’s decline. Traders “sold the news” after Apple unveiled a credit card and streaming services. The new credit card will work with Apple devices and Apply Pay. Its streaming service will put it in head-to-head competition with Netflix (NFLX) and Disney (DIS).

Housing starts, building permits, pending and new home sales for February will be released this week, along with the Case-Schiller home price index for January. Economists are looking for a slowdown in the annualized pace of housing starts, but an uptick in sales.

The Conference Board and University of Michigan will release their consumer surveys for March. Analysts forecast the former will climb and the latter will hold steady.

Crude oil started the week hovering around $59 a barrel. Natural gas was also steady, finishing Monday at $2.72 per mmBTU.

Bond yields extended their decline but may have made a short-term bottom this afternoon. At its low for the day, the 10-year Treasury yield hit 2.38 percent before closing at 2.42 percent. This left the 10-year yield below the 3-month Treasury yield, along with the 2-year and 5-year yields. We could see interest rates rebound if economic data comes in as forecast. Last week, the Atlanta Federal Reserve’s GDP Now model tripled its first quarter growth forecast to 1.2 percent following better than expected data.

Any finality to Brexit remains uncertain. Since the British pound and euro are major components of the U.S. Dollar Index, we could see some volatility later in the week should the March 29 hard deadline hold.

It’s worth remembering that the Brexit vote was hyped as a disaster. The British pound and equities did slide after the Brexit vote in 2016, but they rebounded in the ensuing weeks. If Britain leaves the EU, it will eventually end up in a position like that of Norway. That country is not in the European Union and uses its own currency, though it has a trade agreement with the EU.

Red Hat (RHAT), Carnival (CCL), FactSet Research (FDS), KB Home (KBH), Vale SA (VALE), Lululemon (LULU), Lennar (LEN), Paychex (PAYX), Five Below (FIVE), Accenture (ACN) and CarMax (KMX) are among the larger companies reporting earnings this week.