Month: May 2019

Equities slipped as the technology sector led the market lower for the month. The Nasdaq lost 7.40 percent, while the Russell 2000 Index declined 3.21 percent. The S&P 500 Index declined 2.62 percent and the Dow Jones Industrial Average 3.01 percent to close the month.

Despite the modest correction, the outlook continues to be positive. Consumer confidence jumped in May according to the Conference Board’s survey. First quarter GDP growth was revised to 3.1 percent, down from 3.2 percent initially, but higher than the 3.0 percent consensus forecast. The Bureau of Economic Analysis reported a spike in personal income growth in April, from 0.1 percent to 0.5 percent. Consumer spending grew 0.3 percent and core inflation was 0.2 percent. The Chicago PMI, a measure of manufacturing activity in the Chicago Fed’s region, increased in May.

Over the past few weeks, investors with positions in iShares Edge MSCI Minimum Volatility USA (USMV) and Vanguard Dividend Appreciation (VIG) continues to outperform the broader market.

Emerging markets also outperformed this week. Despite the current trade friction with China dominating the news, iShares MSCI Emerging Markets (EEM) advanced 1.98 percent on the week. iShares China Large Cap (FXI) rallied 1.15 percent. The U.S. Dollar Index climbed 0.3 percent.

Bonds rallied for the week. The 10-year Treasury fell to a new 52-week low of 2.14 percent. Fidelity Corporate Bond (FCOR) gained 0.77 percent, while iShares 20+ Year Treasury (TLT) advanced 3.16 percent.

Equities opened the week lower on Tuesday led by a drop in the utilities and consumer staples sector. SPDR Utilities (XLU) fell 1.64 percent and SPDR Consumer Staples (XLP) slipped 1.63 percent. Tobacco stocks drove the move in the consumer staples sector.  The Nasdaq was the best performing index on the day, decreasing 0.39 percent.

The Conference Board’s consumer confidence index jumped to 134.1 in May, beating expectations. Present situation confidence hit 175.2, up from 169.0 in April. It is the highest reading since December 2000.

The Bureau of Economic Analysis will release the second estimate of first quarter GDP on Thursday. Economists predict it will be trimmed from the initial 3.2 percent growth to 3.0 percent.

Friday brings the Chicago PMI and the University of Michigan’s consumer sentiment survey for May. Forecasters had predicted a dip in that survey coming into this week, before the Conference Board’s strong number was released.

The U.S. Dollar Index advanced after the euro dipped on election news. Nationalist and Green parties advanced in the European Parliament and collectively have more votes than centrist parties. Italy’s ruling party also gained strength in the European election and that may embolden the government as it starts another budget battle with the European Union.

The 10-year Treasury yield fell to a fresh 52-week low of 2.27 percent thanks in part to heavy buying from both domestic and foreign bidders in today’s 2- and 5-year treasury auctions.

The Dow Jones Industrial Average delivered the best return for the week, declining 0.69 percent. The S&P 500 Index dipped 1.17 percent, the Russell 2000 Index 1.41 percent and the Nasdaq 2.36 percent.

Healthcare funds performed exceptionally well. SPDR Healthcare (XLV) rallied 1.29 percent. Medtronic (MDT) climbed 6.04 percent after reporting strong earnings. Biotechnology, medical devices and healthcare providers all gains. iShares U.S. Medical Devices (IHI) was the strongest healthcare subsector, increasing 1.38 percent.

iShares Edge MSCI Minimum Volatility USA (USMV) added another week of outperformance, climbing 0.39 percent. Vanguard Dividend Appreciation (VIG) slid 0.63 percent. Both benefit from investor demand for blue chip, financially sound companies.

SPDR Financial (XLF) was a relative outperformer, falling only 0.15 percent. iShares U.S. Aerospace & Defense (ITA) was flat, sliding just 0.05 percent.

The energy and technology sectors led the market lower. SPDR Energy (XLE), which fell 3.39 percent as crude oil tumbled below $60 per barrel. SPDR Technology (XLK) lost 2.73 percent.

Existing home sales slowed to an annualized pace of 5.19 million in April, a shade under March’s 5.21 million. New home sales beat expectations at an annualized pace of 673,000.

Weekly initial claims for unemployment held near four-decade lows at 211,000.

The flash manufacturing and service PMIs declined to 50.6 and 50.9. Europe’s PMI remained below 50, signaling contraction.

The U.S. Dollar Index declined slightly on the week after British Prime Minister Theresa May announced her resignation. The euro also climbed along with the pound. Emerging market currencies also rallied.

The 10-year Treasury yield fell to a new 52-week low this week and ended at 2.32 percent.

Retailer earnings were mixed. Target (TGT) and Home Depot (HD) shares rallied. Lowe’s (LOW), TJX Companies (TJX) and Best Buy (BBY) all disappointed investors.