Energy, industrials, consumer discretionary and financials were the strongest sectors this week. SPDR Energy (XLE) led with an increase of 2.65 percent after oil prices climbed above $68 a barrel during the week. SPDR S&P Oil & Gas Exploration & Production (XOP) increased 3.72 percent. SPDR Financial (XLF) advanced 1.75 percent. Alcoa (AA) rallied strongly on rising aluminum prices and its earnings beat. The small-cap Russell 2000 Index led the major indexes with an increase of 0.94 percent.
Netflix (NFLX) and Amazon (AMZN) lifted the consumer discretionary sector this week. Netflix beat earnings estimates and gained 5.10 percent on the week. Amazon CEO Jeff Bezos revealed that Amazon now has 100 million Prime subscribers generating $10 billion in revenue each year. Shares rose 6.73 percent. SPDR Consumer Discretionary (XLY) gained 1.72 percent.
The blended earnings growth rate (reported earnings and remaining forecasts) keeps rising as companies beat on earnings and revenue, but a few companies did not meet investors’ expectations. Philip Morris International (PM) fell 17.19 percent on the week after Thursday’s earnings report. It beat earnings, but growth of new products missed expectations. Proctor & Gamble (PG) fell 4.71 percent. Slow growth and rising costs are hurting P&G with much of the consumer staples sector. SPDR Consumer Staples (XLP) fell 4.01 percent on the week.
Taiwan Semiconductor (TSM) slumped 8.66 percent on the week following a miss on earnings and revenue forecasts and neutral guidance. iShares Semiconductor (SOXX) declined 4.48 percent. International Business Machines (IBM) beat earnings, but disappointed investors. It slid 7.51 percent on the week. SPDR Technology (XLK) declined 0.18 percent.
General Electric (GE) investors responded positively to its earnings report, sending shares up 7.78 percent on the week.
Economic data was strong this week. March retail sales, housing starts, building permits, industrial production, and capacity utilization all reported better-than-expected data. Homebuilder confidence eased in April but remained near two-decade highs. Initial claims for unemployment were 232,000, still near four-decade lows.
The 10-year Treasury yield rallied to a new 52-week high on Friday to finish at 2.95 percent. The 30-year Treasury yield hit 3.14 percent. SPDR Utilities (XLU) rallied early in the week and finished with a gain of 1.04 percent.
Rising interest rates accompanied a rally in the U.S. Dollar Index. iShares MSCI EAFE Index (EFA) gained 0.34 percent, SPDR S&P 500 (SPY) 0.64 percent. Weakness was concentrated in emerging markets. iShares MSCI Emerging Markets (EEM) fell 0.74 percent.
Amazon (AMZN) said it was shelving its pharmacy plans for now. It had obtained a pharmacy license last year and many pharmacy stocks underperformed as a result. This week those shares outperformed. iShares U.S. Healthcare Providers (IHF) gained 2.43 percent. SPDR Healthcare (XLV) rose 0.28 percent on the week.