Market Perspective for April 12, 2019

Disney’s (DIS) unveiling of its Disney+ streaming service lifted shares 11.54 percent on Friday and helped send the Dow Jones Industrial Average higher by 1.03 percent on the day. Disney plans a rollout of its streaming service later this year at a cost of $7.99 per month, a 33 percent discount from Netflix’s (NFLX) popular streaming option. Shares of Netflix fell 4.49 percent on Friday. The Disney+ division could lose money for 5 or more years, but it’s also expected to see a huge surge in customers who will have access to all Disney content ranging from classics such as Snow White, the Star Wars and Marvel universes, as well as new properties recently acquired from Fox such as The Simpsons.

Despite Disney’s gains, the Dow Jones Industrial Average wasn’t the best performing index this week. The Nasdaq led with an increase of 0.55 percent, followed by the 0.51-percent gain in the S&P 500 Index. The Dow Jones Industrial Average fell less than 0.1 percent, while the Russell 2000 gained 0.1 percent.

Earnings season started strong with Delta (DAL), J.P. Morgan (JPM) and Wells Fargo (WFC) beating earnings estimates.

J.P. Morgan delivered $2.65 per share, 30 cents more than the consensus forecast. J.P. Morgan rallied 5.60 percent on the week, with most of the gains coming on Friday.

Wells Fargo also beat estimates at $1.20 versus $1.09 per share expectations. However, the firm slipped 2.62 percent on Friday after it lowered forward looking guidance.

Analysts expected gains of 9 cents per share from Delta, but it delivered 96 cents per share.

SPDR Financials (XLF) climbed 1.84 percent on Friday following J.P. Morgan’s report. It gained 2.05 percent on the week and hit a new high for 2019. SPDR Communication Services (XLC) advanced 1.45 percent thanks to Disney. SPDR Technology (XLK) and SPDR Consumer Staples (XLP) returned 1.17 percent and 1.03 percent, respectively. SPDR S&P Regional Banking (KRE) increased 1.67 percent.

Economic data showed the economy picking up steam. Consumer price inflation increased 0.4 percent, in line with expectations. Producer prices jumped 0.6 percent, doubling estimates.

Weekly jobless claims fell to 196,000, a 50-year low. The Job Openings and Labor Turnover Survey (JOLTS) showed 7.1 million openings in February.

Consumer confidence eased in April according to the University of Michigan’s preliminary survey. This was mainly due to consumers reacting to higher prices, itself a sign economic growth is robust.

U.S. Dollar Index eased lower by 0.40 percent for the week.

 

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