Market Perspective for March 12, 2018

Both the S&P 500 and Dow Jones Industrial Average decreased today.  The S&P 500 lost 0.13 percent, while the Dow declined 0.62 percent. The technology sector hit a new all-time high as takeover talk heated up.  The Nasdaq gained 0.36 percent. On Friday, The Wall Street Journal reported that lntel (INTC) has interest in acquiring Broadcom (AVGO). Broadcom is currently pursuing a bid for Qualcomm (QCOM), while the latter is also waiting to close on a buyout of NXP Semiconductor (NXPI). Shares of Qualcomm, Intel and NXP Semiconductor underperformed on Monday, while Broadcom climbed more than 3 percent.

The latest National Federation of Independent Business (NFIB) small business confidence index will be out on Tuesday. The prior reading was one of the highest in the 32-year old index’s history. February consumer price inflation will also be available on Tuesday.  Economists forecast 0.2 percent inflation across the board.  Last month headline prices jumped 0.5 percent and core inflation 0.3 percent. Producer prices are also forecast to rise 0.2 percent, down from 0.4 percent a month earlier.

February retail sales and sales ex-autos are both expected to have risen 0.4 percent. January retail sales fell 0.3 percent and were flat ex-autos.  The Job Openings and Labor Turnover Survey (JOLTS) for January is expected to reflect 5.89 million openings, up slightly from December.

Several housing data points will be out this week, including the homebuilder confidence index, housing starts and building permits. Analysts see February housing starts slowing to an annualized pace of 1.290 million, down from January’s pace of 1.326 million.

Chinese fixed-asset investment and industrial production for February is due mid-week. European Central Bank President Mario Draghi will speak on Wednesday as taper rumors swirl. Inflation data for the Eurozone is scheduled for Friday.

The 10- and 30-year Treasury yields eased, boosting rate-sensitive sectors such as utilities. The U.S. Dollar Index was flat. Crude oil was off by a dollar to $61 per barrel. The dip in oil followed a report from ING showing U.S. producers gaining market share in Asia. OPEC successfully boosted oil prices with a production cut deal that includes Russia, but Asian buyers have doubled imports from the U.S. in response. The U.S. is producing a record amount of oil, nearly 10 million barrels per day. About 1.5 million of that is exported.

With few S&P 500 companies left to report, investors are turning to first-quarter earnings. Adobe System (ADBE) and Broadcom (AVGO) will headline the week, followed by retailers Dick’s Sporting Goods (DKS), Williams-Sonoma (WSM), Dollar General (DG), Tiffany’s (TIF), Ulta Beauty (ULTA), and Signet Jewelers (SIG).

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