Market Perspective for May 24, 2019

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.

 

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