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April 15 – April 19 Week in Review

It was another week of mixed results for the U.S. equity markets last week as heavy selling in health care stocks outweighed a round of generally positive earnings reports from the economically sensitive industrial sector. Overall price action was rather tame though, which is likely reflective of a market that could use a break after a massive rally this year.

In holiday shortened trading last week – the markets were closed Friday for Good Friday – the S&P 500 declined 0.08%, the Dow Jones Industrial Average increased 0.56%, the Nasdaq Composite increased 0.17% and the Russell 2000 underperformed with a loss of 1.20%.

The first full week of the first quarter earnings reporting season provided investors with a host of earnings beats. Most stocks reacted favorably, but the overall market response to the news was muted, likely due to the sense that much of the good news has already been priced in at this point.

Investors, meanwhile, continued to reduce exposure to the health care sector, which has now surprisingly fallen into negative territory for the year. The entire space is under pressure due to talk of potential efforts by some Presidential candidates to curb rising health care costs and create a “Medicare for All", which is likely to continue throughout the 2020 presidential campaign trail. Investors decided that remaining invested in the sector would be dead money at best and continued to sell despite positive earnings reports from UnitedHealth, Johnson & Johnson, and Abbott Labs.

The semiconductor industry, though, continued to be an area of strength for the stock market. The Philadelphia Semiconductor Index rose 4.1% last week, and many of its components also contributed to the outperformance of the S&P 500 information technology sector.

The semiconductor space received a boost from news that Apple and Qualcomm settled their royalty dispute and agreed to a six year licensing deal on Tuesday. Shares of Qualcomm surged 39.7% from Monday's closing price. Intel followed up with a well-received announcement that it will drop out of the 5G smartphone modem business.

Also two new technology IPOs came to market on Thursday, Pinterest and Zoom Video Communications. Pinterest had a hot start to trading, finishing the day 29% higher than its IPO price. Zoom bolted out of the gate, soaring more than 80% at the start of trading, and came to rest 73% higher on the day.

Besides technology stocks last week industrial stocks were also a source of strength. Union Pacific, Honeywell, Danaher, CSX Corp. and United Rentals all reported better than expected earnings results encouraging investors and leading to solid gains.

On the interest rate front U.S. Treasuries finished lower last week, pushing yields higher across the curve. The 2 year yield increased four basis points to 2.38%, and the 10 year yield increased six basis points to 2.56%. Talk of another yield curve inversion seems to have quieted down, at least for now.

In other markets the U.S. Dollar Index increased 0.5% to 97.46 and WTI crude increased 0.2% to $64.03 a barrel, a gain of almost 30% from the start of the year.

April 22 – April 26 Economic Calendar

  • Monday
  • Chicago Fed Activity Index
    8:30 AM ET
  • Existing Home Sales
    10:00 AM ET
  • Tuesday
  • Redbook
    8:55 AM ET
  • FHFA House Price Index
    9:00 AM ET
  • New Home Sales
    10:00 AM ET
  • Richmond Fed Mfg. Index
    10:00 AM ET
  • Wednesday
  • MBA Mortgage Applications
    7:00 AM ET
  • State Street Investor Confidence Index
    10:00 AM ET
  • EIA Petroleum Status Report
    10:30 AM ET
  • Thursday
  • Durable Goods Orders
    8:30 AM ET
  • Jobless Claims
    8:30 AM ET
  • EIA Natural Gas Report
    10:30 AM ET
  • Kansas City Fed Manufacturing Index
    11:00 AM ET
  • Fed Balance Sheet
    4:30 PM ET
  • Money Supply
    4:30 PM ET
    • Friday
    • GDP
      8:30 AM ET

       

       

    • Consumer Sentiment
      10:00 AM ET
    • Baker-Hughes Rig Count
      1:00 PM ET

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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