Telemus Weekly Market Review May 20th - May 24th, 2019

May 20 – May 24 Week in Review

Last week was another losing one for the U.S. equity markets. The S&P 500 lost 1.2%, the Dow Jones Industrial Average lost 0.7%, the tech heavy Nasdaq Composite lost 2.3%, and the small cap Russell 2000 lost 1.4%. Trade and growth concerns sent investors fleeing from economically sensitive assets and seeking shelter in U.S. Treasuries and low volatility stocks.

The S&P 500 information technology and the Philadelphia Semiconductor Index underperformed on efforts to de-risk amid concerns that China could retaliate against U.S. tech companies. The S&P 500 energy sector fell, as oil prices had their worst week in 2019, closing at $59.02 Friday. Concerns about global growth and end demand contributed to the weakness in oil.

On the other hand, the defensive oriented health care, utilities, and real estate sectors all outperformed.

Earnings reports were heavy on retailers last week. Home Depot, Target, TJX Companies, L Brands, and AutoZone advanced following their results. Kohl's, Lowe's, Nordstrom, Urban Outfitters, Foot Locker, and Best Buy all dropped sharply following theirs.

To start the week several companies around the world reportedly began to suspend business or cut ties with China's Huawei Technologies. The U.S. was reportedly considering blacklisting several more Chinese firms after it put restrictions on Huawei. Later the U.S. granted Huawei a 90-day reprieve to continue to work with U.S. companies to service existing networks and mobile devices.

The takeaway is that the market appeared exhausted from the deluge of trade headlines that could swing from positive to negative on any given day. At the same time, the uncertainty in the outcome, and duration, of a trade dispute fed into concerns about economic growth and corporate earnings prospects.

In Europe, the British pound rose after a week of declines as U.K. Prime Minister Theresa May announced Friday she would resign to allow a new leader to try to break log jammed efforts to agree to a way to leave the European Union. Preliminary manufacturing data for the Eurozone remained weak.

The minutes from the April 30 - May 1 FOMC meeting indicated that interest rates will remain low. U.S. Treasuries advanced in a flight for safety, driving yields lower in a curve flattening trade. The 2 year yield dropped five basis points to 2.16%, and the 10 year yield dropped seven basis points to 2.32%.

In other markets the U.S. Dollar Index declined 0.4% to 97.58.

May 27 – May 31 Economic Calendar