October 14 - October 18 Week in Review
It was a mixed week for the U.S. equity markets last week. The S&P 500 gained 0.5%, the Nasdaq rose 0.4% and the Russell 2000 rose 1.6% as the first busy week of earnings reports for the third quarter was generally viewed as better than feared. Only the Dow Jones Industrial fell, losing 0.2%, giving up its weekly advance on Friday after shares of Johnson & Johnson and Boeing lost over 6% apiece on negative news reports.
Seven of the 11 S&P 500 sectors finished in positive territory, with health care, real estate, and financials advancing the most.
The financial sector was helped by upbeat earnings results from JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup among others. The Dow Jones Transport did well too. Positive reactions to results from United Airlines, J.B. Hunt Transport Services, CSX, and KC Southern accounted for the out-performance.
The health care space not only benefited from an earnings driven gain in industry giant UnitedHealth but also by news that a $50 billion package offered by five companies, including Johnson & Johnson & Teva, could settle the opioid lawsuits.
Johnson & Johnson also beat earnings expectations but its subsequent drop on Friday followed news that it recalled 33,000 bottles of baby power for traces of asbestos. Boeing took a hit after Reuters reported that the company may have misled the FAA about the safety of its 737 MAX based on instant messages between two employees in 2016.
The energy sector was last week's laggard, followed by information technology led by a revenue miss from IBM and possibly some de-risking efforts.
As to the economy economic data wasn't too positive last week helping to strengthen expectations for a Fed rate cut at the October FOMC meeting. Most notably, U.S. retail sales unexpectedly declined 0.3% in September. Adding to the muted outlook was news that China's Q3 GDP, reportedly up 6.0%, grew at its slowest year over year pace in over 27 years.
The U.S. Treasury market was relatively quiet last week, with investors perhaps waiting for the outcome of Saturday's Brexit vote in Parliament. The 2 year yield declined three basis points to 1.57% and the 10 year yield was unchanged at 1.75%.
In other markets the U.S. Dollar Index fell 1.1% to 97.26 and WTI crude fell 1.8% to close at $53.76 a barrel.
October 21 – October 25 Economic Calendar