Weekly Market Insight: Special Update – Quarterly Report
The Week on Wall Street
Stocks just posted their second straight weekly gain. Investors were encouraged by the latest jobs report and new signs of progress on a U.S.-China trade deal. The Dow Jones Industrial Average advanced 1.17% in five trading days; the S&P 500, 1.27%; the Nasdaq Composite, 1.72%. The MSCI EAFE index of international stocks improved 1.84%.[1],[2],[3],[4]
The economy generated 196,000 net new jobs in March, according to the Department of Labor. Monthly job growth averaged 180,000 in the first quarter. Both President Trump and Chinese Vice Premier Liu He told the media last week that the U.S. and China were getting closer to a new trade accord.[5],[6]
Meanwhile, a week into the second quarter, another earnings season is about to unfold. As we await results, we will take a brief look back at what happened in the first quarter.
Quarterly Update
Stocks staged an impressive comeback in Q1, recovering nearly all of the losses incurred in the last three months of 2018.
Bullish Sentiment Increased
Investors were able to set some of their recent concerns aside, at least temporarily. The Federal Reserve indicated that it would pause interest rate hikes, and while no U.S.-China trade deal was completed during the quarter, the ongoing trade dispute cooled. The economy seemed healthy: the jobless rate was under 4%, hourly pay was rising at more than 3% a year, and inflation was tame.[7]
Add in some upside from corporate earnings, and a recipe for gains emerged.
Stocks Had Their Best Quarter Since 2009
The Dow rose 11.15%; the S&P 500, 13.07%; the Nasdaq Composite, 16.49%. Additionally, this was the best first quarter seen on Wall Street since 1998.[8]
The Fed Held Interest Rates Steady
In March, the Federal Reserve left the benchmark interest rate alone and indicated that it would not make a rate hike this year. As recently as December, the Fed had forecast two hikes for 2019.[9]
What’s Ahead
The first-quarter earnings season kicks off this week with three big banks reporting results. The question is whether stocks in the S&P 500 will post earnings that beat analyst expectations to the degree they have in the past few quarters. Other questions: how will consumer confidence, wage growth, and job creation fare in Q2? Will there be a Brexit or a new U.S.-China trade pact this quarter, and if so, how will global markets react? If you have questions of your own as this quarter unfolds, remember that we are always here to talk.
THE WEEK AHEAD: KEY ECONOMIC DATA
Wednesday: Minutes from the March Federal Reserve meeting, plus the latest Consumer Price Index, tracking monthly and yearly inflation.
Friday: The initial University of Michigan consumer sentiment index for April, which assesses consumer confidence.
Source: Econoday / MarketWatch Calendar, March 5, 2019
The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision. The release of data may be delayed without notice for a variety of reasons, including the shutdown of the government agency or change at the private institution that handles the material.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Wednesday: Bed Bath & Beyond (BBBY), Delta Air Lines (DAL)
Thursday: Fastenal (FAST), Rite Aid (RAD)
Friday: JPMorgan Chase (JPM), PNC (PNC), Wells Fargo (WFC)
Source: Morningstar.com, March 5, 2019
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, time frame and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
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[1] https://quotes.wsj.com/index/SPX
[2] https://quotes.wsj.com/index/DJIA
[3] https://quotes.wsj.com/index/COMP
[4] https://quotes.wsj.com/index/XX/990300/historical-prices
[5] https://www.cnn.com/2019/04/05/economy/march-jobs-report/index.html
[6] https://www.cnbc.com/2019/04/05/stock-market-us-china-trade-nonfarm-payrolls-in-focus.html
[7] https://www.usatoday.com/story/money/2019/03/29/dow-stocks-pace-best-quarter-decade-good-times-last/3311639002/
[8] https://www.usatoday.com/story/money/2019/03/29/dow-stocks-pace-best-quarter-decade-good-times-last/3311639002/
[9] https://www.usatoday.com/story/money/2019/03/29/dow-stocks-pace-best-quarter-decade-good-times-last/3311639002/
