Markets, Economy

Weekly Kickstart (04/30/2018-05/04/2018)

4/30/18 8:00 AM

/iStock-462756183.jpgStocks edged lower last week, as the S&P 500 fell by 0.01 percent to 2,669.91. That small loss left the benchmark index down only 0.14 percent year-to-date, and just 7.06 percent below the all-time closing high. Despite the seemingly muted week-over-week performance, equities actually finished quite strong considering the weak start. Indeed, the S&P 500 was down by more than 2 percent at one point due to concerns about rapidly rising bond yields. Stocks quickly rebounded, though, thanks to generally encouraging economic data and surprise progress in the peace negotiations between North and South Korea.

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Further, the corporate earnings season for the first quarter of 2018 continued to buoy equities last week, as 74 percent of the companies in the S&P 500 that have already released their Q1 profit data reported a positive sales surprise, according to a new report from FactSet. Seventy-nine percent of firms have also reported a positive earnings surprise, which puts Q1 2018 on track for the best EPS beat rate since 2008. Although encouraging, there are still many potential headwinds for equities in the near future, including a non-trivial chance of another interest rate hike at this week’s Federal Open Market Committee meeting. Retail investors should therefore continue to focus on the long-term goal of amassing a large retirement nest egg. Assistance with that endeavor is available through the consistent use of tax-advantaged savings vehicles, dollar-cost averaging, and regularly consulting with a professional financial advisor. As always, we are here to help with any questions you may have.

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To recap a few of the things we learned about the economy last week, the positives included that the nation’s trade deficit narrowed, existing home sales rose, new home sales jumped, consumer confidence firmed, first-time claims for unemployment benefits fell to a 49-year low, and U.S. GDP during the first quarter grew by more than anticipated. As for the negatives, housing inflation remained elevated, durable goods orders excluding transportation disappointed forecasts, core capital expenditures (a measure of U.S. business investment) unexpectedly declined, gauges of regional manufacturing activity in America continued to send mixed signals, and employment costs rose at the fastest pace in a decade (good for workers but inflationary in the long run). This week the pace of economic data picks up with several important reports on housing, manufacturing, consumers, and inflation scheduled to be released, along with the potentially market-moving April job report from the Bureau of Labor Statistics due out on Friday.

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**A more detailed snapshot of the U.S. economy can be found here.**

What To Watch:

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Thursday

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Sources: Econoday, FactSet, FRBSL

Post author: Charles Couch

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