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Market Recap Week ending 4/26/19

-Darren Leavitt, CFA

The broader indices inked new all-time highs last week as Microsoft, Facebook, and Amazon all posted better than expected earnings.  The S&P gained 1.2% but was outpaced by the Nasdaq and Russell 2000 which posted gains of 1.9% and 1.6%, respectively.  However, the Dow struggled as key components MMM, Intel, and Exxon Mobile missed on earnings and or lowered estimates for the coming year.  The yield curve steepened last week with the 2-year closing down 11 basis points to yield 2.27%, the 10-year shed 5 basis points to close at 2.51%.

US equities and Bonds were also helped by better than expected economic data.  Q1 GDP increased at an annual rate of 3.2% well ahead of the consensus estimate of 1.9%.  The report was accompanied with the GDP Price Deflator which came in at 0.9% lower than the consensus estimate of 1.4%.   Nice growth without inflation put the goldilocks scenario in play and gave investors more reason to buy.  Additionally, better than expected New Home Sales, Consumer Sentiment, and Durable Goods Orders also helped investor sentiment.

The strength of the US economic data provided quite a contrast from than the international economic data released last week.  For instance, South Korea GDP missed the mark, the German IFO Business Climate Index indicated it was still in decline, and the Bank of Japan indicated that it would keep its rates low until at least 2020 on growth concerns.  The international data coupled with cautious commentary from multinationals such as Intel and MMM on their outlook for China warrants some concern but perhaps brings another set of buyers to the US markets namely foreigners who seek higher yields and better economic growth prospects here in the US.  There were no changes to our models last week.

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