Market Update: Friday, May 13, 2016


  • Strong retail sales data boosts sentiment, stocks. A headline beat and strength in the underlying retail sales figures released this morning helped lift stocks off early lows. On Thursday, indexes were little changed amid an up-and–down session as investor’s focused on earnings reports and higher-than-expected jobless claims. European markets are lower but trending up in midday trading despite a downward revision to first quarter Eurozone growth figures. This comes on the heels of disappointing economic data out of Asia, which weighed on the region; indexes in Japan, India and Hong Kong fell 1% or more. Meanwhile, data showing OPEC ramped up production in April is weighing on WTI crude oil prices, as is dollar strength. COMEX gold is up slightly, and 10-year Treasuries are retracing yesterday’s pullback that left the yield at 1.73%.


  • April retail sales should help calm consumer fears. After a difficult week for consumer news–poor Q1 sales from mall-based retailers and a spike in jobless claims–core retail sales rose a better than expected 0.9% between March and April, exceeding expectations of a 0.4% increase. Core sales feed directly into gross domestic product (GDP). In the first two months of Q2 2016, core sales are running more than 4% ahead of their Q1 average, strongly suggesting that Q2 GDP will accelerate from the tepid sub-1% pace seen in Q1 2016.
  •  European Q1 GDP revised down. Additional data came in, revising European GDP data down from 0.6% to 0.5%. Some European countries had already reported GDP, but new data came in overnight. Germany grew at 0.7%, the strongest of the new data, after Spain announced 0.8% growth earlier. The Greek economy contracted at -0.4% during the quarter. Overall, Europe has avoided a recession, but growth remains weak and is expected to be 1.2-1.5% for the year.

    Limping to the finish. Earnings season during the last week was filled with disappointing retail results and, despite a solid government retail sales report for April, leaves markets questioning the health of a major segment of the consumer discretionary sector. The dichotomy highlights the immense demographic and online shifts and, along with the aging business cycle, supports our modest near-term caution on the consumer discretionary sector. 

  • The 50-day moving average is support again. With one day to go, the S&P 500 is up 0.3% for the week. Yesterday was a flat day, but the S&P 500 finished off its lows, finding support from its 50-day moving average. This upward sloping trend line has been support since last week. A flat day yesterday was a nice change, considering the S&P 500 gained over 1% on Tuesday, only to fall nearly 1% on Wednesday.
  • Friday the 13th. Today is the 151st Friday the 13th going back to 1928. As we noted yesterday, this day is actually up 57% of the time, which is better than the average Friday (up 54.5%). However, it has had some big losses when it is lower, taking the average Friday the 13th return down to 0.02% versus the average Friday return of 0.05%. Lastly, today is the 13th occurrence of Friday the 13th in May going back to 1928. This day in May shows a return of -0.3%, with only October and November sporting worse returns.
  • A bullish technical sign for crude. Crude oil had a golden cross on Monday, which could suggest better times are ahead for the commodity. A golden cross is when the faster 50-day moving average moves above the 200-day moving average. In fact, going back to 1983, the recent bear market in crude was a record, as it went 422 days with the 200-day above the 50-day. There have been 23 previous golden crosses; historically, three months later crude is up 4.2% on average and higher 65% of the time. Today on the LPL Research blog we will examine this development in more detail.



  • China: Industrial Production (Apr)
  • China: Retail Sales

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