Weekly Update – Economic Data in Focus, but Here Come Earnings

Weekly Performance

US: S&P 500 Index +2.0%, Dow +1.8%, Nasdaq +2.8%
Europe: STOXX Europe 600 +1.17%, German DAX +1.64%, France CAC 40 +1.08%, U.K. FTSE 100 +1.04%
Asia: Japan Nikkei +.98%, China Shanghai Composite +.89%, Korea KOSPI +1.05%
Rates/Commodities: 10-Year Treasury yield +5 basis points to 2.82%, WTI crude oil +8.41%, COMEX gold +.87%

Though global trade remains firmly on the radar and rising tensions surrounding Syria were notable, a mixed bag of global economic data garnered much of investors’ attention ahead of earnings reports from a string of major financial firms that kicked off first-quarter earnings season. With all 11 S&P 500 sectors forecasted to see growth, LPL Chief Investment Strategist John Lynch noted, “we expect this earnings season to be another strong one, driven by solid global economic growth, robust manufacturing activity, a weaker U.S. dollar, and the benefits from the new tax law.” All-in-all, it was a good week for global stocks with major U.S. indexes up roughly 1.5% while their international counterparts advanced roughly 1%.

On the economic front, U.S. inflation readings on consumers and producers came in above the Federal Reserve’s (Fed) 2% target level. Both were largely shrugged off, however, as the underlying drivers of the price increases are not forecasted to meaningfully impact the Fed’s preferred inflation measure, the personal consumer expenditure index, which registered at 1.6% most recently. Also, the minutes from last month’s monetary policy meeting showed an improved outlook for the U.S. economy and increasing confidence that inflation will rise to—and stabilize at—the target level; though “a strong majority” viewed a trade war as a downside risk. Overseas, recent weakness in European data that included disappointing industrial production figures and lackluster inflation readings across the region led some to question the strength of the recovery. However, minutes from the European Central Bank’s March meeting, released Thursday, helped propel regional equities higher to close out the week after the notes reiterated members’ commitment to the open-endedness of its asset purchase program in pursuit of a sustained increase in inflation.

Looking ahead, U.S. retail sales, industrial production data, and the Leading Economic Index are due out alongside earnings reports from about 15% of S&P 500 companies. The foreign docket is highlighted by Eurozone, German, and U.K. inflation; as well as first-quarter gross domestic product from China and trade data from Japan.




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