Stocks Meander Through Holiday-Shortened Week.
US: S&P 500 Index -0.1%, Dow +0.6%, Nasdaq +0.2%
Europe: STOXX Europe 600 +0.8%, German DAX +1.9% France CAC 40 +1.4%, U.K. FTSE 100 +0.5%
Asia: Japan Nikkei +1.0%, China Shanghai Composite +1.9% Korea KOSPI -0.9%
Rates/Commodities: 10-Year Treasury yield +7 basis points to 2.56%, WTI crude oil +0.8%, COMEX gold: +0.0%
Major U.S. indexes continue to hover near all-time highs, but little changed this week amid sustained weakness in healthcare stocks and as investors shrugged off indications that a U.S.-China trade deal may soon come to fruition.
Investors had political headlines, corporate earnings, and economic data to chew on, though none were able to push stocks meaningfully one way or the other. Reports throughout the week of continued progress on the U.S.-China trade front that included a late-week announcement that both parties hope to soon finalize a deal and hold a signing ceremony in late May or early June, failed to move the needle. The public release of a redacted version of Special Counsel Robert Mueller’s report also had little-to-no impact. Politics did trip up healthcare stocks, which have significantly trailed the broad market year to date, as members on both sides of the aisle mull ideas for tighter regulation ahead of the next presidential election. On the healthcare sector, LPL Chief Investment Strategist John Lynch said, “Policy uncertainty remains a significant headwind for healthcare stocks, but demographics and projected spending in the space remain favorable.”
Foreign stocks got a tailwind out of China after another round of better-than-expected data indicated that targeted government stimulus appears to be working. Consequently, Asian stocks outpaced those in Europe. However, the STOXX Europe 600 rose every day—albeit modestly—and capped a seven-day win streak. Gains were kept in check by Markit Purchasing Managers’ Index reports that showed continued deterioration in both the manufacturing and services sectors for the Eurozone as a whole. However, services activity in both Germany and France bested consensus expectations, with the latter moving back into expansionary territory.
Several key announcements are on the economic docket for the upcoming week, with preliminary first-quarter gross domestic product (GDP) figures due out, as well as home sales and building permits data. In Europe, Eurozone Consumer Confidence and Germany IFO Business Climate surveys are noteworthy. Japanese industrial production and Leading Economic Index data headline the week in Asia. Track these and other important events on our Weekly Global Economic & Policy Calendar.
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