Weekly Market Drivers | LPL Financial Research

S&P 500 notches fresh record high after seven month drought.

US: S&P 500 Index +1.1%, Dow -0.2%, Nasdaq +1.8%
Europe: STOXX Europe 600 +0.1%, German DAX +0.8% France CAC 40 -0.2%, U.K. FTSE 100 +0.2%
Asia: Japan Nikkei +0.3%, China Shanghai Composite -5.0% Korea KOSPI +1.7%
Rates/Commodities: 10-Year Treasury yield -6 basis points to 2.50%, WTI crude oil -1.5%, COMEX gold: +0.9%

After more than seven months, the S&P 500 Index closed at new record high this week, powered by strength in healthcare and financials stocks, sectors that have significantly lagged the broader market in recent months.

The new record highs came amid a relatively light week of economic releases and geopolitical headlines, though it was one of the busiest weeks of the S&P 500’s quarterly earnings season. “The S&P 500’s new high follows a more than seven-month drought,” said LPL Chief Investment Strategist John Lynch. “We think there is a compelling fundamental case for equities at these levels, but a modest pullback may be overdue after such a strong rally.” Economic data consisted of several housing market reports that painted somewhat of a mixed picture, as well as the initial read of first quarter gross domestic product (GDP), which registered its best first quarter growth—at 3.2%—since 2015. Treasury yields fell after the GDP report, however, as the data showed growth in consumer demand and prices decelerated from the prior quarter.

Foreign stocks were mixed on the week with the STOXX Europe 600 finishing little changed, while China’s Shanghai Composite (-5.0%) significantly trailed Japan’s Nikkei 225 (+0.8%), which paced major foreign indexes. The disparity centered on monetary policy, with Chinese reports suggesting government officials have no intention of providing further support, while policymakers in Japan reassured investors that ultra-low rates will be maintained for the foreseeable future.

Corporate earnings continue to roll in next week, with heavy hitters such as Google, Apple, and McDonalds slated to report. The U.S. also has a full economic docket, headlined by nonfarm payrolls and the Federal Reserve’s next policy meeting. Abroad, first quarter GDP figures are due out for the composite Eurozone, while April manufacturing PMI for China and Japan will garner attention. Track these and other important events on our Weekly Global Economic & Policy Calendar.

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted

Investing in foreign and emerging markets securities involves special additional risks. These risk include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.

The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

The Shanghai Stock Exchange Composite Index is a capitalization-weighted index. The index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange. The index was developed on December 19, 1990 with a base value of 100. Index trade volume on Q is scaled down by a factor of 1000.

The Nikkei 225 Stock Average is a price-weighted index comprised of the top 225 blue-chip companies on the Tokyo Stock Exchange.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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