Weekly Market Drivers | LPL Financial Research

Stocks slightly higher after Friday rally

US: S&P 500 Index +0.2%, Dow -0.1%, Nasdaq +0.2%
Europe: STOXX Europe 600 -0.2%, German DAX 0.8% France CAC 40 -0.4%, U.K. FTSE 100 -0.6%
Asia: Japan Nikkei N/A, China Shanghai Composite N/A, Korea KOSPI +0.8%
Rates/Commodities: 10-Year Treasury yield -4 basis points to 2.52%, WTI crude oil -2.4%, COMEX gold: -0.4%

Modest gains gave way to mid-week selling pressure after the Federal Reserve (Fed) concluded its two-day monetary policy meeting. Then, a strong jobs report on Friday pushed the S&P 500 Index higher for the week.

The S&P 500 notched a third consecutive record high through Tuesday before sliding nearly 1% over the two-day stretch following the Fed’s decision to stand pat on interest rate policy, as expected. Fed Chair Jerome Powell promised further patience, but investors seemingly wanted more, as we outlined in a post-meeting blog. Treasury yields subsequently moved higher, leaving the slope of the yield curve little changed on the week.

The combination of generally upbeat corporate earnings and economic data helped to offset investors’ apparent disappointment with the Fed. The busiest week of first quarter earnings season pushed the S&P 500 year-over-year earnings growth rate into positive territory, and economic data was mostly positive. However, major stock indexes remained in the red until Friday’s monthly nonfarm payrolls report showed that U.S. hiring hasn’t wavered amid global uncertainty and trade tensions. At the same time, productivity in the first quarter rose at the fastest year-over-year pace since 2010. On this week’s economic data, LPL Research Chief Investment Strategist John Lynch said, “Data continue to show a resurgence in U.S. consumer health after lackluster activity over the past few months. We are particularly encouraged by the pickup in worker productivity, which suggests the increase in business spending that began late last year is starting to kick in.”

Abroad, it was a fairly uneventful week marked by holiday-related closures. In Europe, Spain’s primary stock index underperformed following national elections that highlighted the geopolitical unrest many countries in the region are seeing. In Asia, exchanges in mainland China, Japan, and other markets closed for most (or all) of the week for public holidays.

Looking ahead, the steady flow of corporate earnings continues, both in the U.S. and Europe, while U.S. inflation and several important data sets out of China highlight the economic docket. Track these and other important events on our Weekly Global Economic & Policy Calendar.

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