What I’m Watching This Week – 23 April 2018

The Markets (as of market close April 20, 2018)

Favorable first-quarter earnings reports helped push stocks higher for the second consecutive week. Led by the small caps of the Russell 2000, each of the benchmark indexes listed here posted gains by the end of last week. The energy sector continued to post strong returns, boosted by rising crude oil prices, which are approaching $70 per barrel. Treasury yields climbed as prices fell following a sell-off of Treasury bonds.

The price of crude oil (WTI) climbed again last week, closing at $68.26 per barrel early Friday evening, up from the prior week’s closing price of $67.39 per barrel. The price of gold (COMEX) fell to $1,337.60 by early Friday evening, down from the prior week’s price of $1,348.60. The national average retail regular gasoline price increased to $2.747 per gallon on April 16, 2018, $0.053 higher than the prior week’s price and $0.311 more than a year ago.

Market/Index 2017 Close Prior Week As of 4/20 Weekly Change YTD Change
DJIA 24719.22 24360.14 24462.94 0.42% -1.04%
Nasdaq 6903.39 7106.65 7146.13 0.56% 3.52%
S&P 500 2673.61 2656.30 2670.14 0.52% -0.13%
Russell 2000 1535.51 1549.51 1564.12 0.94% 1.86%
Global Dow 3085.41 3057.98 3083.28 0.83% -0.07%
Fed. Funds target rate 1.25%-1.50% 1.50%-1.75% 1.50%-1.75% 0 bps 25 bps
10-year Treasuries 2.41% 2.82% 2.96% 14 bps 55 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

  • Sales at the retail level grew 0.6% in March from the previous month, and 4.5% above March 2017. Motor vehicle and parts dealers saw a monthly sales increase by 2.0%, while health and personal care sales advanced 1.4% in March over February. Nonstore (internet) retail sales increased 0.8% for the month and are up 9.7% over March 2017.
  • New residential construction enjoyed a favorable March as building permits and housing starts surged. Residential building permits were 2.5% above February’s rate and are 7.5% ahead of March 2017. Privately owned housing starts in March were 1.9% above February’s estimate and 10.9% above the rate a year ago. Housing completions for all types of residential construction slowed in March, falling 5.1% below the prior month. Most of the March strength in the report is attributable to multifamily construction — single-family permits (-5.5%), starts (-3.7%), and completions (-4.7%) each fell off from February. Demand for housing continues to be solid, however, a dearth of labor coupled with escalating materials costs may be hampering new construction.
  • Industrial production rose 0.5% in March after increasing 1.0% in February. The output of consumer goods advanced 0.5% in March. After having climbed 1.5% in February, manufacturing production edged up 0.1% in March. Mining output rose 1.0%, mostly as a result of gains in oil and gas extraction and in support activities for mining. Total industrial production was 4.3% higher in March than it was a year earlier. Capacity utilization for the industrial sector moved up 0.3 percentage point in March.
  • In the week ended April 14, there were 232,000 initial claims for unemployment insurance, a decrease of 1,000 from the previous week’s level. The advance insured unemployment rate remained at 1.3%. The advance number of those receiving unemployment insurance benefits during the week ended April 7 was 1,863,000, a decrease of 15,000 from the prior week’s level, which was revised up by 7,000.

Eye on the Week Ahead

Several important economic reports are out this week. Information on new and existing home sales in March is revealed. Last month, existing home sales fared better than sales of new homes. The first look at the gross domestic product for the first quarter comes at week’s end. The fourth-quarter GDP grew at a rate of 2.9%.

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