Broker Check

May 6, 2019 - Stocks Slightly Higher After Friday Rally

| May 06, 2019

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.


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.

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

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.

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.

This research material has been prepared by LPL Financial LLC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial LLC is not an affiliate of and makes no representation with respect to such entity.

The investment products sold through LPL Financial are not insured deposits and are not FDIC/NCUA insured. These products are not Bank/Credit Union obligations and are not endorsed, recommended or guaranteed by any Bank/Credit Union or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.

Securities and Advisory services offered through LPL Financial LLC, a Registered Investment Advisor


For Client Use - Tracking #1-849661 (Exp. 5/20)