Markets: It was a mixed week for the market. The Dow Jones was down, but the S&P 500, NASDAQ, and Russell small caps all gained. The NASDAQ led again, with a 1.62% gain. The market rallied Friday, led by bank stocks as a stronger-than-expected jobs report for May reinforced expectations of a June interest rate hike by the Fed.
On Thursday, the US imposed steel and aluminum tariffs on the country’s top allies, the EU, Canada, and Mexico. The tariffs will be 25% on steel and 10% on aluminum. Canada, Mexico and the EU made up 50% of US steel imports in 2017.
Stocks plunged Thursday after Canadian Prime Minister Justin Trudeau announced steel and aluminum tariffs against the US. The EU announced tariffs on Harley Davidson, and Mexico also said it would retaliate.
Dividend Stocks Update: These high dividend stocks go ex-dividend this coming week: FGP, ATUS, FDUS, GNL, VOD.
Volatility: The VIX rose 2.2% this week, ending the week at $13.46.
Currency: The dollar has risen vs. most major currencies in 2018, except the yen.
Market Breadth: 13 of the DOW 30 stocks rose this week, vs. 15 last week. 48% of the S&P 500 rose this week, vs. 54% last week.
Economic News:
Nonfarm payrolls increased by 223,000 jobs in May, the Labor Department reported, while the average hourly earnings rose 0.3 percent after edging up 0.1 percent in April.
Economists polled by Reuters had forecast jobs increasing by 188,000 and a 0.2 percent rise in wages. The data showed a drop in the unemployment rate to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions.
Employment gains for April and March were revised up by a combined 15,000, the Labor Department said Friday. The government said 159,000 new jobs were created in April instead of 164,000. March’s increase was raised to 155,000 from 135,000. (Reuters)
Stock markets around the world plunged on Tuesday and investors demanded higher yields in return for taking on Italian government debt. The main stock index in Italy extended its losses for the week, dropping another 3%. The country’s banks were hardest hit, with some stocks falling by over 5% (CNN).
U.S. economic growth slowed slightly more than initially thought in the first quarter amid downward revisions to inventory investment and consumer spending, but a robust labor market and income tax cuts are likely to boost activity this year. Gross domestic product increased at a 2.2 percent annual rate, the Commerce Department said in its second estimate of first-quarter GDP, instead of the previously reported 2.3 percent pace. The economy grew at a 2.9 percent rate in the fourth quarter (Reuters).
“The U.S. lost nearly 8.7 million jobs in the Great Recession and its aftermath. It has gained 18.9 million since then — a powerful rebound that belied fears of another “jobless recovery.” (Net growth was needed just to keep pace with the working-age population, which has increased by about 10 million during the same period.)
Politicians, investors and, yes, journalists love to obsess over the month-to-month swings in the job numbers. But the true story of the recovery is one of remarkable consistency. American employers have added jobs for 92 straight months — far and away the longest streak on record — and apart from a few blips, the gains have been steady.”
Week Highlights: It’ll be a short week, with US markets closed for Monday’s Memorial Day holiday. A handful of S&P 500 firms report, including Smucker’s, Avago, and Brown-Forman.
Next Week’s US Economic Reports: It’ll be a slow week, with relatively few economic reports due out.
Sectors: The Energy Sector led this week, while Financial Sector trailed.
Futures:
Crude Oil WTI Futures have risen 8.8% in 2018, while Natural Gas futures have risen .75%.
WTI Crude finished the week down 1.9%, at $65.71/barrel, its lowest price in 4 weeks.
