Markets: It was an up week for the market, with all 4 indexes posting gains, led by the Russell small caps. The week ended on a down day, though, investors grew leery of rising bond yields and rising inflation. The 10-Year Treasury note rose to 2.956% on Friday, the highest since January 2014. Stocks have been more sensitive to bond prices recently, as the 10-year yield approaches 3%.
“Bank of America, (NYSE:BAC), America’s second-largest bank hauled in $6.9 billion in profit during the first three months of 2018. That’s the biggest quarterly profit in Bank of America’s history, taking out the previous record set in 2011. The bigger profits are partially due to the tax cut bill.
BAC paid Uncle Sam $1.5 billion in income tax, down 26% from last year, even though overall profit soared 30%. The bank said the tax law lowered its effective tax rate by 9 percentage points. The new corporate tax rate is 21%, down from 35%. Without the gift of the tax law, Bank of America’s results would have been less stellar. Pretax income rose a more modest 15%, while revenues ticked up just 4%.” (Source: Money.CNN)
Dividend Stocks Update: These high dividend stocks go ex-dividend this coming week: Pembina Pipeline Corp (NYSE:PBA), Peak Resorts Inc (NASDAQ:SKIS), Chatham Lodging Trust REIT (NYSE:CLDT), Tallgrass Energy GP LP (NYSE:TEGP), Tallgrass Energy Partners LP (NYSE:TEP).
Volatility: The VIX fell -.07% this week, ending the week at $16.88.
Currency: The USD rose vs. most major currencies this week.
Market Breadth: 19 of the Dow 30 stocks rose this week, vs. 24 last week. 65% of the S&P 500 rose this week, vs. 72% last week.
Economic News: “Spending at U.S. retailers bounced back in March, but the broader trend in consumer spending shows only moderate growth despite a solid labor market and growing worker paychecks. Part of the rise in retail sales was an expected bounceback after three consecutive months of weak readings. In February, sales dropped 0.1% after a 0.2% drop in January and a 0.1% decline in December.
‘Retail sales rose for the first time in March, but the report was nothing to write home about’, wrote Gus Faucher, chief economist at PNC Financial Services Group (NYSE:PNC), in a note to clients. Consumer spending is growing at a moderate pace.
A bump in auto sales helped drive the overall rise in retail spending. Excluding vehicles, sales were up 0.2% last month. Excluding both autos and gasoline, sales rose 0.3% in March from the prior month.”
Week Ahead Highlights: Q1 ’18 earnings season heats up, with 12 DOW stocks reporting, including Coca-Cola Company (NYSE:KO), Boeing (NYSE:BA), Exxon Mobil (NYSE:XOM), Verizon Communications Inc (NYSE:VZ), and Microsoft (NASDAQ:MSFT). 36% of the S&P 500 will report next week.
Next Week’s US Economic Reports: The Q1 GDP estimate is due out next Friday am.
Sectors: The Energy sector led again this week, as Utilities trailed. WTI Crude futures hit their highest mark in 2 years, spurred on by the threat of US air strikes on Syria.
” Some major airlines were re-routing flights on Wednesday after Europes air traffic control agency warned aircraft flying in the eastern Mediterranean to exercise caution due to possible air strikes on Syria. Syria is not a significant oil producer, but any sign of conflict in the region tends to trigger concern about potential disruption to crude flows across the wider Middle East, home to some of the worlds biggest producers. The U.S. Energy Information Administration (EIA) said on Tuesday that it expects domestic crude oil production in 2019 to rise by more than previously expected, driven largely by growing U.S. shale output.”
Futures:
The CRB, a commodity futures price index, has risen 4% year to date, its highest since Oct. ’15. WTI Crude futures rose 1% this week, while Natural Gas futures rose .37%.
“Oil futures were up Wednesday after U.S. inventories dropped, following fresh signs that OPEC and Russia will stay the course with their output cuts. U.S. crude jumped 2.7% to $68.30 a barrel on Wed., topping $68 for the first time in more than three years, and Brent rallied 2.3% to $73.26 a barrel. Late Tuesday, the American Petroleum Institute, an industry group, reported a 1 million-barrel drop in crude stockpiles and a 2.5 million-barrel drop in gasoline stockpiles. U.S. oil production climbed to a fresh high of 10.54 million barrels a day last week from 10.53 million a week earlier.” (Source: IBD)
“Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil rose by 5 to 820 this week. The oil-rig count had logged gains in each of the last two weeks. The total active U.S. rig count, which includes oil and natural-gas rigs, climbed by 5 to 1,013.” (Source: MarketPulse)
