April 5, 2019 Weekly Market Recap

The stock market rally carried over into the second quarter, with the S&P 500 gaining 2.1% this week, extending its winning streak to seven straight sessions and setting a new closing high for the year. Investor sentiment was boosted by positive manufacturing data, progressing U.S.-China trade talks, and a Goldilocks Employment Situation Report for March.

The Dow Jones Industrial Average gained 1.9%, the Nasdaq Composite gained 2.7%, and the Russell 2000 gained 2.8%.

The S&P 500 materials (+4.3%), financials (+3.3%), and consumer discretionary (+3.2%) sectors led the broader market higher. Conversely, the defensive-oriented consumer staples (-1.0%) and utilities (-0.2%) sectors were the lone groups that finished lower.

Stocks rallied to begin the week, catalyzed by better-than-expected manufacturing activity for March out of the U.S. and China. The data helped reinforce the idea that global economic activity could be close to, or near, a bottom, which could potentially lead to a pickup in earnings growth later in the year.

The broader market drifted higher throughout the week while U.S.-China trade talks appeared to progress favorably in Washington. Key issues like forced technology transfers and enforcement mechanisms have yet to be resolved, though. President Trump said it will be known probably in the next four weeks or so if a deal gets done.

Friday’s release of the Employment Situation Report for March showed job growth rebound without stirring concerns about inflation, which provided more fuel for the rally. Overall, the report exposed February’s weak payrolls data as an aberration and helped drive the notion that the economic expansion in the U.S. still has room to run.

U.S. Treasuries pulled back this week, driving yields higher across the curve. The 2-yr yield increased seven basis points to 2.34%, and the 10-yr yield increased nine basis points to 2.50%. The U.S. Dollar Index increased 0.1% to 97.40. WTI crude rose 4.9% to $63.10/bbl, hitting a five-month high.

Source: Briefing Investor