U.S. stocks edged higher on the week, adding on to the previous week's 2% rally, leaving the S&P 500 flat year-to-date. Stronger-than-expected earnings growth of 18% for the S&P 500 have helped stocks move higher, but potential causes of volatility, including additional tariff proposals and rising interest rates, continue to be headline risks. Through volatile markets it's important to take a long-term perspective and remember that market returns are driven by economic and earnings growth over time, and both appear positive, in our view.
Earnings Offer a Welcome Distraction: Our Key Market Takeaways
The market has spent the last two months focused on worries of a trade war and swirling political uncertainties. Last week brought a welcome – and positive -- distraction as corporate earnings announcements grabbed the spotlight. Stocks gained less than a half percent on the week, having now rebounded 3.5% from the April lows, pulling the U.S. market back near even for 2018 and within 7% of the January highs.
Policy and political concerns are not gone, nor is the volatility they'll spur as they jump in and out of the headlines. But our view that the broader bull market still has gas left in the tank is supported by the positive foundation of further economic and earnings growth, as last week demonstrated. Here are our key takeaways:
Source: 1. Factset Earnings Insight.
|Dow Jones Industrial Average||24,463||0.4%||-1.0%|
|S&P 500 Index||2,670||0.5%||-0.1%|
|10-yr Treasury Yield||2.96%||0.13%||0.55%|
Source: Bloomberg, 4/20/2018. Bonds represented by the iShares Core U.S. Aggregate Bond ETF. Past performance does not guarantee future results.
The Week Ahead
The earnings season will take center stage next week, with more than one-third of the companies in the S&P 500 reporting first-quarter results. Economic data to be reported includes existing home sales on Monday, new home sales on Tuesday, and GDP for the first quarter on Friday.
The Weekly Market Update is published every Friday, after U.S. markets close.
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