Closing Stock Market SummaryThe S&P 500 increased 0.1% on Tuesday after being down as much as 0.6% following a key revenue miss from Alphabet (GOOG 1188.48, -99.10, -7.7%). Investors bought the intraday dip to help the benchmark index set a new closing high and close out the month with a gain of 3.9%.
The Dow Jones Industrial Average (+0.2%) increased its monthly gain to 2.6%. The Nasdaq Composite (-0.8%) and the Russell 2000 (-0.5%) lowered their monthly gains to 4.9% and 3.3%, respectively.
Shares of Alphabet fell 7.7%, as its revenue shortfall raised concerns about its ability to sustain strong growth amid increasing competition. Its underperformance weighed on the S&P 500 communication services sector (-2.6%) and contributed to some profit taking in shares of Apple (AAPL 200.67, -3.94, -1.9%) in front of its earnings report.
The news was also an excuse to sell a market fresh off record-highs. Investor regrouped, though, attributing the results as company-specific, and positioned themselves ahead of the Fed's policy decision tomorrow.
The stock market was able to muster gains from nine of the 11 S&P 500 sectors, including the defensive-oriented utilities (+1.7%), consumer staples (+1.2%), and real estate (+1.2%) sectors.
At the same time, positive reactions to earnings reports from Merck (MRK 78.71, +1.93, +2.5%), Pfizer (PFE 40.61, +1.02, +2.6%), McDonald's (MCD 197.57, +0.45, +0.2%), MasterCard (MA 254.24, +7.11, +2.9%), and General Electric (GE 10.17, +0.44, +4.5%) were added measures of support for the market.
Separately, Berkshire Hathaway (BRK.B 216.71, +0.13, +0.1%) committed to invest $10 billion in Occidental Petroleum (OXY 58.88, -1.25, -2.1%) to finance its acquisition of Anadarko Petroleum (APC 72.85, -0.08, -0.1%). The news boosted shares of Chevron (CVX 120.06, +2.34, +2.0%), as the investment dampens Chevron's attempt to acquire Anadarko for a hefty premium.
U.S. Treasuries saw increased buying interest, pushing yields lower across the curve. The 2-yr yield and the 10-yr yield declined three basis points each to 2.27% and 2.51%, respectively. The U.S. Dollar Index lost 0.4% to 97.52. WTI crude increased 0.6% to $63.80/bbl, aided by Saudi Arabia saying that OPEC+ production-cuts may continue beyond June.
Reviewing Tuesday's batch of economic data:
- The Conference Board's Consumer Confidence Index jumped to 129.2 in April (consensus 127.3) from 124.2 in March.
- The key takeaway from the report is the understanding that consumer attitudes about the short-term outlook (i.e. the next six months) improved, which is a supportive indication for consumer spending since it was matched with a more favorable outlook for the labor market.
- The MNI Chicago Business barometer, otherwise known as the Chicago PMI, dropped to 52.6 in April (consensus 58.2) from 58.7 in March. The April reading marks the lowest level for the index since January 2017.
- The key takeaway from the report is the acknowledgment from the senior economist at MNI that most barometer components have fallen below their 12-month averages, which suggests greater business uncertainty among firms.
- The Q1 Employment Cost Index increased 0.7% (Briefing.com consensus +0.8%), seasonally adjusted, for the three-month period ending in March 2019 after increasing 0.7% for the three-month period ending in December 2018. Wages and salaries, which account for about 70% of compensation costs, rose 0.7%, while benefit costs, which make up the remainder of compensation costs, also increased 0.7%.
- The key takeaway from the report is that there has been some moderation in the growth rate of employment costs.
- Pending Home Sales increased 3.8% in March (Briefing.com consensus 1.1%). Today's reading follows an unrevised decrease of 1.0% in February.
- The Case-Shiller Home Price Index for February increased 3.0% (Briefing.com consensus 3.1%), down from a revised reading of 3.5% in January (from 3.6%).
Looking ahead, investors will receive the following reports on Wednesday: the ISM Manufacturing Index for April, the FOMC rate decision, the ADP Employment Change for April, Construction Spending for March, and the weekly MBA Mortgage Index.
- Nasdaq Composite +22.2% YTD
- Russell 2000 +18.0% YTD
- S&P 500 +17.5% YTD
- Dow Jones Industrial Average +14.0% YTD