Closing Market Summary: Stock Market Ends Week at Record HighThe major averages wrapped up the range-bound week with modest Friday gains. The S&P 500 (+0.4%) and the Nasdaq (+0.4%) finished at new record highs while the Dow (+0.3%) settled just a step behind its peers. For the week, the S&P 500 added 0.6%.
Buyers had a slight edge from the jump after the Employment Situation Report for April showed better than expected nonfarm payrolls (211,000 actual vs 180,000 consensus) and lower than expected unemployment (4.4% actual vs 4.6% consensus). However, the Jobs report did have a few blemishes. Namely, the labor force participation rate dipped to 62.9% from 63.0% and average hourly earnings decelerated on a year-over-year basis (to 2.5% from 2.6%).
The Federal Reserve Bank of New York revised its second quarter GDP forecast to +1.8% from last week's +2.3% following today's data. However, investors in the bond market lacked conviction to push Treasuries one way or the other. The benchmark 10-yr yield (2.35%) settled at its unchanged mark.
Crude oil registered a much needed bounce-back performance on Friday, jumping 1.5% to $46.23/bbl. However, the positive showing only put a dent into the 8.0% week-to-date loss that the commodity brought into Friday's session. WTI crude faced multiple challenges this week, including persistently high U.S. inventories, weak economic data from China, and deteriorating technical support. Nonetheless, the energy sector appreciated the late-week rally, adding 1.6%.
The lightly-weighted telecom services (+1.5%) and materials (+1.4%) sectors closed in line with the energy space at the top of the day's leaderboard. Like energy, the materials group received some support from the commodity market with copper ($2.53/lb, +0.8%) finishing solidly higher after dropping 5.7% over the three previous sessions. Gold (1,226.90/ozt, -0.1%) and silver ($16.28/ozt, -0.1%) closed just below their flat lines, however, in light of their respective weekly losses of 3.3% and 5.7%, the slight downtick was a positive.
Retailers helped push the consumer discretionary sector (+0.6%) ahead of the benchmark index, evidenced by the 1.5% increase in the SPDR S&P 500 Retail ETF (XRT 43.39, +0.62). The industrial group (+0.6%) also settled ahead of the broader market with aerospace and defense names providing a pocket of strength. The real estate (+0.8%), utilities (+0.6%), consumer staples (+0.3%), and technology (+0.3%) spaces also finished in the green.
On the flip side, the influential financials (-0.1%) and health care (-0.1%) sectors ended Friday's session a tick below their flat lines. Biotech names weighed on the health care sector with the iShares Nasdaq Biotechnology ETF (IBB 295.87, -2.58) losing 0.9%. The financial space experienced broad weakness with most of its largest components settling in the red.
In Europe, the major bourses finished higher across the board with France's CAC (+1.1%) leading the advance. The positive performance precedes the French presidential run-off, which will take place on Sunday. The latest polls give Emmanuel Macron a healthy 62-38 advantage over Marine Le Pen. This has been construed as a positive for equity markets in light of Ms. Le Pen's anti-EU rhetoric. Germany's DAX and the UK's FTSE settled higher by 0.6% and 0.7%, respectively.
The U.S. Dollar Index (98.44, -0.17) slipped 0.2% as the greenback lost 0.1% and 0.4%, respectively, against the euro (1.0994) and the pound (1.2978).
In addition to the Employment Situation Report, investors received the March Consumer Credit report on Friday:
- The April Jobs Report showed that nonfarm payrolls hit 211,000 (consensus 180,000), nonfarm private payrolls added 194,000 (Briefing.com consensus 175,000), the unemployment rate fell to 4.4% (consensus 4.6%), average hourly earnings increased 0.3% (consensus 0.3%), and the average work week was 34.4 (consensus 34.4).
- The key takeaway from the report for us is that there were some elements that left it a little out of sync with the view that the economy is poised to hit, and sustain, escape velocity. The asynchrony we are referring to is the drop in the labor force participation rate and the deceleration in average hourly earnings growth on a year-over-year basis. The former dipped to 62.9% from 63.0% while the latter slipped to 2.5% from 2.6%. Friday's last economic report--March Consumer Credit (consensus $16.0 billion)--will cross the wires at 15:00 ET.
- The Consumer Credit report for March showed an increase of $16.4 billion while the consensus expected growth of $16.0 billion. The prior month's credit growth was revised to $13.8 billion from $15.2 billion.
- Consumer credit increased at a seasonally adjusted annual rate of 4.25% during the first quarter (and 5.25% in March), with revolving credit little changed and nonrevolving credit increasing at an annual rate of 5.75%.
Investors will not receive any economic data on Monday.
- Nasdaq Composite +13.3% YTD
- S&P 500 +7.2% YTD
- Dow Jones Industrial Average +6.3% YTD
- Russell 2000 +2.9% YTD
