US stock markets pushed to new highs early in the week helped by another benign inflation reading when core PCE data missed expectations once again. Improving data in continental Europe buoyed risk sentiment and helped rates move up globally heading into the FOMC and BOE meetings Wednesday and Thursday. Stock prices also backed away from the highs as some noted seasonality and a heavy upcoming IPO calendar as a good reason to reassess and potentially take profits. Oil prices also dropped notably as US inventories and production continued to swell.
Chairman Powell was not as dovish as the market may have expected, though, when he went out of his way to explain that the low inflation readings are likely the result of “transient” factors. Advocates for an ‘insurance’ rate cut amid low inflation, including the White House, were disappointed when Powell said he didn’t see any reason to move rates in either direction at this time.
A Chinese press report on Thursday dampened markets by suggesting trade talks had reached an “impasse,” but stocks recouped the losses on Friday and interest rates settled.
A heavy week of earnings topped corporate headlines this week. Google shares slumped after reporting a top-line miss and noting a slowdown in Pixel smartphone sales. Apple rallied after posting a beat and boosting its stock buyback program, despite a 5% drop in total revenue on an annual basis. McDonald’s reached fresh all-time highs after announcing strong SSS growth in Q1, while Yum Brands shares moved lower after disappointing SSS readings from Taco Bell and Pizza Hut. GE popped after beating its beaten-down expectations and reaffirming its FY outlook. Occidental partnered with Berkshire Hathaway to solidify financing for an Anadarko takeover, and reports indicated Chevron was unlikely to counterbid. Amazon rose after word surfaced that Berkshire had bought shares in the tech giant. HealthEquity confirmed a $2B bid for WageWorks in an effort to create a larger health savings account and employee benefits provider. Tesla stock rallied after the automaker formally announced an upsized $2.7B capital raise and Elon Musk said he would personally buy $25M of shares.
Macro :
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