S&P 500 
The U.S. unemployment rate came in at 3.6% in April, the lowest since December 1969, as stressed by the Labor Department at the end of the week. Payrolls rose by 263,000 thereby beating Wall Street expectations of 190,000. Moreover, the average hourly wage growth held at 3.2% over the past year, a notch below Dow Jones estimates of 3.3%. This positive backdrop neutralized Jerome Powell’s comments denting rate-cut hopes which had cooled stock markets in the middle of the week and pushed Treasury yields a bit higher (Govt 10-year yield at 253bps) and gold futures a bit lower (below $1,280/oz). As a result, losses initially suffered on Wednesday and Thursday were recouped on Friday. The S&P500 index finally climbed again (+0.2% WTD at market close on Friday) after pulling back. Same performance for the MSCI World index while European markets were slightly down (MSC EMU: -0.1%). By contrast, Asia bounced back (MSCI All China up 1.08%) after the market downturn last week. Behind this relative calm in terms of volatility (VIX finishing below 13 after peaking at 15.78 on Thursday), we should keep in mind that sector and intra-sector rotation is continuing unabated. Thus, the energy sector lost ground once again (-3.23% WTD) as crude oil prices fell below $62 a barrel after the government data showed U.S. oil output at a new record high and a stronger-than-expected rise in crude inventories last week. Stocks are now at their highest in 19 months. Information technology was also under pressure (-2.4% WTD) despite Apple’s stellar results and forecast easing fears about slowing growth in corporate profits (share up 3.65% WTD). On the opposite, Alphabet dropped 6.82% as revenue growth dipped below 20% for the first time in three years, the company’s top management giving little information on why revenue had decelerated at the start of the year. Among the losers of the week, materials were affected (-0.72% WTD) by DowDuPont (-7.84%) as its profits tumbled 28% in Q1, on the back of dwindling demand for chemicals.
Healthcare was again the best performer of the week (+1.27%) in the wake of CVS Health Corp (+5.85% WTD) after the drugstore chain and pharmacy benefit manager set a new full year earnings forecast largely above analysts’ expectations. Financials and industrials also fared well (+1.21% and +1.13% respectively).
Last but not least, President Trump tweeted Sunday that he was about to raise the 10% tariff on $200bn in Chinese goods imported to the U.S. to 25% by 10 May 2019. He thinks the negotiations with China are going “too slowly:” is this an early warning sign of unsuccessful negotiations with China or is he bluffing once again before the meeting supposed to happen mid-week? The answer is expected within the next few days.
Find the full report : https://www.trackinsight.com/weekly-flow-report/2019-05-03/global
