Normally at this point in the year we are talking about surprising earnings numbers (either good or bad) being the primary focus and driver of the market, but the big story from last week involved different numbers – namely, the April Jobs Report, which came in stronger-than-expected.
The Department of Labor reported Friday that the U.S. economy added 263,000 jobs last month (versus market expectations for gains of around 175,000), and the unemployment rate declined to 3.6%, the lowest rate since December 1969. Investors liked the numbers and pushed stock prices higher, with the Standard & Poor’s 500 Index gaining nearly one percent, and all 11 of its sectors finishing in positive territory for the day. The market gains on Friday made up ground lost earlier in the week however, so in total the major market averages finished little changed last week.
The averages have been trading at or near all-time highs, supported by a growing economy with low inflation and earnings that have been coming in better-than-expected. According to FactSet, with 78% of the companies in the S&P 500 having already reported results for the first quarter of 2019, 76% have reported actual earnings per share above estimates, which is above the five-year average. In the week ahead, over 50 S&P companies are scheduled to report, and we’ll (still) be watching developments with the U.S./China trade negotiations, which is in the news this morning.
President Trump tweeted about raising tariffs over the weekend, citing trade talks which are progressing “too slowly”. With worries this may represent a breakdown in negotiations, the markets are opening the week notably lower this morning, so expect some volatile trading and a dynamic news situation. As always, feel free to contact us with any questions you may have, or if you would like to set up a meeting.
All the best,
Southport Station Financial Management, LLC