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Stocks Climb as the Quarter Concludes

It is Friday and the markets are looking good at midday.

Friday, March, 29, 2019, 12:31 PM, EST

  • NASDAQ Composite +0.62% Dow +0.53% S&P 500 +0.40% Russell 2000 +0.28%
  • NASDAQ Advancers: 1325 / Decliners: 981
  • WTI Crude Oil+1.2%,Gold+0.2%,Dollar Index+0.0%, Volumes+0.9%

Market Movers

  • Personal Income (Feb) +0.2%
  • Personal Spending (Jan) +0.1%
  • PCE Deflator (Jan) +0.1%
  • PCE Deflator YoY +1.4%
  • MNI Chicago PMI (Mar) 58.7
  • New Home Sales +4.9% to 667k Annualized
  • Consumer Sentiment 98.4

Steve’s Commentary

It is Friday and the markets are looking good at midday. The four major indices are in the green and although they lost some momentum following word that the latest Brexit vote failed to win passage in parliament, they seem to be back on the upswing. The markets posted modest gains yesterday but trading volumes were anemic, second lowest of the year with only some after-hour trades preventing it from coming in at the lowest position. No matter, the quarter is looking good with double-digit gains in the major indices and seven sectors. In fact it was the best quarter for the S&P 500 and Nasdaq Composite since 2012. Markets in Asia closed higher overnight with Chinese markets up over 3%, and European markets are also modestly higher. Chinese markets also chalked up a strong quarter with the Shanghai up 27% and most European markets look to close the quarter with gains just under 10%. There are a number of items feeding into today’s strength.

Nasdaq proudly welcomes Lyft to the family of innovative companies. The company raised $2.3 billion in its oversubscribed IPO, and the media attention seems to be generating enthusiasm as the quarter draws to a close. Treasury yields are higher this morning, perhaps signaling some stability in rates. The latest round of US-China trade negotiations conclude with no deal in place, but participants indicate progress continues. Vice Premier Liu is set to meet with his counterparts in DC nest week for more discussion. The Bureau of Economic Analysis reported this morning that Personal Income rose 0.2% in February and Personal Spending rose 0.1% in January, both missing the 0.3% expected. Despite the misses both show notable improvement from the prior month but also imply a softer GDP in the first quarter. Just note the spending data is getting reported about 30-day later this year compared to last, resulting in a mismatch (February income but January for spending). That is lingering fallout from the government shutdown, but the two should get back in tandem at the next reporting date on April 29th.

The Fed’s preferred inflation measure – Personnel Consumption Expenditures (PCE) – also missed expectations and fell 0.1% in January and YoY stands at 1.4%, the lowest since 2016. Core PCE excluding food and energy missed with a +0.1% reading in January and YoY fell 0.2% from December to 1.8%. The softening consumer spending and inflation data clearly bolster the argument for pause in rate hikes and depending on how the numbers flow in the coming months, perhaps a rate cut. Last Friday the National Association of Realtors reported a nice uptick in existing home sales, and today that continues with new home sales in February rising 4.9% to an annualized rate of 667k units, more than double expectations and unit sales at the highest since last March.

Additionally the -6.9% decline in reported for January was revised to +8.2%, so even though February represents a decline from January, taken together the numbers are the best in a year. The two key factors are prices and mortgage rates, and both are favorable for more growth. The median sales price fell 3.6% from February last year, and Freddie Mac reports that over the past week mortgage rates fell by the most in a decade with the average 30-year fixed mortgage now at 4.06%. Consumer sentiment also feeds into the improving narrative and the University of Michigan’s final look at March shows a rebounded to 98.4 from 97.8. The strength comes from households in the lower two-thirds of the economic scale with a record 55% reporting improved conditions. Most sectors are higher with Industrials leading with an 0.6% advance and Healthcare following with a 0.5% gain.

On the downside are Communications with a 0.4% loss, its third consecutive decline. Energy (-0.3%), Materials (-0.3%) and REITs (-0.2%) are also seeing some weakness. After falling for the last two days crude oil is trading with a 1.4% gain and is set to close its best quarter since 2002 with a 32% surge. Gold is getting an 0.2% rebound after falling for three days, and the Dollar index is flat after gaining for three days, and lastly the British pound gave up earlier gains and moved to session lows following the latest Brexit defeat.

Sector Recap

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Quarterly Performance of the S&P Sub-Sectors

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Nasdaq's Market Intelligence Desk (MID) Team includes:

Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Brian Joyce, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).

Michael Sokoll, CFA is Associate Vice President on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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