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Market Summary

U.S. equities closed out a choppy week of trading on a positive note following better than expected first quarter earnings reports from several large banks and a rebound in Chinese export data. The late week surge helped to offset a negative start to the week for equities driven by earnings season apprehension, announcement of U.S. plans to impose tariffs on the E.U., and a global growth forecast downgrade from the International Monetary Fund. For the week, the S&P 500 and NASDAQ gained 0.5% while the Dow Jones finished -0.1% lower, but all three indices remain within 2% of their all-time highs.

Although the U.S. and China continue to move closer to executing a final trade agreement, investor enthusiasm was reined in last Tuesday as the Trump Administration announced that it is kicking off the process to impose tariffs on $11.2 billion of goods from the European Union in retaliation to subsidies granted to European aircraft manufacturer Airbus. The U.S. has been in litigation over said subsidies at the World Trade Organization since 2004, and resolution of the trade dispute with China would free resources to further pursue the issue.

Further weighing on sentiment, the International Monetary Fund once again cut its 2019 global GDP growth forecast from 3.5% to 3.3%, after reducing the forecast from 3.7% in October, citing economic weakness out of China and Europe, tightening financial conditions, and ongoing geopolitical tensions as primary headwinds. However, several recent economic reports out of China, including manufacturing and export data, have started to show some positive traction for the nation’s economy.

Though the trading week ahead will be shortened by Good Friday, market participants will have plenty to pay attention to as first quarter earnings season moves into full swing.

Economic Highlights:

Brexit: British Prime Minister Theresa May managed to convince E.U. leaders to extend the deadline for the U.K. to depart the bloc to October 31, thereby providing some further breathing room for negotiations.

Inflation: The U.S. Consumer Price Index (CPI) was mixed with headline inflation surprising to the upside at 1.9% year-over-year (compared to 1.5% in the prior month and expectations of 1.8%), whereas core inflation (excluding food and energy) fell below expectations at 2.0% year-over-year compared to the consensus forecast of 2.1%. The recent upward surge in gas prices was a major contributor to the surprise readings.

US Economy – The Week Ahead

Tuesday, 4/16/2019

  • Industrial Production (Month-over-Month) – Consensus Estimate: 0.30%, Prior Month: -0.04%

Wednesday, 4/17/2019

  • Wholesale Inventories Month-over-Month Growth – Consensus Estimate: 0.3%, Prior Month: 1.2%
  • Trade Balance – Consensus Estimate: -$53.5B (-4.7%), Prior Month: -$51.1B (14.6% MoM)

Thursday, 4/18/2019

  • Initial Jobless Claims – Consensus Estimate: 207,000 (5.6% WoW), Prior Week: 196,000 (-3.9% WoW)
  • Leading Economic Indicator Index (Month-over-Month) – Consensus Estimate: 0.4%, Prior Month: 0.2%
  • Retail Sales Month-Over-Month Growth – Consensus Estimate: 0.9%, Prior Month: -0.2%

Friday, 4/19/2019

  • Financial markets closed for Good Friday
  • Housing Starts – Consensus Estimate: 1,247K (7.3% MoM), Prior Month: 1,162K (-8.7% MoM)
  • Building Permits – Consensus Estimate: 1,300K (0.7% MoM), Prior Month: 1,291K (-2.0% MoM)
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