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Market Summary

U.S. equities notched another positive weekly return to finish off one of the best quarterly results since 2009, despite concerns of slowing global economic growth. The S&P 500 finished the quarter with a 13.7% return after last week’s gain of 1.2%, while the NASDAQ and Dow Jones recorded weekly returns of 1.2% and 1.7% to end the quarter up 16.8% and 11.8%, respectively. International stocks also recorded a solid quarter with a 10.7% return, per the MSCI All-Country World ex-U.S. index. The stark rebound in risk assets from the fourth quarter sell-off has largely been attributed to a monetary policy pivot from the Federal Reserve and improving international trade relations.

Equity investors have broadly shrugged off concerns of falling corporate profit growth expectations so far this year, bringing stocks to just below their September peaks. According to FactSet, corporate earnings for the S&P 500 are expected to have declined by -3.6% in the first quarter of 2019 compared to the first quarter of 2018 as profit margins begin to contract from trade tensions and the tightening labor market, though the full year 2019 growth forecast remains positive at 4.2%. Despite the expected decline in first quarter profits, the S&P is less than 4% off its all-time high.

The final reading of U.S. GDP growth for the fourth quarter of 2018 came in at 2.2% over the third quarter, below the initial reading of 2.6%, which brought the full year GDP growth for 2018 to 3.0%. Weaker than expected consumer spending was a driving factor in the downward revision. Investors will continue to closely monitor the health of consumer spending as it accounts for almost 70% of U.S. GDP.

Looking at the week ahead, market participants will be paying attention to updated U.S. employment data as well as any progress on trade negotiations as China’s Vice Premier Liu He makes a visit to Washington following what Trade Representative Robert Lighthizer classified as “constructive” trade talks in Beijing last week.

Economic Highlights:

Inflation: Personal Consumption Expenditures (PCE), the Federal Reserve’s preferred gauge for inflation, rose just 1.4% year-over-year in January, well below the Fed’s 2.0% inflation target.

Brexit: The original March 29 deadline for a Brexit decision came and went last week with little headway as Prime Minister Theresa May’s withdrawal proposal was rejected for a third time by Parliament, despite May’s offer to resign and hand over control if lawmakers were to accept her deal.

US Economy – The Week Ahead

Tuesday, 4/2/2019

  • U.S. Durable Goods Orders Month-over-Month Growth – Consensus Estimate: -0.8%, Prior Month: 0.34%

Wednesday, 4/3/2019

  • ADP Employment Survey – Consensus Estimate: 165,000, Prior Month 183,000
  • ISM Non-Manufacturing PMI – Consensus Estimate: 58.0 (-2.8% MoM), Prior Month: 59.7 (5.3% MoM)

Thursday, 4/4/2019

  • Initial Jobless Claims – Consensus Estimate: 216,000 (2.4% WoW), Prior Week: 211,000 (-2.3% WoW)

Friday, 4/5/2019

  • Hourly Earnings Growth Year-over-Year – Consensus Estimate: 3.4%, Prior Month: 3.4%
  • U.S. Unemployment Rate – Consensus Estimate: 3.8%, Prior Month: 3.8%
  • Nonfarm Payrolls Added – Consensus Estimate: 170,000, Prior Month: 20,000
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