Weekly Expert Market Perspectives Park Avenue Securities PAS

Upbeat U.S. Data and Strength in Mega-Cap Stocks Lift S&P 500 and Nasdaq to New

The S&P 500 (+1.2%) and Nasdaq Composite (+1.9%) each posted solid gains this week while setting new closing highs in the process. Strength in the U.S. economy and solid earnings reports from mega-cap companies contributed to the week's upside bias.

The Dow Jones Industrial Average declined 0.1% following disappointing results/guidance from 3M (MMM), Intel (INTC), and Exxon Mobil (XOM).

U.S. economic data this week showed healthy pickups in new home sales and durable goods orders for March. The advance estimate for first quarter GDP also topped expectations, increasing 3.2% (Briefing.com consensus 1.9%), while the GDP Price Deflator showed prices moderate more than expected.

Upbeat data, tame inflation, and strong earnings results from mega-cap companies like Amazon (AMZN), Facebook (FB), and Microsoft (MSFT), helped contribute to gains in most sectors. The health care sector (+3.7%) led the pace, bouncing back from last week's 4.4% decline. 

The narrative overseas, however, remains gloomy. 3M and Intel each called attention to a slowdown in demand from China while foreign economic data corroborated slowing growth expectations. South Korea's first quarter GDP contracted by 0.3%, and Germany's Ifo Business Climate Index remained on the decline. The Bank of Japan also expects rates to be kept at extremely low levels until at least the spring of 2020.

Weakness in 3M and UPS (UPS), meanwhile, contributed to the underperformance of the S&P 500 industrials sector (-1.0%), while Intel helped lead the Philadelphia Semiconductor Index (-0.7%) lower. The S&P 500 energy sector (-1.3%) also underperformed following weakness in Exxon Mobil and lower oil prices ($63.23/bbl, -$-0.80, -1.3%).

Oil prices started the week on a higher note after the U.S. decided to end its waivers for countries to import oil from Iran. Prices reeled in following President Trump telling OPEC to keep fuel costs down on Friday. 

U.S. Treasuries finished higher in a curve-steepening trade, driven by muted inflation and dovish monetary policy from central banks. The 2-yr yield declined 11 basis points to 2.27%, and the 10-yr yield declined five basis points to 2.51%. The U.S. Dollar Index rose 0.6% to 98.03.

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Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Data and rates used were indicative of market conditions as of the date shown and compiled by Briefing.com. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Each company’s security affects the index in proportion to its market value. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

Park Avenue Securities LLC (PAS) is an indirect, wholly-owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC.

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2019-78899 (Exp 08/19)

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