After a pullback last week, U.S. stocks rebounded to end this week higher.
The S&P 500 (^GSPC) ended Friday’s session up 2.89% for the week, clinching the best weekly advance since November 30. The index was up 0.5% for the day, or 14 points, with tech stocks outperforming.
The Dow (^DJI) advanced 0.54%, or 138.93 points, as of market close Friday. The index closed the week 1.6% higher, snapping a two-week losing streak. The Nasdaq (^IXIC) rose 0.76%, or 57.62 points, on Friday and was up about 3.8% for the week.
Each of the S&P 500’s 11 sectors is in the green for the year-to-date, with the Information Tech sector outperforming with a 17.8% advance and the Health Care sector lagging with a 6.4% year-to-date increase through Friday’s close.
Outside of capital markets, some weakness has emerged in the domestic economy, particularly in the manufacturing sector. The Federal Reserve reported Friday that manufacturing production fell 0.4% in February, an unexpected second consecutive month of declines versus the 0.1% increase consensus analysts had estimated. Industrial production also came in short of expectations, up just 0.1% versus 0.4% expected.
Regions throughout the country have individually reported weakness in their manufacturing sectors. The New York Fed’s latest Empire State Manufacturing Survey on Friday registered a reading for state business activity in March of 3.7, a decrease of about five points from the previous reading and the third consecutive monthly reading below 10. Consensus expectations had been for a reading of 10, according to Bloomberg data, and the headline reading is the weakest in 22 months. The softness is consistent with readings from other regional Federal Reserves as of late, with the Philadelphia Fed having most recently reported a reading that fell to negative 4.1 in its own manufacturing activity report for February.
“The consensus forecast for an increase in the index was something of a head-scratcher, given the intense downward pressure on global manufacturing from China’s sharp slowdown,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note Friday. “China’s PMI suggests that the Empire State index has further to fall over the next few months, but we expect something of a rebound from mid-year.”
Meanwhile, the University of Michigan’s closely watched metric for consumer sentiment rose more-than-expected, according to a preliminary reading for March. The headline figure rose to 97.8, above the 95.6 consensus and 93.8 reading for the month prior. This uptick in sentiment was driven “entirely” by households with incomes in the bottom two-thirds of the distribution as lower-income households viewed more positively their personal finances for the month, said Richard Curtin, Surveys of Consumers chief economist. The index for consumers’ assessments of current conditions rose by 2.7 points to 111.2 – below consensus of 112 – while the index for expectations rose 4.8 points to a better-than-expected 89.2 points.
“The bigger increase in expectations is no surprise; it’s much more sensitive to stock prices than the current conditions measure, which tends to track jobless claims,” Shepherdson noted.
Overseas, Chinese officials on Friday wrapped up its annual National People’s Congress. Premier Li Keqiang said Friday that China will not turn to a policy of quantitative easing to boost the country’s growth and instead will rely on broad reductions of taxes and fees for firms in order to help provided economic support. China’s GDP is set to slow from its 2018 annual pace of 6.6% to between 6% and 6.5%, and supply-side metrics of the economy for factors including production and employment have weakened in the first two months of the year. However, investment and retail sales indicators have firmed in recent months.
Elsewhere, the British pound rose against the dollar (GBPUSD=X) to more than $1.32 before paring some gains after the UK Parliament voted Thursday to delay Brexit for at least three months past the original March 29 deadline. This came after MPs struck down Prime Minister Theresa May’s revised Brexit plan earlier in the week, and then voted against exiting the EU without a deal in place. May is now set to request an extension to the Brexit deadline from the EU, and will hold another “meaningful vote” on her withdrawal agreement next week.
The U.S. Securities and Exchange Commission is suing Volkswagen (VOW3.DE, VOW.DE) and former CEO Martin Winterkorn over alleged fraud involving an emissions scandal. The SEC claims that Volkswagen issued more than $13 billion in bonds and asset-backed securities in between 2014 and 2015 in U.S. markets while knowing that more than 500,000 of its vehicles in the U.S. breached limits for vehicle emissions. Volkswagen told the New York Times that the company will “vigorously” contest what it considers to be a “legally and factually flawed” complaint.
Facebook (FB) CEO Mark Zuckerberg announced in a blog post Thursday that two of its top executives were leaving the company, marking the latest in a series of executive departures over the past year. The two most recently departing executives, Chris Cox and Chris Daniels, were chief product officer and head of WhatsApp, respectively. Zuckerberg said in the blog post that Cox had been discussing “his desire to do something else,” however, the New York Times said in a report citing people familiar with the matter that both Cox and Daniels left over disagreements with Zuckerberg over the social media company’s future direction and decision to integrate its various apps into one platform.
KeyBanc upgraded shares of Amazon (AMZN) to Overweight from Sector Weight – a rating the firm had held since April 2017 – with a price target of $2,100. KeyBanc analyst Edward Yruma said he sees Amazon solving profitability in retail following recent moves including the closure of its 87 pop-up locations and lowering shipping costs for its new grocery concept by introducing pick-up options. Yruma said he sees “an inflection point in Amazon’s profits over the next three years driven by improving retail margin expansion coupled with the mix shift to higher margin AWS and Advertising segments that combined could top $100B by 2022 (25% of sales) vs. $10B in 2015.”
Oracle (ORCL) provided weak guidance for its fiscal fourth quarter, eclipsing better-than-expected results for the company’s fiscal third quarter. The cloud computing company sees fourth-quarter revenue flat to down 2%, and anticipates that adjusted earnings per share will be in a range of $1.05 to $1.09 per share, with the midpoint of the range short of the $1.09 expected. Oracle said it gained new business from companies including Fair Isaac, UNICORP, Gap and Jo-Ann stores during its fiscal third quarter.
Adobe (ADBE) delivered guidance for its fiscal second quarter that fell short of consensus expectations. The software company said it sees second-quarter adjusted EPS of about $1.77, or 11 cents short of consensus estimates. Its guidance for second-quarter revenue of $2.7 billion also fell slightly short of expectations. However, Adobe beat Wall Street’s expectations for first quarter results, delivering adjusted EPS of $1.71 on revenue of $2.6 billion, versus estimates for earnings of $1.62 per share on revenue of $2.55 billion.
Broadcom (AVGO) delivered better-than-expected earnings for the fiscal first quarter and reaffirmed its outlook for 2019. The semiconductor company delivered adjusted earnings from continuing operations of $5.55, or 2 cents above consensus estimates. First-quarter adjusted net revenue of $5.79 billion fell slightly short of expectations for $5.82 billion, and gross margin of 71.4% exceeded estimates by 2%. The company is maintaining its fiscal 2019 revenue outlook for $24.5 billion.
Ulta (ULTA) delivered earnings for the fiscal fourth-quarter that topped Wall Street’s expectations by 5 cents, coming in at $3.61 per share. Quarterly revenue of $2.12 billion also slightly exceeded expectations. Comparable same-store sales increased 9.4% in the fourth quarter, an improvement from 8.8% in the fourth quarter of 2017, and the company sees full-year comps for 2019 up between 6% and 7%. Ulta ended the fourth quarter with 1,174 stores and said it plans to add about 80 new stores in fiscal 2019.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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