April 5, 2019 – Another week of modest gains for the major equity indices. The market seems content to drift higher while talks about trade with China and Brexit drag on with no real progress.
We’re now a week away from the revised Brexit deadline. Today’s news is that Prime Minister May will ask the EU to extend the deadline to June 30, which would give Britain more time to figure out a plan, without the country taking part in E.U. parliamentary elections. That date has already been rejected by the E.U., but May proposed the exact same Brexit plan to her own country’s parliament three times now and had it rejected each time, so it’s not surprising to see her ask for something that’s already been rejected.
The story on trade is the same as it has been for months now. The U.S. and China both claim that progress is being made, but no specifics have been released, and the sticking point seems to still be around enforcement mechanisms in case China fails to live up to the terms of the deal. Four weeks (but maybe more or less) was the time frame given by President Trump this week, so it seems we’re still a ways away from a resolution.
The headline economic news this week, today’s jobs report, was generally in keeping with recent trends. The economy continues to add jobs, and wages continue to increase, albeit slowly. That the unemployment rate has been relatively static is interesting, but at this point it seems to be saying that many of the people finding jobs each month weren’t counted as part of the labor force at all the previous month.
All told this week, the S&P rose 2.06%, the Nadsaq added 2.71%, and the Dow Jones gained 1.91%.
S&P 500 and Nasdaq
We noticed that while the Nasdaq outperformed for the week, it underperformed by quite a bit on Thursday. There was no real news we could point to, but there seemed to be heavy selling in a lot of recent momentum names such as Salesforce.com (CRM), Splunk (SPLK) and other cloud-based service providers.
With the exception of Thursday, the major indices largely moved together this week. You can look at proximate support and resistance levels in last week’s post. The post-Christmas rally has brought the major indices back near their all-time highs. We would expect things to slow down a bit as we get closer to those levels. Earnings season could be a catalyst for new gains or stifle the rally, depending on how the results come in.