Investment Commentary –May 8th, 2018

Year to Date Market Indices as of Market Close May 8th, 2018
Dow 24,360 (-1.45%)
S&P 2,671 (-0.06%)
NASDAQ 7,266 (5.27%)
Gold $1,312 (-0.14%)
OIL $67.44 (12.87%)
US 10Y Treasury 3.08 (59.64%)
Barclay Bond Aggregate (-2.37%)

Stock market set to get lift from energy sector after Trump’s Iran move boosts oil

U.S. stock-index futures pointed to a higher open on Wednesday, with energy companies set to lead the advance as oil prices jumped to 3 1/2-year highs.

The premarket gains came as traders digested President Donald Trump’s decision a day earlier to pull the U.S. out of the Iran nuclear deal and resume sanctions against the oil-producing nation.
What are markets doing?

Futures for the Dow Jones Industrial Average YMM8, +0.42% rose 125 points, or 0.5%, to 24,432, while S&P 500 index futures ESM8, +0.37% climbed 11.70 points, or 0.4%, to 2,682. Nasdaq-100 index futures NQM8, +0.26% gained 20 points, or 0.3%, to 6,840.75.

What is driving the market?

A rally in oil prices helped lift U.S.-listed energy companies in premarket action, which pushed stock-index futures higher. West Texas Intermediate oil CLM8, +2.59% jumped 2.6% while Brent LCON8, +2.54% was up 2.5%. Trump said the U.S. intends to impose sanctions on Iran, curbing the country’s oil exports and tightening global oil supply.

The moves come after a volatile session on Tuesday, when U.S. stocks managed to claw back losses from earlier in trading to close essentially flat. During the session, Trump announced the U.S. was abandoning the 2015 Iran deal, which was forged by former President Barack Obama. The Dow industrials DJIA, +0.01% ended 2.89 points higher and the Nasdaq Composite Index COMP, +0.02% rose 1.69 point, but the S&P 500 SPX, -0.03% slipped 0.71 point.

Around the Web:

Momentum shift: For the second week in a row, the major U.S. stock indexes fell early in the week, but later recovered. Overall, the Dow and the S&P 500 changed little during one of the busiest weeks of the quarterly earnings season; the NASDAQ gained more than 1%.

Fed outlook: The U.S. Federal Reserve Board kept short-term interest rates unchanged and issued a policy statement that didn’t disrupt market expectations for an additional rate hike when it meets in mid-June. Fed officials acknowledged a recent uptick in inflation but didn’t signal any acceleration in the pace of rate increases

Tech rally: Shares of information technology companies helped lead the major stock indexes higher on Friday, lifting the NASDAQ out of negative territory for the week. The Dow finished the day with a 332-point gain.

Upcoming events:

Wednesday: Producer Price Index, U.S. Bureau of Labor Statistics
Thursday: Consumer Price Index, U.S. Bureau of Labor Statistics

Other Notable Indices (YTD)

Russell 2000 (small caps) 3.71
EAFE International 0.38
EAFE Emerging Markets 0.41
Shiller Annuity Index 4.02

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.