Investment Commentary –April 24th, 2018

Year to Date Market Indices as of Market Close April 24TH, 2018
Dow 24,011 (-2.86%)
S&P 2,631 (-1.55%)
NASDAQ 7,001 (1.41%)
Gold $1,333 (1.43%)
OIL $67.79 (13.42%)
US 10Y Treasury 2.99 (58.06%)
Barclay Bond Aggregate (-2.41%)

Dow has longest losing streak in a year as stocks slump broadly

The Dow Jones Industrial Average marked its longest losing streak in a year, as stocks ended the session sharply lower on Tuesday on the back of higher Treasury yields. The 10-year Treasury yield TMUBMUSD10Y, +0.53% hit the psychologically important 3% for the first time in more than four years Tuesday, but retreated again toward the end of the session. Higher yields are seen as a headwind for equity investors, as they could mean higher borrowing costs for corporate America going forward. The Dow DJIA, -1.74% dropped 1.7%, marking fifth loss in a row and worst one-day drop since April 6. The sell-off was particularly driven by materials and industrials stocks. The S&P 500 SPX, -1.34% closed 1.3% lower, also its worst daily percentage drop in 2.5 weeks.

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Flattening curve: On Wednesday, the gap between short- and long-term U.S. Treasury bond yields narrowed to its smallest amount in more than a decade. The difference between the yields of the 2-year Treasury and the 10-year Treasury was less than 0.43 of a percentage point. The so-called yield curve is considered a key indicator of sentiment about economic growth and the outlook for interest rates.

Banking profits: Major banks were among the biggest winners as quarterly earnings season got under way. In the first quarter, combined net income at the six largest U.S. banks climbed 24% from the same period a year ago. That tops the 17% earnings gain that’s forecast for companies across the S&P 500, according to FactSet.

Crude awakening: Crude oil prices rose for the second week in a row, climbing above $69 a barrel at one point, reaching the highest level in more than three years. Prices were lifted by fresh geopolitical concerns in the Middle East and recent production cuts by major oil-producing nations.

Upcoming events:

Friday: First-quarter GDP, advance estimate

Other Notable Indices (YTD)
Russell 2000 (small caps) 1.14
EAFE International 0.62
EAFE Emerging Markets 0.51
Shiller Annuity Index 1.50

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.