Stocks got a win this week, with all the major indices advancing. The tech-heavy Nasdaq Composite gained 2.8%, while the S&P 500 and the Dow Jones Industrial Average advanced 2.0% and 1.8%, respectively.
The stock market began the week on a positive note following weekend interviews from several White House officials, including Treasury Secretary Steven Mnuchin, that helped to alleviate fears that the U.S. is barreling towards a tit-for-tat trade war with China. Chinese President Xi Jinping helped further improve investor sentiment with a speech at the Boao Forum on Tuesday, saying that he plans to “significantly” cut tariffs on imported automobiles, reduce duties on other imported goods, and improve the intellectual property rights of foreign firms.
Moving to the Middle East, geopolitical tensions were heightened following a suspected chemical attack from the Syrian government. The situation escalated even further on Wednesday morning when Russia, which supports Syrian President Bashar al-Assad, warned that it would shoot down any missiles fired at Syria.
In addition to the situation in Syria, a missile attack aimed at Saudi Arabia by pro-Iranian rebels in Yemen served to further escalate tensions in the region. Saudi air defense forces intercepted one missile over the capital Riyadh on Wednesday, while two others were intercepted over the southern areas of Jazan and Najran.
With all the concerning headlines out of the oil-rich Middle East, traders pushed oil prices substantially higher this week, betting that the tensions will eventually lead to a slowdown in production. West Texas Intermediate crude futures surged 8.4% to $67.26 per barrel, closing Friday at their highest level in more than three years.
In Washington, Facebook (FB) CEO Mark Zuckerberg testified on Capitol Hill this week, answering questions regarding the company’s Cambridge Analytica data scandal and Russia’s alleged use of Facebook to influence the 2016 U.S. presidential election. Mr. Zuckerberg was grilled for 10 hours by nearly 100 lawmakers, but the market seemed satisfied with his answers. Facebook shares climbed 5.3% over the two days of testimony, eventually finishing the week with a gain of 4.7%.
On Friday, big banks kicked off the first quarter earnings season, with JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) all beating profit estimates on in-line revenues. However, shares of the three lenders, and the broader financial sector, sold off in the wake of the reports. The financial sector settled the week with a gain of 1.0%, which placed it in the middle of the sector standings.
Investors received the minutes from the March FOMC meeting this week, but the report contained few surprises. Some key inflationary data was also released this week, namely the CPI readings for March, but was met with a largely muted response from the market. In short, the consumer prices report showed a firming (though not scary) inflation trend that will keep the Federal Reserve wedded to its tightening bias and its belief that at least two more rate hikes are warranted this year.
Source: Briefing Investor