April 20, 2018 Weekly Market Recap

The U.S. stock market notched its second consecutive weekly advance this week, but losses on Thursday and Friday put a damper on returns going into the weekend. The S&P 500 added 0.5% this week, while the Dow Jones Industrial Average and the Nasdaq Composite climbed 0.4% and 0.6%, respectively.

Wall Street kicked off the week on a positive note, breathing a sigh of relief after a U.S. led strike on Syria over the weekend turned out to be less dramatic than many had feared. Russian President Vladimir Putin condemned the attack, saying additional strikes could invite chaos in global affairs, but made no mention of a military response to this particular incident – leading investors to believe that the dust has settled for now.

The bullish bias carried over into Tuesday’s session, as investors turned their attention to the earnings front. Netflix (NFLX) soared nearly 10% on Tuesday, hitting a new all-time high, after crushing subscriber growth estimates for the first quarter and issuing upbeat guidance for Q2. Goldman Sachs (GS) had a blow-out first quarter, easily beating both earnings and revenue estimates, but its shares struggled to advance on Tuesday, putting the investment bank on a long list of financial names that have failed to rally on upbeat results.

Stocks moved higher once again on Wednesday, but only modestly so, as IBM (IBM) weighed on investor sentiment. Shares of the tech giant tumbled 7.5% in the midweek session after the company’s above-consensus first quarter profits and revenues were overshadowed by its disappointing gross margin rate, the quality of its revenue (more from hardware and less from cloud), and its relatively conservative profit guidance for fiscal year 2018. Meanwhile, energy shares outperformed as crude oil futures returned to their highest level in more than three years.

On Thursday, the market registered its first loss of the week, with consumer staples shares pacing the retreat. Shares of tobacco giant Philip Morris (PM) plunged 15.6% after the company reported a decline in cigarette shipment volume for the first quarter and slower-than-expected growth for its IQOS product – which heats tobacco instead of burning it.

Wall Street ended the week with another disappointing performance on Friday. The technology sector showed relative weakness once again, with its top component by market cap – Apple (AAPL) – sliding 4.1% after several analysts raised concerns about the prospect of iPhone sales being weaker than expected. Financials provided some relief though. Financial giant Wells Fargo (WFC) was particularly strong, adding 2.0%, after agreeing to pay $1 billion to settle loan abuse allegations.

In the end, seven S&P sectors finished with weekly gains, while four finished with weekly losses. The energy group (+2.6%) was the top-performing group, as WTI crude futures advanced 1.5% over five sessions, closing Friday at $68.38 per barrel. Conversely, the consumer staples sector (-4.4%) was the worst performer by a large margin, extending its 2018 loss to 11.8%. In general, growth-sensitive sectors outperformed defensive ones, although the top-weighted technology group (-0.2%) bucked this trend.

Source: Briefing Investor