Contents
- Indices [1]
- Commodities [2]
- Economy [3]
- Markets [4]
- Looking Ahead [5]
Indices
Dow Jones: 17,873.20 (+2.13%)
NASDAQ: 4,933.50 (+3.44%)
S&P 500: 2,099.06 (+2.28%)
Commodities
Gold: 1,223.80 (-2.32%)
Copper: 210.55 (+2.43%)
Crude Oil: 49.42 (+3.50%)
Economy
Real GDP growth for Q1 2016 was revised up to 0.8% from 0.5%. Additional data showed that the decrease in business investment, previously estimated at 3.5%, was smaller than forecasted, now revised to 2.6%. The trade deficit was narrower than previously thought with exports only falling 2% from the 2.6% earlier projected. Growth in consumer and government spending was maintained at 1.9% and 1.2% respectively.
New-home sales for April were extraordinary, coming in at 619,000, the highest since January 2008. Sales varied significantly by region. The Northeast, South, and West saw an increases of 50%, 15.8%, and 23.6% respectively while the Midwest declined 4.8%. The supply of new homes has not kept pace with sales. Despite the unusual reading, sequential changes in new-home sales have historically been volatile. Therefore, while the reading is noteworthy, inferring a trend requires more months of data.
Corporate profits dropped 3.6% in the first quarter YoY. However, profits rose a modest 1.9% from the fourth quarter. Financial corporations saw a decline of $2 billion in profits, whereas it was a decline of $24 billion in the fourth quarter. Non-financials saw an increase of $45.7 billion following a $129.2 billion decline last quarter. Corporate profits are after-tax profits and do not include inventory valuation or capital consumption adjustments.
Durable goods orders for April were mixed. Orders exceeded expectations with a monthly gain of 3.4%, owing largely to vehicle and commercial-aircraft orders. Other positive factors included a increase in shipments and improvement in the inventory-to-shipments ratio. However, business investment was a concern as orders of core capital goods declined 0.8% and have declined in the last 5 out of 6 reports.
Markets
On Tuesday’s news of an 8-year high in new-home sales, residential-construction companies rose 1.9%. Mohawk Industries (MHK [6]) jumped 2.3%, Lennar (LEN [7]) increased 3.9%, and D.R. Horton (DHI [8]) rocked 4.2%. Home improvement stores and home furnishing manufacturers showed strong gains as well. Whirlpool (WHR [9]) increased 4.4% and Home Depot (HD [10]) increased 1.5%.
Netflix (NFLX [11]) announced a deal with Disney (DIS [12]) to the exclusive rights of new movies from Disney, Marvel, LucasFilm, and Pixar beginning in September. Netflix shares rose 3.2% on the news. The deal puts pressure on rival pay-TV and streaming services such as HBO, Starz, Amazon Prime, and Hulu.
HP Enterprise (HPE [13]) announced a future sale of its business service unit to Computer Sciences (CSC [14]). Investors sent the stock up 6.8% on the news. HP Enterprise is expected to concentrate on selling hardware for servers, storage, and networking as well as specialized software.
Alibaba (BABA [15]) stated that US regulators have placed the company under an investigation of its accounting practices. The investigation includes an examination of logistics company Cainiao Network of which Alibaba owns a large stake. The stock was hammered, closing down 6.7%.
Looking Ahead
Upcoming Events:
Tuesday May 31 — Personal Income and Outlays (a gauge of the consumer sector)
Wednesday June 1 — ISM Manufacturing Index (a gauge of the manufacturing sector)
Friday, June 3 — Employment Situation (a report on the state of the labor market)
Earnings Calendar:
| Monday | Tuesday | Wednesday | Thursday | Friday |
|---|---|---|---|---|
| SoftBank Group (SFTBY) [16] | Medtronic (MDT) [13] | Box (BOX) [17] | Broadcom (AVGO) [18] | Sears Hometown (SHOS) [19] |
| Klabin (KLBAY [20] | Workday (WDAY) [21] | Cracker Barrel (CBRL) [22] | Donaldson (DCI) [23] | Bridgford Foods (BRID) [24] |