Stocks were mostly flat last week with a bias toward the negative. Despite a 117-point advance in the Dow Industrials on Monday, weakness took over for the next three days with a slight recovery on Friday. A large part of the first quarter earnings now in the rear view mirror, traders focused on economic news, which was not great. The Labor Department said that non farm payrolls rose 160,000 last month, below expectations of 205,000 and the lowest level of job creation in seven months. Productivity also declined. While equities shrugged off the news (with expectations for an interest rate hike less likely in June on the report), a drop in manufacturing numbers for April both in the U.S. and China weighed more on sentiment. The dollar softened this week, helping multinationals somewhat, but also casts a shadow on economic growth here at home.
For the week, there was little leadership again in market sectors. As oil prices retreated, energy-related shares took a 3.5% hit and basic material stocks were negative by 2.5%. Even the few positive areas couldn’t manage a gain of more than 1%. In all, the Dow was down only 33 points or 0.2%, but the S&P 500 was off by 0.4% and the technology and bio-tech heavy NASDAQ was in the red nearly 1%. Fixed income moved higher as yields fell.
In the week ahead, a large number of retailers – including Macy’s, Kohl’s, JC Penny and Nordstrom – will report earnings, giving some guidance as to consumer sentiment. On Friday, retail sales for April will be released and indications are positive. Absent any major economic developments here and abroad, the week should be uneventful for equities. Looking further out, the market will remain choppy for a while with little evidence of positive direction. The stock market is showing some resilience, however, with any selloff generally confined to a session or two followed by a comeback. Some traders are taking profits off the table with any upturn in stocks and others are hunting for bargains when equities retreat. And so it goes. In all, a positive, but guarded, outlook for stocks is the best we can hope for.
Here is the answer to last week’s trivia question; J.M. Smucker purchased its highly sought after Jiff Peanut Butter brand from Procter & Gamble in 2001 for $813 million in stock. What other product from P&G came along for the ride? Pringles, Crisco, Sunny Delight or Folgers Coffee. Answer: Crisco. Smucker later purchased the Folger and Millstone coffee brands from Procter & Gamble for nearly $3 billion in 2008.
Today’s Trivia Question: PETCO Park is home of Major League Baseball’s San Diego Padres. Prior to the opening of PETCO Park in 2004, the naming rights to the old Padre’s Stadium belonged to which other San Diego-based company? Sempra Energy, Jack-In-the Box, Kyocera USA or Qualcomm.