Stocks End Week Higher As Fed Leaves Rates Unchanged
Stocks ended the week higher as the Federal Reserve decided to leave interest rates unchanged, the House passed a bill intended to repeal and replace Obama's Affordable Care Act and as earnings season continues.
MACRO NEWS: In the U.S., personal income rose 0.2% in March, while personal spending was flat. Markit's final manufacturing PMI reading for April was 52.8. Construction spending fell 0.2% in March. ISM's manufacturing PMI for April dropped to 54.8. Payroll processor ADP said the private sector added 177,000 jobs in April. Markit's services PMI rose 0.3 points to 53.1 in the final April print. May's services ISM bounced 2.3 points to 57.5. The Federal Reserve kept its target rate unchanged between 0.75%-1.00%. Initial jobless claims fell to 238,000 in the week ended April 29. Productivity contracted 0.6% in the preliminary first quarter report. The trade deficit narrowed to $43.7B in March. Factory orders rose 0.2% in March. Durable goods orders rose 0.9% last month. Nonfarm payrolls rose 211,000 in April. The headline unemployment rate dipped to 4.4% in April. In Europe, IHS Markit's manufacturing PMI for the Eurozone jumped to 56.7 in April. The Eurozone unemployment rate of 9.5% for March was unchanged from February's figure. Preliminary flash GDP for the Eurozone remained unchanged in the first quarter at 0.5%. The Eurozone PPI for March came in at -0.3%. Markit's composite PMI for the Eurozone came in at 56.8 in April. In Asia, China's composite PMI came in at 51.2 in April.
COMPANY NEWS: Twitter (TWTR) was in the spotlight earlier in the week after the company's CEO Jack Dorsey disclosed that he had purchased 574,002 shares of stock. Additionally, The Wall Street Journal reported that Twitter is partnering with Bloomberg to create a 24/7 streaming news service expected to begin operating in the fall... Ford (F), Fiat Chrysler (FCAU) and General Motors (GM) announced a sharper decline in April U.S. sales than expected, suggesting that domestic vehicle demand have peaked following years of growth. Nissan (NSANY) and Toyota (TM) also missed views... Apple (AAPL) reported second quarter results that were largely in-line and third quarter revenue guidance that was below the consensus forecast. The iPhone maker also boosted its capital return program by $50B, raising its dividend level and increasing its share repurchase authorization... Facebook (FB) also reported earnings this week, beating expectations but reiterating its prior warning about its expectations for revenue growth to decelerate and expenses to ramp... Tailored Brands (TLRD) announced a plan to wind down its partnership with Macy's (M)... Warren Buffett told CNBC's Becky Quick in an interview that he sold roughly 30% of his stake in IBM (IBM). In M&A news, 21st Century Fox (FOX; FOXA) and private equity firm Blackstone (BX) were said to be in talks on a joint bid for Tribune Media (TRCO), potentially besting Sinclair's (SBGI) offer for the company, according to media reports... Angie's List (ANGI) agreed to be acquired by IAC (IAC). The new publicly-traded company will be called ANGI Homeservices and the combined business will maintain both Angie's List and HomeAdvisor brands... Straight Path Communications (STRP) disclosed that a "multi-national telecommunications company" has raised its bid to acquire the company to $135.96 per share, reflecting an enterprise value of approximately $2.3B. This new offer is superior to AT&T's (T) previous bid to acquire the company, Straight Path stated... Siris Capital Group reported a roughly 13% stake in Synchronoss Technologies (SNCR) and said that it has expressed interest in discussing one or more potential strategic transactions, which may include a "take-private" deal... VWR (VWR) announced it will be acquired by Avantor for $33.25 per share. Among companies that announced quarterly results this week, Merck (MRK), MasterCard (MA), Hilton Worldwide (HLT), Coach (COH), Yum! Brands (YUM), First Solar (FSLR), FireEye (FEYE), Mondelez (MDLZ), AB InBev (BUD), Square (SQ), Fitbit (FIT), CBS (CBS), Cigna (CI), Zynga (ZNGA), and Herbalife (HLF) advanced following their reports, while Dish Network (DISH), AMD (AMD), Pfizer (PFE), CVS Health (CVS), AMAG Pharmaceuticals (AMAG), Lumber Liquidators (LL), Time Warner (TWX), Sprint (S), Groupon (GRPN), Molson Coors (TAP), Tesla's (TSLA), Viacom (VIAB), Avon Products (AVP), Occidental Petroleum (OXY), Fluor (FLR), and Zendesk (ZEN) declined.
INDEXES: For the week, the Dow rose 0.31% to 21,006.94, the Nasdaq advanced 0.87% to 6,100.76, and the S&P 500 gained 0.63% to 2,399.29.
Disclosure: None.
Yawn that was not any big surprise. The Fed these days is comparable to a dying cat asked to catch a mouse. It is more likely going to be eaten by the mouse than catch it.