Investment Commentary – April 20th, 2016

Market Indices as of Market Close April 20th, 2016
Dow 18,096 (3.85% YTD)
S&P 2,102 (2.86% YTD)
NASDAQ 4,948 (-1.18% YTD)
Global Dow 2,405 (2,033 52 week low /2,644 high)
10-year Treasury 1.76 (1.53 52 week low /2.50 high)
Gold 1,245 ($1,047 52 week low /high $1,288)
Oil $42.74 ($29.85 52 week low /high $65.39)

U.S. stocks close at 2016 highs as oil rally continues

U.S. stocks closed higher Wednesday, but off session highs, as a turnaround by oil futures and upbeat housing data provided support.

Crude-oil futures turned higher after the data from the U.S. Energy Information Administration showed a fall in weekly domestic output for a sixth straight week.

The S&P 500 SPX, +0.08% closed up 1.60 points, or 0.1%, at 2,102.40, led by gains in financial and energy stocks, marking a third straight day of gains. The index’s close was its highest since Dec. 1.

The Dow Jones Industrial Average DJIA, +0.24% advanced 42.67 points, or 0.2%, to settle at 18,096.27, for its highest finish since late July and a third day of gains. Earlier in the day, the Dow was up as much as 114 points.

The average was led by a 2.7% gain for Goldman Sachs Group Inc. GS, +2.66% and a 2.6% gain by UnitedHealth Group Inc. UNH, +0.04% which on Tuesday said it plans to exit by 2017 most of the Affordable Care Act state exchanges where it currently operates. But the blue-chip gauge was weighed down by sharp losses for Coca-Cola Co. KO, -4.79% which closed down 4.8%.

Meanwhile, the Nasdaq Composite Index COMP, +0.16% climbed 7.8 points, or 0.2%, to end at 4,948.13.

It may be too early to tell, but over the past month the market has been supported by formerly beaten down sectors, indicating a possible broader investor rotation into sectors like energy, materials, and industrials, said Paul Nolte, portfolio manager at Kingsview Asset Management. For the year to date, the energy sector is up 11%, materials are up 8%, and industrials are up 6%.

Trump leans toward replacing Fed chief if he wins White House

Republican presidential front-runner Donald Trump would be inclined to replace Federal Reserve Chair Janet Yellen if he wins the White House despite supporting the U.S. central bank’s efforts to keep interest rates low, he told Fortune magazine.

“I think she’s done a serviceable job,” Trump said in an interview published late on Tuesday, as the billionaire real estate mogul moved a step closer to becoming his party’s nominee with a resounding win in New York State’s Republican nominating contest.

“I don’t want to comment on reappointment, but I would be more inclined to put other people in.”

Yellen was nominated for the top Fed job by Democratic President Barack Obama, and began her four-year term in February 2014. Nominees need Senate approval, after which they are protected from political interference until their terms expire.

In his interview, Trump said he “absolutely” backed efforts to diminish the Fed’s power and allow Congress to launch so-called “audits,” or outside reviews, of its policy decisions. He also backed away from his pledge to erase the more than $19 trillion in U.S. debt in eight years.

Representatives for the Fed declined to comment on the report.

THIS DAY IN FINANCIAL HISTORY

April 20th, 1818 U.S. Age of Protective Tariffs Begin
On this day in 1818, congress passed a tariff that ushered in an age of United States protectionist policy that lasted until World War II. Urged by President Monroe’s call to uphold the fiscal integrity of domestic industry; congress agreed to pass sharp tariffs of iron and textiles from other countries.

 
The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.

 
http://www.marketwatch.com/story/us-stock-futures-pull-back-putting-2-day-advance-in-jeopardy-2016-04-20
http://www.reuters.com/article/us-usa-election-trump-yellen-idUSKCN0XH1V5?feedType=RSS&feedName=businessNews
http://www.econedlink.org/economic-calendar.php?month=4