Most stock indexes were down for the week, with trade-sensitive materials and technology as the worst performers. Trade talks between the United States and China ended without a resolution as the U.S. increased tariffs on $200 billion of imports from China to 25%. President Trump threatened to place additional tariffs on all Chinese exports to the U.S. Markets perked back up after Treasury Secretary Mnuchin and Chinese Vice Premier Liu both offered positive comments after Friday’s discussions, though neither side offered details.
Oil prices fell after a larger than expected U.S. inventory build. Gold prices rose, reacting to disappointing inflation data. The yield on the ten-year U.S. Treasury ended the week at 2.47%. The U.S. dollar fell against a basket of major currencies.
With 90% of S&P 500 companies reporting first-quarter results, 75% have exceeded earnings per share expectations and 57% have beaten revenue expectations. As of May 10, 2019, Refinitiv estimated the S&P 500 index’s first-quarter earnings growth rate at 1.3% and its 12-month forward P/E ratio at 16.7. Roku, Microsoft and Ford Motor Co. impressed this week; whereas Tesla, Merck & Co. and eBay disappointed.
The Job Openings and Labor Turnover Survey (JOLTS) report exceeded expectations, as the number of job openings rose to 7.5 million in March. The expected forecast was 7.22 million. The largest increases in job openings were in transportation, warehousing and utilities. The number of federal government job openings decreased.
German industry production beat forecasts in March, led by manufacturing and construction. Still, the outlook remains gloomy due to weak business sentiment and falling orders. China’s consumer price index (CPI) and producer price inflation (PPI) both rose in April. The cost of pork has significantly increased as China’s hog herd battle with an outbreak of African swine fever. Industrial production in the United Kingdom increased 1.3% in March, exceeding market expectations.
The producer price index rose a modest 0.2% in April, in line with market expectations, and indicating that inflation remains under wraps. Nevertheless, U.S. consumer prices increased in April, led by higher costs for gasoline, rent and healthcare. Initial jobless claims missed estimates.