Friends
At first blush, our first look at 1st quarter GDP was a bit of an eye opener. The economy grew at 3.2% in the 1st quarter which was quite a bit better than the 2.5% that analysts were expecting. But, after further analysis the bears among us noticed that a good portion of the growth was due to inventory build and that underlying demand had weakened. Remember the days when a good number was just, well, a good number? Bond market participants immediately went with the more cynical view as bond prices rose, while yields fell. But, stocks had a relatively good day. Moderate growth with low interest rates and no inflation has been just fine for stock investors for quite some time.
Anyway, by the close, the Dow Jones Industrial Average was up 81 points to finish the day at 26,543. The S&P 500 was up 13 points to close at 2,939. Gold was up $8 to trade at $1,288 per ounce, while oil was down $2.32 to trade at $62.89 per barrel WTI.
On the earnings front, Intel, Chevron and Exxon Mobil disappointed, while Amazon did its thing and delivered solid results. As busy as this week was, next week is the busiest week on the earnings calendar. We’ll see reports from Alphabet (Google), Apple, GM, McDonalds, Conoco Phillips, Merck, Pfizer, Kellogg, DowDupont and hundreds more. As we have seen the earnings reports and the subsequent share price reactions have been very mixed. My overall impression so far is that earnings are probably a little better than we expected, but share prices were already reflecting that, with the advance we have seen since the beginning of the year. Also noteworthy is that companies are still providing very cautious guidance going forward, and that too has been a bit of a headwind for stocks over that past couple of weeks. All in all, though, here we are at all-time highs. As I said, stocks don’t mind a slow growth, low inflation, and low interest rate environment. We’ll let you know how next week’s busy earnings schedule plays out.
Have a great weekend everyone.
