ND&S Weekly Commentary (8.6.18) – $1,000,000,000,000

US equities finished modestly higher last week in what was a busy week from political, economic, and company specific perspectives. For the week, the DJIA increased 0.05% while the broader-based S&P 500 climbed 0.80% for the week. International equities closed the week in the red with the MSCI EAFE off 1.45% and emerging markets closed lower by 1.66%. Treasury yields stayed relatively flat for the week, despite the FOMC characterizing the US economy as “strong” which would likely hint they will continue to raise rates at the current pace. The 10yr US Treasury briefly crossed 3% before closing the week at 2.97%. Gold and oil closed the week slightly lower.

Trade tensions escalated with China as the Trump administration announced they are looking into raising the tariff rate to 25% on $200 billion worth of Chinese goods … an increase from the 10% rate initially announced. China in-turn announced they would retaliate with tariffs on roughly $60 billion worth of US goods ranging from 5% – 25%.

Economic news for the week included – Personal consumption expenditures (PCE) came in at 1.9%, slightly below estimates of 2.0%; Markit/ISM mfg. PMI at 58.1, surpassing expectations and reaffirming continued expansion of US manufacturing; Nonfarm payrolls rose 157,000 in July which missed estimates for the month. However, there were upward revisions to both May and June that resulted in the unemployment rate dropping to 3.9%. Hourly earnings rose 0.3% in June having risen 2.7% from a year ago.

Tuesday, after the closing bell, Apple (AAPL) reported both revenues and earnings per share (EPS) that beat analyst expectations with its fiscal third quarter earnings report. In addition to the strong numbers, their forward revenue guidance came in ahead of market expectations which was enough to ultimately push the company’s market cap over $1,000,000,000,000 (that’s a lot of zeros), making it the first company to reach this historic valuation.

With 80% of S&P 500 constituents having reported, 2nd quarter earnings growth is estimated to be 24%. Those earnings figures are running very close to the 24.8% EPS growth rate in the first quarter. There will be 85 companies scheduled to report this week along with economic releases on Inflation, consumer credit and jobless claims. Have a great week!

“Great things in business are never done by one person. They’re done by a team of people.”Steve Jobs