Week In Review: Bulls Dominate Another Week
It was another good week on Wall Street; the Dow Jones Industrial Average jumped 1.0%, the Nasdaq Composite climbed 1.0%, and the S&P 500 added 0.9%. However, the bulls looked somewhat fatigued, at least in comparison to the first two weeks of the year; the S&P 500 rose 2.6% in the first week of 2018 and 1.6% in the second. This week, the S&P 500 posted losses in two of four sessions (markets were closed on Monday for Martin Luther King Jr. Day).
Maybe it's the beginning of the end for the new year rally. Maybe not.
What is certain is that 2018 has been a great year for the stock market thus far. The Dow, the Nasdaq, and the S&P 500 have advanced between 5.1% and 6.3% year to date and have notched a handful of new records along the way. And that's to say nothing of the stock market's 2017 campaign, during which the major averages climbed between 19.4% and 28.2%.
Financials dominated the earnings front this week with Citigroup (C), Bank of America (BAC), Goldman Sachs (GS), U.S. Bancorp (USB), Charles Schwab (SCHW), Morgan Stanley (MS), and American Express (AXP) reporting their fourth quarter results. All seven companies beat earnings estimates, but revenues came in mixed; Goldman Sachs, Morgan Stanley, and American Express reported above-consensus revenues, while Bank of America missed estimates. The S&P 500's financial sector (+1.0%) finished roughly in line with the broader market.
Meanwhile, the health care sector (+1.9%) was among the top-performing groups this week. Within the space, UnitedHealth (UNH) rose 6.4% after reporting better-than-expected earnings for the fourth quarter, and Merck (MRK) jumped 4.5% after announcing that its drug Keytruda was successful, in combination with two chemotherapy drugs, as a first line treatment for lung cancer.
The consumer staples (+2.4%) and technology (+1.5%) sectors finished alongside health care at the top of the sector standings. The tech group's largest component by market cap--Apple (AAPL)--announced that it will make a one-time tax payment of $38 billion to repatriate cash holdings overseas and will invest over $30 billion in the U.S. over the next five years, creating 20,000 new jobs. Apple said its decision was the result of recent changes to the U.S. tax law.
Meanwhile, IBM (IBM) slipped 0.5% despite reporting year-over-year revenue growth for the first time in 23 quarters.
The industrial sector (-0.9%) slid this week with General Electric (GE) pacing the retreat. GE shares tumbled 13.3%, hitting a six-year low, after the industrial giant said its legacy reinsurance business will take a larger-than-expected charge of $6.2 billion for the fourth quarter. In addition, the company was reported to be considering a major breakup.
The energy sector (-1.3%) also underperformed as crude oil retreated from a three-year high; West Texas Intermediate crude futures dropped 1.6% to $63.30 per barrel.
In Washington, the House of Representatives passed a one-month spending measure on Thursday evening, but that bill doesn't appear to have enough support to pass in the Senate, where it needs Democratic votes to reach the 60-vote threshold. If an agreement cannot be reached by 12:01 AM ET Saturday morning, the government will start closing non-essential operations.
Investors didn't appear to be shaken though, pushing the S&P 500 and the Nasdaq to new records on Friday.
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