Major benchmarks ended mixed after a strong finish compensated for a poor start to the week, the Nasdaq Composite
Index performed best, helped in particular by a rise in heavily weighted Apple.
Technology stocks also outperformed within the S&P 500 Index, while health care shares lagged, due to both some
poor earnings results and worries that the Trump administration might announce measures to regulate drug prices.
Trade fears seemed largely responsible for the market’s slow start to the week, international traders noted that
investors were worried about the upcoming deadline for the extension of waivers on U.S. aluminum and steel tariffs, as
well as the outcome of a planned two-day visit of a U.S. trade delegation to China.
On Friday however, The Wall Street Journal reported that the talks had ended without a joint statement or significant
progress and that Mnuchin and others had not met with President Xi Jinping as planned.
Earnings and solid labor market support sentiment, strong economic and earnings environment seemed to
compensate for the turbulent geopolitical backdrop.
On the economic front, Friday’s monthly employment summary from the Labor Department showed that payrolls
increased at a healthy pace in April, while the unemployment rate had declined to 3.9%, its lowest level since 2000.
Furthermore many economists think that rates will continue to rise if unemployment continues to fall.
Longer-term bond yields remained roughly stable for the week, although the yield on the 10-year Treasury note
approached 3% again on Wednesday after having crossed the symbolic threshold the previous week.
Stable cash flows into the sector and a lighter new issuance calendar helped municipal bonds start off the week on a
positive note. Demand remained evident across all maturities but appeared to focus more on shorter and intermediate
The investment-grade corporate bond market saw heavy new issuance and most deals were met with solid demand,
however analysts noted that volatility in interest rates remained a concern, causing issuance estimates for the month to
vary widely.
News on Sunday of the planned merger of Sprint and T-Mobile received ample attention in the high yield market as the
trading week began. Sprint and T-Mobile bonds on the other hand settled close to where they began as investors
weighed the probability of the deal receiving regulatory approval.
Source : Galt & Taggart
