Stocks finished the week on a down note with the Dow lower by 40 points to close at 20,940 on lighter trading volume following a huge week for earnings reports. Both IBD and BTS have the markets rated as “green light” for now. BTS does however warn bond holders that should the 10 year US Treasury yield hit 2.6% or higher it could be bad for the bond market. The current 10 year yield is 2.28%. For the week the Dow gained about 1.9% or 392 points.
Yesterday after the market closed several big market leading tech companies reported earnings. Amazon reported a 23% revenue increase and a 38% increase in profits. The gurus or “Amurus” as they are now called, were pleasantly surprised and upped their price targets to the $1,100 per share range. Google (aka Alphabet) also shot higher after reporting a 22% revenue gain and a 28% profit increase. Shares hit a new high as the results were better than expected. Microsoft (aka Micropoopee) reported an increase in profits of 16% beating estimates while revenue was up 6% and came in less than expected and pushing shares to an all-time high proving once again that one of the best things to ever happen to Microsoft was the retirement of Steve Ballmer.
Despite consumer confidence being at a 20 year high and corporate earnings doing well, the first quarter GDP estimate from the Commerce Department was a disappointing reading of 0.7%. The expectations had been for a number closer to 1.1%. The “core GDP” rate however was closer to 2.2%. Within the official GDP estimate, business fixed investment grew 9.4%, home building soared 13.7% and consumer spending edged up by only 0.3% thanks to slow auto sales and utility use. These data points all suggest that the Fed will continue to raise short term rates two more times this year.
I am taking a load of scouts out on a trip this weekend. We will camp near Mt. Rainier at a place called Buck Creek. Hopefully it will be wet and rainy so I can watch the lunkheads grapple with the elements.