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Bob Carey
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  US Stock Markets Ended May 18, 2018
Posted Under: Weekly Market Commentary

Stocks fell for the week as investors grappled with higher bond yields, political risks around the globe, trade tensions and higher energy prices. The real estate and utilities sectors, which tend to be bond proxies due to their high dividend yields, lost over 2% for the week. By contrast, the materials and energy sectors posted the biggest gains as investors are starting to price in higher inflation expectations. In economic news, retail sales rose 0.3% in April, in-line with forecasts, as higher paychecks from tax-cuts offset rising fuel costs. In stock news, both Walmart Inc. and Cisco Systems Inc. fell after announcing quarterly results, despite both companies beating earnings expectations. Shares of Macy's Inc. gained 14.6% for the week on strong earnings results as comparable sales increased by 4.2% and management increased full-year fiscal guidance. Campbell Soup fell after the company announced another disappointing quarter and guided down for the full year. Despite missing estimates, Deere & Co. shares gained as the maker of heavy equipment announced price increases to offset higher freight and raw material prices. With earnings season nearly in the books, the S&P 500 is on pace to grow earnings by 24% in the 1st quarter and by 22% for 2018. While higher interest rates and inflation could provide some headwinds to the market moving forward, it is most likely not enough to derail the market if domestic economic growth and earnings growth remain robust. The earnings multiple for the S&P 500 has contracted year-to-date as markets are up marginally versus an over 20% rise in earnings, leaving room for equity gains in the near term.
Posted on Monday, May 21, 2018 @ 8:16 AM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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