Equities closed the New Year holiday shortened week positive, after the S&P 500 Index was up 0.78%. Equities stumbled to start last week after poor economic numbers from China and Europe, as well as weak ISM data from the US. On Friday, U.S. December non-farm payroll data had a large upside surprise with 312k new jobs, while expectations were 184k. Further, Fed Chair Powell indicated a more flexible approach to rate raises in 2019. This was welcomed news and combined with the FOMC expectations of only 2 rate raises this year, down from 3, helped equities soar as the S&P 500 Index was up over 3.3% Friday. Bristol-Myers Squibb Co. agreed to acquire Celgene Corp. for $50 in cash and a share of the combined company. The combined company, with a market cap over $150b, would be the fourth largest pharma company behind Johnson & Johnson, Pfizer Inc. and Merck & Co. Apple Inc. ushered shares lower after reducing their sales guidance from $89b-$93b down to $84b for 1st quarter 2019. The hardware behemoth cited demand issues in China as the main reason for the reduction. Overall, shares fell nearly 9% on Thursday but did recover nearly 3.5% on Friday. Naturally the poor Apple expectations rippled through their parts suppliers as Skyworks Solutions Inc. and Broadcom Inc. both were over 8% lower Thursday. Despite the bearishness that has befallen equity markets, if job and corporate profit data remain strong, as well as GDP growth and consumer spending this might point to a rebound in equities and provide a firmer growth catalyst going forward.
Posted on Monday, January 7, 2019 @ 8:08 AM
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