US Stocks Week Ended May 23, 2014

Markets continued to trade higher as the S&P 500 closed above 1,900 for the first time on Friday. Dovish comments from the Federal Reserve minutes released Wednesday was the main market driver. Federal Reserve policy makers commented that further stimulus doesn't currently risk igniting a higher inflation rate. Economic data was mixed for the week with the U.S. PMI index showing strong growth in output and new U.S. homes sales increasing for the first time this year, while Initial Jobless Claims came in higher-than-expected. Turning to earnings, a number of retailers reported lackluster results due to the harsh winter conditions in the 1st quarter. TJX Companies, Inc., Staples, Inc., Urban Outfitters, Inc. all traded lower following disappointing earnings reports. Despite Home Depot Inc. missing expectations due to delayed spring purchases from the colder temperatures, shares gained over 2% for the week on a strong recovery in sales for May and management seeing no material slowdown in the housing market. Dollar Tree, Inc. reported solid results with strong comps and better-than-expected gross margins. In addition, Tiffany's & Co. also bucked the retail trend by reporting strong global sales as Japanese sales rose by 20% and profits gained 50%. Next week's holiday shortened trading week lacks market-moving economic data points. Investors are looking ahead to the June 6th release of May's non-farm payroll report. Longer term we remain constructive on the equity markets as economic data though mixed is more positive than negative and with interest rates remaining low for the near future, equities remain a better option for putting money to work for most investors.
Posted on Tuesday, May 27, 2014 @ 8:46 AM

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.