US Stocks Ended May 19, 2017
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After a mid-week plunge, stocks ended a turbulent week lower as investors weighed another political setback for the Trump administration versus continued strong corporate fundamentals. The sell-off on Wednesday was driven by reports that President Trump had purportedly asked then-FBI Director James Comey to drop the investigation into former national security advisor Michael Flynn. Popular reflation trades, which have been unwinding in 2017, dropped further on Wednesday as investors discounted further the depth of tax cuts, infrastructure spending, and regulation reform. While Trump's time in the White House continues to be tumultuous, corporate profits are growing by the fastest pace since the 3rd quarter 2011. Deere & Co, one of the last firms to report, jumped 7.3% after announcing strong results due to robust demand from Latin America and cost cuts, which helped margins. Cisco Systems shares fell after providing disappointing guidance amid a shift towards cheaper, software-based networks. Shares of McKesson gained after guiding above the street for fiscal year 2018 as organic growth offset some of the pressure from weak drug pricing. Looking ahead to next week, major events will be Thursday's OPEC meeting, the release of April's new and existing home sales, and the second reading of first quarter GDP. Looking ahead longer term, the market tends to drift with corporate profits. Fundamentals seem to be on track as the S&P 500 grew earnings by 13.9% in the quarter, with 95% of names reporting.
Posted on Monday, May 22, 2017 @ 8:16 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.