Stocks Manage Late-Day Advance

Charles Schwab: On the Market

Posted: 5/5/2017 4:15 PM ET

Stocks Manage Late-Day Advance

U.S. stocks managed a mid-afternoon advance to finish the trading session higher as domestic markets grappled with a jobs report that showed growth rebounded but wages were mixed. Treasury yields were mostly lower and the U.S. dollar dipped, while crude oil prices rebounded from a recent drop to power gains in the energy sector. Political uncertainty remained after yesterday's passage in the House of a health care bill and ahead of this weekend's second round of the French Presidential election. Dow member IBM was lower after Warren Buffett said he trimmed his stake in the company. Gold was little changed.

The Dow Jones Industrial Average (DJIA) gained 55 points (0.3%) to 21,007, the S&P 500 Index added 10 points (0.4%) to 2,399, and the Nasdaq Composite ticked 25 points (0.4%) higher to 6,101. In moderately-heavy volume, 830 million shares were traded on the NYSE and 1.9 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.70 to $46.22 per barrel and wholesale gasoline increased $0.02 to $1.50 per gallon. Elsewhere, the Bloomberg gold spot price added $1.13 to $1,229.29 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.2% lower at 98.56. Markets were higher for the week, as the DJIA advanced 0.3%, the S&P 500 Index gained 0.6%, and the Nasdaq Composite increased 0.8%.

Dow member International Business Machines Corp. (IBM $155) saw pressure after Billionaire investor Warren Buffett told CNBC that his company Berkshire Hathaway Inc. (BRK/B $167) had sold about a third of its stake in the tech giant.

Cigna Corp. (CI $160) reported Q1 earnings-per-share (EPS) of $2.30, or $2.77 ex-items, versus the $2.45 FactSet estimate, as revenues rose 5.0% year-over-year (y/y) to $10.4 billion, above the forecasted $10.1 billion. CI raised its full-year profit and revenue guidance. The company noted continued strong growth in its Commercial Healthcare and Global Supplemental Benefits segments, partially offset by contraction, as expected, in its Seniors business. Shares traded higher.

Activision Blizzard Inc. (ATVI $54) posted Q1 EPS of $0.56, or $0.31 ex-items, compared to the projected $0.21, with revenues rising 31.7% y/y to $1.2 billion, versus the expected $1.1 billion. The game maker issued Q2 EPS guidance that missed estimates, while raising its full-year profit outlook that remains below expectations. Shares gained modest ground.

CBS Corp. (CBS $65) announced Q1 profits of $1.09 per share, or $1.04 ex-items, compared to the estimated $0.95, as revenues declined 6.8% y/y to $3.3 billion, roughly in line with expectations. Shares advanced on analyst optimism about the company's revenue diversification amid negative advertising revenue trends seen by some of its peers in the traditional pay-TV segment.

April nonfarm payroll report tops forecasts

Nonfarm payrolls (chart) rose by 211,000 jobs month-over-month (m/m) in April, compared to the Bloomberg forecast of a 190,000 increase. The rise of 98,000 seen in March was revised to a gain of 79,000 jobs. The total downward revision to the job gains in March and February was 6,000. Excluding government hiring and firing, private sector payrolls increased by 194,000, versus the forecasted gain of 190,000, after increasing by 77,000 in March, revised from the 89,000 rise that was initially reported. The report was led by job gains in leisure and hospitality, healthcare, professional and business services, financial activities and mining, while retail services job growth rebounded. Employment in construction and manufacturing remained sluggish.

The unemployment rate unexpectedly fell to 4.4% from 4.5%, hitting the lowest level since May 2007, versus forecasts to tick higher to 4.6%, while average hourly earnings rose 0.3% m/m, matching projections. However, y/y wage growth slowed to a 2.5% pace, missing the 2.7% projection, from the negatively revised 2.6% rise in March after the m/m gain was downwardly revised to 0.1%. Finally, average weekly hours came in at 34.4 from March's unrevised 34.3 rate, in line with estimates.

Despite the mixed wage picture, the jobs data adds credence to Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, view in his latest Schwab Sector Views: Is Retail Really Dead?, that the status of the U.S. consumer looks to us to be quite solid and is showing signs of improving.

The report may be easing concerns about the slowing of Q1 GDP growth, which the Fed characterized as likely being transitory as it keep its monetary policy stance unchanged on Wednesday. Schwab’s Chief Investment Strategist Liz Ann Sonders notes in her latest article, ½ Full: Seeing Through a Weak Q1, that leading indicators say a lot more about the economy prospectively than backward-looking measures like GDP, and they remain quite healthy. Liz Ann concludes that we are likely just experiencing yet another "soft patch" in an ongoing expansion; so for now, "I am seeing the glass as half full." Read both these articles on the Markets & Economy page at www.schwab.com. Follow Liz Ann and Schwab on Twitter: @lizannsonders and @schwabresearch.

Consumer credit, released in the final hour of trading, showed consumer borrowing advanced by $16.4 billion during March, well above the $14.0 billion forecast of economists polled by Bloomberg, while February's figure was adjusted lower to an increase of $13.7 billion from the originally reported $15.2 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, climbed by $14.5 billion, while revolving debt, which includes credit cards, increased by $2.0 billion.

Treasuries finished mostly higher in choppy action as the yield on the 2-year note was unchanged at 1.31%, while the yields on the 10-year note and the 30-year bond dipped 1 basis point (bp) to 2.35% and 2.99%, respectively. For analysis of the interest rate environment, see our article, Mixed Signals: What Does Recent Economic Data Mean for Bonds?, on the Insights & Ideas page at www.schwab.com, where you can also find our latest commentary, Cash: What to Consider in the New Rate Environment. Follow Schwab on Twitter: @schwabresearch.

Finally, the political front remained in focus in the wake of yesterday's passage in the House of an Affordable Care Act replacement bill, which now faces the Senate. For commentary on the political front, Schwab's Chief Global Investment Strategist Jeffrey Kleintop, CFA, discusses What the Coming Tax Cuts Mean for the Stock Market on the Markets & Economy page at www.schwab.com. Follow Jeff on Twitter: @jeffreykleintop. Moreover, see the video from Schwab's Vice President of Trading and Derivatives, Randy Frederick's and Vice President of Legislative and Regulatory Affairs, Michael T. Townsend's video, Washington Overview: Budget Deals, Tax Reform, and Trump's 100-Day Mark, on the Insights & Ideas page at www.schwab.com. Follow Randy on Twitter: @randyafrederick.

Europe higher, Asia lower 

European equities finished higher, with basic materials and oil & gas issues rebounding amid recoveries from the recent slides in metals and crude oil prices, while the markets digested the favorable U.S. employment report. Commodity prices have tumbled amid some softness in economic data out of China and the U.S., along with exacerbated oil supply concerns. For a look at the sectors, see Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, articles, Materials Sector Rating: Marketperform and Energy Sector Rating Marketperform, on the Markets & Economy page at www.schwab.com.

Meanwhile, stocks appeared to shrug off lingering political uncertainty ahead of this weekend's second round of the French Presidential election, while Brexit negotiations continue with a looming U.K. election in June, which will be followed by a German election later this year. For analysis of the political uncertainty see Schwab's Jeffrey Kleintop's, CFA, and Randy Frederick's video, Political Risk: How Should Investors Respond? on the Insights & Ideas page at www.schwab.com, where you can also find our article, Brexit Begins: What's Next for the U.K?, while Director of International Research, Michelle Gibley CFA, offers her article, Europe Votes: Could More Countries Reject the EU? on the International Investing page at www.schwab.com. Eurozone business activity in the retail sector moved back to a level depicting expansion. The euro and British pound ticked higher versus the U.S. dollar and bond yields in the region finished mixed.

Stocks in Asia finished lower, with the recent drop in commodity prices, notably metals and crude oil prices, pressuring the basic materials and energy sectors, while the markets were likely cautious ahead of today's U.S. labor report. Also, China remained hamstrung by recent soft economic data and uneasiness toward regulatory crackdowns in the financial system. Shares trading in mainland China and Hong Kong fell, while securities in Australia and India also declined. Volume remained lighter than usual as markets in Japan remained closed for a holiday, while South Korea also took a holiday break. With political and geopolitical uncertainty festering, Schwab's Jeffrey Kleintop, CFA, offers the articles, Missiles and Markets: An investor guide to geopolitical risks on the Markets & Economy page at www.schwab.com, as well as, Top Five Trade Issues Investors Should Be Watching on the International Investing page at www.schwab.com.

Stocks glide after digesting a plethora of mixed market sustenance

Coming off back-to-back solid weekly gains, stocks treaded water amid a plethora of divergent events. Political uncertainty on both sides of the pond lingered ahead of this weekend's French Presidential election and as the House passed a bill aimed at repealing and replacing the U.S. Affordable Care Act. The Fed kept its policy stance unchanged as expected but the markets seemed to continue to grapple with the prospect of the Central Bank trimming its bloated balance sheet. Friday's stronger-than-expected labor report was preceded by an upbeat ISM non-Manufacturing Index that showed key services sector activity grew faster than expected, but another disappointing monthly auto sales report exacerbated worries about hard data being soft. Commodity prices fell, headlined by a drop to multi-month lows for crude oil prices to weigh on the energy sector, though technology stocks continued to rally, shrugging off a mixed earnings report from Dow member Apple Inc. (AAPL $148), and financials led the way as Treasury yields continued a recovery. Earnings season reached the home stretch, continuing to mostly top elevated expectations. About 65% have bested revenue forecasts and 78% have exceeded profit projections out of the 410 companies that have reported thus far from the S&P 500, per data compiled by Bloomberg.

With earnings season well past the apex, the economic front will likely garner more attention next week, delivering April inflation readings such as the Import Price Index, Producer Price Index (PPI) and Consumer Price Index (CPI). Also, the all-important U.S. consumer will be on display, courtesy of the releases of April retail sales and the preliminary May University of Michigan Consumer Sentiment Index.

As noted in the latest Schwab Market Perspective: Should Sharp Sentiment Shifts Mean a Change in Strategy?, a shift in sentiment has led to a sharp reversal in market action recently, with leadership shifting back toward cyclical areas of the market. We continue to believe the bull market will continue due to decent economic growth and a good profits picture, but there will likely be sentiment-driven dips and surges to come. We urge investors to remain disciplined and focus on longer-term horizons and the underlying fundamentals of the economy. Read more on the Markets & Economy page at www.schwab.com.

International reports due out next week that deserve a mention include: Australia—building approvals and retail sales. China—trade balance, CPI and PPI, and lending statistics. India—trade balance, CPI and industrial production. Japan—trade balance. Eurozone—industrial production, along with German factory orders, trade balance and Q1 GDP. U.K.—industrial and manufacturing production, trade balance and the Bank of England's monetary policy decision.

French Election Results Ignite Relief Rally

Charles Schwab: On the Market

Posted: 4/24/2017 4:15 PM ET

French Election Results Ignite Relief Rally

The U.S. equity markets rallied, with financials leading the way, in the wake of yesterday's French Presidential election that appeared to have eased political concerns abroad. Treasury yields moved higher and the U.S. dollar fell after the euro rallied following the election results, while crude oil and gold prices were lower. Equity news was somewhat light, with M&A in focus, headlined by Becton Dickinson's $24 billion agreement to acquire C.R. Bard.

The Dow Jones Industrial Average (DJIA) rallied 216 points (1.1%) to 20,764, the S&P 500 Index increased 25 points (1.1%) to 2,374, and the Nasdaq Composite jumped 73 points (1.2%) to 5,984. In moderately-heavy volume, 906 million shares were traded on the NYSE and 1.8 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.39 lower to $49.23 per barrel and wholesale gasoline lost $0.02 to $1.63 per gallon. Elsewhere, the Bloomberg gold spot price fell $8.65 to $1,275.79 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.9% lower at 99.08.

Becton, Dickinson and Co. (BDX $177) announced an agreement to acquire medical technology company C.R. Bard Inc. (BCR $303) for $317.00 per share in cash and stock, for a total consideration of $24.0 billion. Shares of BCR rallied, though BDX traded to the downside.

Hasbro Inc. (HAS $102) reported 1Q earnings-per-share (EPS) of $0.54, or $0.43 ex-items, compared to the FactSet estimate of $0.38, with revenues rising 2.0% year-over-year (y/y) to $850 million, versus the projected $818 million. HAS traded solidly higher.

Dow member Caterpillar Inc. (CAT $97) gained ground after the mining and construction equipment maker reported the first increase in 3-month rolling retail sales through March since 2012, with the Asia-Pacific region registering sharp gains.

Halliburton Co. (HAL $47) posted a 1Q loss of 0.04 per share, or EPS ex-items of $0.04, versus the expected $0.03, as revenues increased 1.9% y/y to $4.3 billion, roughly in line with forecasts. Shares were lower.

Regional manufacturing report dips to kick off economic calendar

The Dallas Fed Manufacturing Activity Index unexpectedly dipped but remained solidly at a level depicting expansion (a reading above zero). The index declined to 16.8 in April, from 16.9 in March, and compared to the expected improvement to 17.0.

Treasuries finished lower in the wake of the reaction to the French Presidential election, as the yield on the 2-year note rose 5 basis points (bps) to 1.23%, the yield on the 10-year note gained 2 bps to 2.27%, and the 30-year bond rate increased 1 bp to 2.91%. For a look at the bond markets, see Schwab's Chief Fixed Income Strategist, Kathy Jones article, Three Reasons to Own Bonds When the Fed is Raising Interest Rates on the Markets & Economy page at www.schwab.com. Follow Kathy on Twitter: @kathyjones.

Bond yields rebounded and the U.S. dollar dropped as the first round of the key French Presidential election came in as expected, appearing to alleviate some political concerns. Also, the markets remain optimistic regarding progress made on President Trump's tax-reform plans, details of which are expected to be delivered this week. However, Schwab's Vice President of Legislative and Regulatory Affairs, Michael T. Townsend discusses his latest article, Congress Facing Possible Government Shutdown—Again, on the Insights & Ideas page at www.schwab.com. Follow Schwab on Twitter: @schwabresearch.

Along with ramped-up earnings season, this week's economic calendar will deliver key reads on the economy, beginning with tomorrow's new home sales report, with economists forecasting a 1.4% m/m decline during March to an annual rate of 584,000 units, as well as the S&P/Case-Shiller CoreLogic Home Price Index, expected to show year-over-year increase of 5.8% during February, and a 0.7% m/m rise on a seasonally-adjusted basis. Other reports slated for this week include  durable goods orders, Consumer Confidence and the University of Michigan Consumer Sentiment Index. However, the headlining report will likely be the first look (of three) at 1Q GDP, projected to show growth slowed from a quarter-over-quarter annualized rate of 2.1% in 4Q to 1.1%. The docket will deliver a good mix of "soft" data (confidence/survey-based) and "hard" data, which have diverged to cause some concern in the markets. We note in the latest Schwab Market Perspective: Reassessing Risk and Reflation, that some convergence between the two is expected, and this topic is drilled into by Schwab’s Chief Investment Strategist Liz Ann Sonders in her article, Hard Times: Time for the Hard Data to Catch Up to the Soft Data.

Per the Schwab Market Perspective, investors appear to be shying away from risk, resulting in the recent pullback in stocks. We view this as temporary, although patience will be required and sharper downturns could occur within the ongoing bull market as political and geopolitical uncertainty abounds, while the Fed has begun to address the slow draining of its balance sheet. Global earnings have aided stock market gains, but the expectations bar is getting higher to hurdle. The next several weeks should show whether gains will persist or if expectations may have gone too far. Read both these articles on the Markets & Economy page at www.schwab.com and follow Liz Ann on Twitter: @lizannsonders.

Europe rallies, Asia mostly higher following French election results

European equities jumped, with financials leading a broad-based rally as the markets appeared to breathe a sigh of relief after the first round of the key French Presidential election came in as the polls had predicted. The election did not offer any surprising results and post-election polls are suggesting pro-Europe, mainstream candidate Emmanuel Macron is poised to defeat anti-EU Marine Le Pen in the final vote on May 7th. For analysis of the European political front, which still has the final French vote, a U.K. vote and a German election later this year, see Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, and Vice President of Trading and Derivatives, Randy Frederick's videos, "Brexit" Underway: How Can Investors Prep Now That Article 50 Has Been Triggered? and Why Should the French Presidential Election Be Important to Investors? on the Insights & Ideas page at www.schwab.com. Also, check out our article, Brexit Begins: What's Next for the U.K.?, on the Insights & Ideas page at www.schwab.com, while Director of International Research, Michelle Gibley CFA, offers her article, Europe Votes: Could More Countries Reject the EU? on the International Investing page at www.schwab.com. The euro jumped and the British pound declined versus the U.S. dollar, while bond yields were mixed. In economic news, German business sentiment improved to the highest level in almost six years for April.

Stocks in Asia finished mostly to the upside as the markets appear to be relieved by the results from the French Presidential election over the weekend that went according to what the polls had suggested to ease some political uncertainty. Japanese equities gained solid ground following a drop in the yen, while markets in Australia, South Korea and India all gained ground. Stocks in Hong Kong also traded higher, but those traded in mainland China fell sharply on festering concerns about regulatory crackdowns. The markets shrugged off lingering geopolitical uncertainty as discussed by Schwab's Jeffrey Kleintop, CFA, in his article, Missiles and Markets: An investor guide to geopolitical risks on the Markets & Economy page at www.schwab.com, while he also offers a look at the global landscape in his article, Top Five Trade Issues Investors Should Be Watching on the International Investing page at www.schwab.com.

Tomorrow, reports slated for release internationally include consumer price inflation data from Japan, consumer sentiment out of South Korea, business sentiment from France, PPI from Spain, and public sector net borrowing from the U.K.

Stocks off Lows, but Stay Red on Close

Charles Schwab: On the Market

Posted: 4/21/2017 4:15 PM ET

Stocks off Lows, but Stay Red on Close

U.S. stocks finished lower with financial stocks leading the decline, while an extension of recent losses for crude oil prices also weighed on the energy sector. Traders were likely exercising some caution ahead of this weekend's first round of a key French Presidential election. In economic news, existing home sales hit the fastest annual pace in over a decade and business activity reports missed forecasts. In other developments, President Trump stated that there will likely be an announcement on tax reform next week on Wednesday or shortly thereafter. Treasury yields were mixed and the U.S. dollar and gold were higher.

The Dow Jones Industrial Average (DJIA) declined 31 points (0.2%) to 20,548, the S&P 500 Index decreased 7 points (0.3%) to 2,349, and the Nasdaq Composite shed 6 points (0.1%) to 5,911. In moderate volume, 931 million shares were traded on the NYSE and 1.7 billion shares changed hands on the Nasdaq. WTI crude oil declined $1.09 to $49.62 per barrel and wholesale gasoline was $0.02 lower at $1.65 per gallon. Elsewhere, the Bloomberg gold spot price increased $2.92 to $1,284.82 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 99.91. Markets were higher for the week, as the DJIA advanced 0.5%, the S&P 500 Index gained 0.9%, and the Nasdaq Composite rallied 1.8%.

Dow member General Electric Co. (GE $30) reported 1Q earnings-per-share (EPS) of $0.10, or $0.21 ex-items, compared to the FactSet estimate of $0.17, as revenues declined 1.0% year-over-year (y/y) to $27.7 billion, versus the projected $26.4 billion. The company said it expects cash flow to improve throughout the remainder of the year, while reaffirming its 2017 guidance. Shares closed lower amid analyst concerns about the company's cash that came in weaker than expected.

Dow component Visa Inc. (V $91) posted fiscal 2Q earnings of $0.18 per share, or $0.86 ex-items, compared to the projected $0.79, with revenues rising 23.0% y/y to $4.5 billion, above the estimated $4.3 billion. The company reaffirmed its full-year revenue outlook, while announcing a new $5.0 billion share repurchase program. V finished flat. 

Mattel Inc. (MAT $22) announced a 1Q loss of $0.33 per share, or a loss of $0.32 ex-items, versus the expected shortfall of $0.17, as revenues declined 15.0% y/y to $736 million, below the forecasted $794 million. The company said its softer-than-expected results were due to a retail inventory overhang coming out of the holiday period, but it remains encouraged by strong performance at retail for its key core brands. Shares fell.

Honeywell International Inc. (HON $127) reported 1Q EPS of $1.71, or $1.66 ex-items, above the expected $1.62, as revenues were flat y/y to $9.5 billion, topping the forecasted $9.3 billion. HON finished nicely higher.

Existing home sales hit fastest pace in over a decade, business activity slips

Existing-home sales in March rose 4.4% month-over-month (m/m) to a 5.71 million annual rate—the fastest pace since February 2007—compared to the Bloomberg forecast of a 5.60 million pace. February's figure was revised to a 5.47 million annual rate. Sales of single-family homes rose 4.3% m/m and purchases of condominium and co-op units grew 5.0%. The median existing-home price was up 6.8% y/y at $236,400. Housing supply came in at a 3.8-month pace at the current sales rate, and the inventory of homes for sale is down 6.6% y/y. Sales grew in all regions except for the West. Existing home sales are based on contract closings instead of signings and account for the majority of the housing sales market.

National Association of Realtors (NAR) Chief Economist Lawrence Yun said, "The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market." Yun pointed out that finding available properties to buy continues to be a strenuous task, and sales will go up as long as inventory does.

Schwab's Director of Market and Sector Analysis, Brad Sorensen's, CFA, latest Schwab Sector Views: Housing—Building Bubble or Growing Trouble?, discusses the constrained supply in the housing market, which is conspiring with price gains, an uptick in mortgage rates, and modest wage gains to decrease affordability for homebuyers. Brad concludes that we believe the housing market is a modestly positive contributor to overall U.S. economic activity. Read more on the Markets & Economy page at www.schwab.com. Follow Schwab on Twitter: @schwabresearch.

The preliminary Markit U.S. Manufacturing PMI Index came in at 52.8 for April, below March's final read of 53.3, and compared to estimates calling for an improved level of 53.8. The preliminary Markit U.S. Services PMI Index for April declined to 52.5 from March's reading of 52.8, versus forecasts of an improvement to 53.2. Readings above 50 for both reports denote expansion in activity.

Treasuries straddled the unchanged mark, with yield on the 2-year note dipping 1 basis point (bps) to 1.18%, the yield on the 10-year note flat at 2.23% and the 30-year bond rate gaining 1 bp to 2.89%. 

For analysis of the moves in the bond and currency markets see Schwab's Vice President of Trading and Derivatives, Randy Frederick's and Senior Fixed Income Research Analyst, Collin Martin's, CFA, video What's Driving the Ongoing Drop in Long-Term Bond Yields? on the Insights & Ideas page at www.schwab.com. Follow Randy on Twitter: @randyafrederick. Also, Schwab's Chief Fixed Income Strategist, Kathy Jones discusses, Three Reasons to Own Bonds When the Fed is Raising Interest Rates on the Markets & Economy page at www.schwab.com. Follow Kathy on Twitter: @kathyjones.

Europe mixed ahead of French election, Asia diverges amid lingering uncertainty

European equities finished mixed to little changed, with financials extending a recovery as the recent pressure on bond yields continued to show relative signs of lessening, but oil & gas issues fell as crude oil prices added to a weekly slide. The markets appeared cautious in the face of heightened geopolitical and political uncertainty as France heads for the first round of its key Presidential election this weekend, exacerbated by yesterday's terrorist attack in the nation. Also, the U.K. approved an election for June this week and German elections are slated for later this year. For more on the political front in the region, see Schwab's Chief Global Investment Strategist Jeffrey Kleintop's, CFA, and Randy Frederick's videos, "Brexit" Underway: How Can Investors Prep Now That Article 50 Has Been Triggered? and Why Should the French Presidential Election Be Important to Investors? on the Insights & Ideas page at www.schwab.com. Also, check out our article, Brexit Begins: What's Next for the U.K.?, on the Insights & Ideas page at www.schwab.com, while Director of International Research, Michelle Gibley CFA, offers her article, Europe Votes: Could More Countries Reject the EU? on the International Investing page at www.schwab.com. In economic news, eurozone business activity in the manufacturing and services sectors unexpectedly showed expansion accelerated slightly for April, while U.K. retail sales fell more than expected for March. The euro and British pound were lower versus the U.S. dollar.

Stocks in Asia finished mostly to the upside, on the heels of the solid gains in the U.S. yesterday that were fueled by a plethora of earnings reports that tilted to the positive side and comments that caused U.S. tax reform optimism to resurface. Japanese equities gained ground, with the yen holding onto recent weakness and as a report showed that growth in the nation's manufacturing output accelerated slightly in April. Australian securities advanced and shares trading in South Korea were also higher. However, Indian stocks dipped, while mainland Chinese equities finished flat and Hong Kong listings ticked lower with festering concerns about regulatory crackdowns continuing to hamstring sentiment in the world's second largest economy. Political and geopolitical concerns remained, ahead of this weekend's key French election and amid recent rhetoric from North Korea. For analysis of the global front, see Schwab's Jeffrey Kleintop's, CFA, article, Missiles and Markets: An investor guide to geopolitical risks on the Markets & Economy page at www.schwab.com, and his article, Top Five Trade Issues Investors Should Be Watching on the International Investing page at www.schwab.com.

Stocks show some resiliency coming out of Easter break

U.S. stocks followed a long holiday weekend with a weekly advance despite lingering headwinds off elevated geopolitical and political concerns, as well as a pullback in crude oil prices on U.S. supply concerns that pressured the energy sector. Earnings season heated up and appeared to provide some support as about 71% of the 94 companies that reported results from the S&P 500 Index topped forecasts and 82% bested earnings estimates, per data compiled by Bloomberg. However, the Dow lagged the major markets, with gains being limited by disappointing earnings reports from International Business Machines Corp. (IBM $161), Verizon Communications Inc. (VZ $48) and Goldman Sachs Group Inc. (GS $217). The markets got a late-week boost by comments from U.S. Treasury Secretary Mnuchin that appeared to foster resurfaced tax-reform optimism. Treasury yields and the U.S. dollar remained in focus, with both extending recent slides but showing modest signs of life as the week matured to help financials rebound, along with upbeat earnings from Morgan Stanley (MS $42), while exacerbating the pressure on crude oil prices.

Looking to next week, along with ramped-up earnings season, the economic calendar will deliver reads on new home sales, durable goods orders, Consumer Confidence and the University of Michigan Consumer Sentiment Index. However, the headlining report will likely be the first look (of three) at 1Q GDP, projected to show growth slowed from a quarter-over-quarter annualized rate of 2.1% in 4Q to 1.3%. The docket will deliver a good mix of "soft" data (confidence/survey-based) and "hard" data, which have diverged to cause some concern in the markets. We note in the latest Schwab Market Perspective: Reassessing Risk and Reflation, that some convergence between the two is expected, and this topic is drilled into by Schwab’s Chief Investment Strategist Liz Ann Sonders in her article, Hard Times: Time for the Hard Data to Catch Up to the Soft Data.

Per the Schwab Market Perspective, investors appear to be shying away from risk, resulting in the recent pullback in stocks. We view this as temporary, although patience will be required and sharper downturns could occur within the ongoing bull market as political and geopolitical uncertainty abounds, while the Fed has begun to address the slow draining of its balance sheet. Global earnings have aided stock market gains, but the expectations bar is getting higher to hurdle. The next several weeks should show whether gains will persist or if expectations may have gone too far. Read both these articles on the Markets & Economy page at www.schwab.com and follow Liz Ann on Twitter: @lizannsonders.

International reports due out next week include: Australia—Consumer Price Inflation (CPI). China—industrial profits. Japan—Bank of Japan monetary policy decision, CPI, retail sales and industrial production. Eurozone—European Central Bank monetary policy decision and CPI, along with German retail sales. U.K.—1Q GDP and consumer confidence.