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Sigh of Relief
16-Apr-18 16:30 ET
Dow +212.90 at 24573.04, Nasdaq +49.63 at 7156.28, S&P +21.54 at 2677.84

https://www.briefing.com/investor/markets/stock-market-update/2018/4/16/sigh-of-relief.htm

[BRIEFING.COM] Investors breathed a sigh of relief on Monday, pushing stocks solidly higher, after a U.S.-led strike on Syria over the weekend turned out to be less dramatic than many had feared.

The S&P 500 finished higher by 0.8% at 2677.84 after getting rejected at its 50-day moving average (2687). The Dow Jones Industrial Average and the Nasdaq Composite also finished a step below their 50-day moving averages, adding 0.9% and 0.7%, respectively.

U.S., U.K., and French forces carried out a much-anticipated missile attack against the Syrian government late Friday, targeting three sites associated with the production of chemical weapons following a suspected poison gas attack against the rebel-held town of Douma on April 7. Russian President Vladimir Putin -- who supports the Syrian government -- condemned the attack, saying additional strikes could invite chaos in global affairs, but made no mention of a military response to this particular incident -- giving the impression that it's now in the rear-view mirror.

That realization proved to be a positive for the equity market, but didn't bode so well for crude oil, which surged more than 8.0% last week on the bet that heightened tensions in the oil-rich Middle East would lead to a slowdown in production; West Texas Intermediate crude futures slid 1.6% to $66.18 per barrel. However, the energy sector, which typically moves in tandem with the price of crude oil, rallied 1.0%.

All 11 S&P sectors finished Monday in positive territory, with gains ranging from 0.4% to 1.5%. Lightly-weighted groups populated the top and bottom of the sector standings, with telecom services (+1.5%), utilities (+1.4%), and materials (+1.4%) closing at the top, and real estate (+0.4%) closing at the bottom. The heavily-weighted financial space (+0.5%) was the second-worst performer.

In corporate news, drug retailers CVS Health (CVS 66.10, +2.67) and Walgreens Boot Alliance (WBA 66.22, +2.40) rallied 4.2% and 3.8%, respectively, following a CNBC report that internet retail giant Amazon (AMZN 1441.50, +10.71) has shelved plans to sell and distribute pharmaceutical products to hospitals. Separately, Merck (MRK 58.65, +1.48) and Bristol-Myers (BMY 54.08, -4.57) both reported better-than-expected clinical trial results for their respective cancer treatments, but Merck surpassed expectations even more so than Bristol. Merck shares jumped 2.6%, while Bristol shares tumbled 7.8%.

On the earnings front, Bank of America (BAC 29.93, +0.13) struggled early after reporting above-consensus first quarter earnings ahead of Monday's opening bell, but eventually finished up 0.4%. Financial peer Charles Schwab (SCHW 53.08, +2.04) soared 4.0% after also beating bottom-line estimates for Q1. Moving to transports, JB Hunt (JBHT 119.75, +6.98) jumped 6.2% after beating both earnings and revenues estimates for the first quarter, helping to fuel a broad transport rally; the Dow Jones Transportation Average finished Monday higher by 2.3%.

In the bond market, U.S. Treasuries ended Monday slightly lower, which was a minor victory in light of the larger losses posted overnight. The 2-yr yield flirted with 2.40% before closing flat at 2.37%, while the benchmark 10-yr yield flirted with 2.87% before closing with a one basis point gain at 2.83%.

Reviewing Monday's economic data, which included Retail Sales for March, the Empire State Manufacturing Survey for April, Business Inventories for February, and the NAHB Housing Market Index for April:

March retail sales increased 0.6% (Briefing.com consensus +0.4%). The prior month's reading was left unrevised at -0.1%. Excluding autos, retail sales increased 0.2%, as expected. The prior month's increased was left unrevised at 0.2%.
The key takeaway from the report is that March stopped a streak of three consecutive monthly declines in retail sales, although it also demonstrates that consumers continue to show some restraint in discretionary spending.
The Empire Manufacturing Survey for April declined to 15.8 (Briefing.com consensus 20.0) from the prior month's unrevised reading of 22.5.
Business Inventories increased 0.6% in February (Briefing.com consensus +0.6%). The January reading was left unrevised at +0.6%.
The key takeaway from the report is that inventory growth outpaced sales growth, as inventories increased for manufacturers (+0.3%), retailers (+0.4%), and merchant wholesalers (+1.0%).
The NAHB Housing Market Index for April decreased to 69 (Briefing.com consensus 70) from an unrevised reading of 70 in March.

On Tuesday, investors will receive March Housing Starts (Briefing.com consensus 1268K) and Building Permits (Briefing.com consensus 1315K) at 8:30 AM ET and March Industrial Production (Briefing.com consensus +0.3%) and Capacity Utilization (Briefing.com consensus 77.8%) at 9:15 AM ET.

Nasdaq Composite: +3.7% YTD
Russell 2000: +1.8% YTD
S&P 500: +0.2% YTD
Dow Jones Industrial Average: -0.6% YTD