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Tech Shares Lead Broad-Based Rebound
26-Apr-18 16:20 ET
Dow +238.51 at 24322.34, Nasdaq +114.94 at 7118.68, S&P +27.54 at 2666.94

https://www.briefing.com/investor/markets/stock-market-update/2018/4/26/tech-shares-lead-broadbased-rebound.htm

[BRIEFING.COM] Stocks rallied on Thursday, recouping just about all of their weekly losses, as investors cheered the latest batch of first quarter earnings. The S&P 500 and the Dow Jones Industrial Average advanced 1.0% apiece, while the tech-heavy Nasdaq Composite did even better, jumping 1.6%, as technology shares set the pace.

The most influential S&P 500 sector -- information technology -- advanced 2.3% on Thursday, finishing atop the day's sector standings by a comfortable margin. Tech giant Facebook (FB 174.16, +14.47) soared 9.1% after reporting a blowout first quarter, easily topping earnings and revenue estimates and also reporting double-digit growth in daily active users (DAUs). Visa (V 127.08, +5.87) and Advanced Micro (AMD 11.04, +1.33) contributed to the tech rally as well, adding 4.8% and 13.7%, respectively, after reporting above-consensus earnings and revenues for the first quarter and issuing upbeat guidance.

Chipotle Mexican Grill (CMG 422.50, +82.98) was perhaps the most notable post-earnings mover, surging 24.4% to its highest level in nearly a year. The burrito chain reported an impressive first quarter, handily beating earnings estimates on above-consensus growth in same-store sales. The S&P 500 sector that houses Chipotle -- consumer discretionary -- finished in second place in the sector standings with a gain of 1.6%, while most other advancing groups added between 0.6% and 1.5%.

The heavily-weighted financial sector was an exception, finishing just a tick above its flat line. The group underperformed as Treasury yields slipped from multi-year highs; the yield on the benchmark 10-yr Treasury note slipped below the psychologically important 3.0% mark, ending three basis points below its Wednesday close at 2.99%. The 2-yr yield, meanwhile, finished unchanged at 2.49%.

Telecom services was easily the worst-performing sector, tumbling 3.2%, after AT&T (T 33.10, -2.10) reported lower-than-expected earnings and revenues for the first quarter -- T shares dropped 6.0%. The industrial sector was the only other space to close in the red, losing 0.4% and extending its weekly decline to 3.0%; for comparison, the S&P 500 is down just 0.1% week to date. Within the industrial group, transports showed particular weakness, with American Airlines (AAL 42.37, -2.88) dropping 6.4% after lowering its guidance due to higher fuel prices.

Overseas, the European Central Bank released its latest policy directive on Thursday morning, which -- as expected -- left interest rates unchanged and confirmed that net asset purchases will remain at the current monthly pace of EUR30 billion until the end of September 2018, or beyond, if necessary. The euro declined 0.5% against the U.S. dollar to 1.2105 -- its lowest level since early January -- following the release and a dovish-sounding press conference from ECB President Mario Draghi.

Reviewing Thursday's economic data, which included Durable Goods Orders for March, weekly Initial Claims, Advance International Trade in Goods for March, and Advance Wholesale Inventories for March:

March durable goods orders climbed 2.6%, which is more than the 1.9% increase expected by the Briefing.com consensus. The prior month's reading was revised to +3.5% (from +3.1%). Excluding transportation, durable orders were flat (Briefing.com consensus +0.6%) to follow the prior month's revised increase of 0.9% (from +1.2%).
The key takeaway from the report was that business spending was soft, evidenced by a 0.1% decline in orders of nondefense capital goods excluding aircraft. Shipments of those goods, which factor into GDP forecasts, were down 0.7% after increasing 1.0% in February.
The latest weekly initial jobless claims count totaled 209,000, while the Briefing.com consensus expected a reading of 225,000. Today's tally was below the revised prior week count of 233,000 (from 232,000). As for continuing claims, they declined to 1.837 million from a revised count of 1.866 million (from 1.863 million).
The key takeaway from the initial claims report is that it will feed concerns about a tightening in labor supply and a potential pickup in wage-based inflation pressure as a result of it.
The Advance report for International Trade in Goods for March showed a deficit of $68.0 billion.
The Advance report for Wholesale Inventories for March showed an increase of 0.5%.

On Friday, investors will receive the advance estimate of first quarter GDP (Briefing.com consensus +2.1%) at 8:30 AM ET. The first quarter Employment Cost Index (Briefing.com consensus +0.7%) will also be released at 8:30 AM ET, while the Chicago PMI for April (Briefing.com consensus 56.3) and the final reading of the University of Michigan Consumer Sentiment Index for April (Briefing.com consensus 98.0) will cross the wires at 9:45 AM ET and 10:00 AM ET, respectively.

Nasdaq Composite: +3.1% YTD
Russell 2000: +1.5% YTD
S&P 500: -0.3% YTD
Dow Jones Industrial Average: -1.6% YTD