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Afternoon Note

Dow Trying for Seven

By Charles Payne, CEO & Principal Analyst
5/11/2018 1:21 PM
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The major indices continue to be mixed with the Dow, while off its high, attempting to close for a seven consecutive up day.  The S&P 500 has turned negative, while the Nasdaq has been in the red all session.  Health Care, Materials and Telecom are strong, while Consumer Staples and Technology are the laggards.  Advancers are leading decliners 1480/1349 on the NYSE and 1453/1307 on the Nasdaq.  

There was two pieces of economic data out today. First, U.S. import prices for April increased 0.3% compared to a 0.2% decrease in March.  Prices of imports for the past twelve months increased 3.3%.  Import prices excluding fuel were up 0.2%.  Excluding fuel, import prices on a trailing twelve-month basis are up 1.8% compared to the prior year period increase of 1.0%.   

U.S. export prices rose 0.6% in April compared to 0.3% in March.  For the twelve months ended in April export prices rose 3.8%.  Export prices excluding agriculture were up 0.7%.  Export prices of nonagricultural industrial supplies and materials increased 1.5%, partially offset by a decline in agricultural export prices of 1.2%.

Fuel import prices have advanced 18.7% over the past twelve months.  Month over month fuel import prices increased 1.3%.

Agricultural exports prices fell 1.2% in April.  The decline in agricultural export prices was led by lower prices for soybeans, wheat and nuts.  Export air passenger fares increased 16.2%, this was the largest monthly advance since first being published in December 2000.  The increase was mainly driven by increases in Asian and Latin American fares.  

The bottom line is pricing pressures have been moderate on a year-over-year basis and nonfuel import prices continue to be at acceptable levels during the same period.

Next, Consumer Sentiment Survey for May was flat at 98.8 from the final April reading.  This is still a 14-year high.  There was a slight decrease in the income expectations and a fractional increase from 2.7% to 2.8% in the one-year inflation expectation.

Inflation continues to increase at a moderate pace.  The 10-Year Treasury Note yield has moderated as well and is now back below 3% at 2.96%.  This is roughly the same level from last week.  

The latest Baker Hughes U.S. Oil Report shows a total increase of 13 rigs to 1,045 from the prior week and up 160 rigs year over year.  Oil rigs were up 10 to 844 and are up 132 year-over-year.  WTI is down .45% to $71.00 but is still at multi-year highs on concerns over supply now that the U.S. has walked away from the Iran Nuclear Deal.


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