The major averages enjoyed another round of weekly gains as the first quarter came to a close. The S&P 500 gained 1.8% for the week while the Nasdaq Composite outperformed, climbing 3.0% since last Friday.
Although the Nasdaq showed relative strength during the week, the tech-heavy index remains down 1.9% for the year versus a 1.4% gain in the S&P 500.
The first two days of the week were very quiet with investors sitting on their hands ahead of Janet Yellen’s speech that was scheduled for Wednesday. Yellen spoke before the Economic Club of New York and her remarks were interpreted as decidedly dovish. All in all, Yellen echoed her recent comments in the speech, which was a relief for the market that was becoming concerned about the her assuming a more hawkish posture.
By putting so much emphasis on international developments, Yellen essentially moved the goalposts, indicating the Fed is no longer targeting just “progress towards 2.0% inflation and an unemployment rate below 6.5%,” but also looking to maintain global economic stability.
As the week wore on, investors received the Employment Situation report for March (215K), which showed average hourly earnings growth of 0.3%. This report strengthened the rate hike argument, but Yellen’s speech was still fresh in the minds of investors. Accordingly, stocks began Friday under pressure, but rallied off their lows as investors weighed the U.S. economy against the global growth picture. We’re still the best house in a bad neighborhood.
Biotechnology outperformed as the group rebounded from its difficult start to the year. The IBB gained 2.8% as the group moved higher in sympathy with Regeneron Pharmaceuticals (REGN). Regeneron spiked 12.4% today after reporting positive results in two phase-three trials.
Some of the only decliners in the S&P on Friday were shares of energy companies. Oil fell sharply after Saudi Arabia’s crown prince said in an interview with Bloomberg that the kingdom will only freeze its oil output if Iran and other major producers agree to curb their output. Iran???? LOL, I don’t think so.
I’m seeing a multitude of amazing long setups in biotech again and I will focus my time this weekend on those names. I will go over these in some detail on the weekend Premium video.
Enjoy your Friday evening and have a great weekend.
Joe