Disappointing earnings and data pressured shares to the downside.
United States
Stocks were down Friday as health care and technology companies continued to report weak first quarter results, but thanks to some late buying, they managed to avoid major losses. Stocks opened lower and fell further throughout the morning, extending a downturn from the day before and followed a rout in European indexes.
The Dow Jones industrials gave up 0.3 percent, the S&P was down 0.5 percent and the Nasdaq lost 0.6 percent. On the week, the Dow and S&P both lost 1.3 percent while the Nasdaq was 2.8 percent lower. The Dow and S&P managed to edge up for the month while the Nasdaq did not.
Health care companies took the biggest losses after a bout of weak earnings reports. Gilead Sciences was down after it said its results were hurt by big discounts and rebates on its costly hepatitis C medicines. Amgen reported relatively solid results but declined anyway. Molina Healthcare declined after it slashed its full-year guidance because of higher medical care costs in Ohio and Texas, expenses related to recent acquisitions and pharmacy costs especially in Puerto Rico. Cepheid also retreated after analysts were disappointed with its revenue projections for the second quarter.
Among the tech stocks that declined were Seagate Technology, Western Digital and Apple, which is in a deep two-week slide and has fallen for seven days in a row. Amazon advanced after it said its revenue jumped 28 percent in the first quarter and the company turned a far bigger profit than analysts expected. Newell Brands gained after it gave a strong outlook for the year after its reported solid results in the first quarter. Expedia was up after it reported a bigger adjusted profit and greater sales than expected. Rovi said it will buy digital video recording company TiVo for about $1.1 billion in cash and stock. Both companies advanced.
March personal income climbed by 0.4 percent while personal spending edged up only 0.1 percent. With income rising faster than spending, the personal savings rate rose to 5.4 percent in March from 5.1 percent in February, reaching its highest level in thirteen months.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$29.65 to US$1,285.65. Copper futures were up 2.3 percent to US$2.28. WTI spot crude was down11 US cents to US$45.92. Dated Brent spot crude was down 40 US cents to US$47.37. The US dollar was down against the yen, euro and the Swiss franc. It advanced against the Australian dollar and was virtually unchanged against the pound and Canadian dollar. The Dollar Index was up 0.1 percent. The yields on US Treasury 30 year bond and 10 year note were unchanged at 2.68 percent and 1.83 percent respectively.
Europe
Stocks were down on Friday and for the week. However, they managed to advance in April. Investor sentiment took a hit after the sharp sell-off in the US on Thursday along with the weak performance in Asia. The Bank of Japan’s surprise decision to refrain from adding stimulus measures and Thursday’s disappointing US GDP data continued to weigh on the markets. Investors exited riskier investments at the end of the week in favor of safe havens. Gold prices were sharply higher Friday and silver prices advanced to a 15-month high. Mining and resource stocks benefited from the surge in metal prices. The FTSE declined 1.3 percent, the SMI retreated 1.7 percent, the CAC lost 2.8 percent and the DAX dropped 2.7 percent. For the week, the FTSE lose 1.1 percent, the SMI declined 1.8 percent and the CAC and DAX were down 3.1 percent and 3.2 percent respectively.
Puma was down after the sportswear firm issued a cautious outlook for full-year sales and profitability after reporting a 4 percent rise in first-quarter profit. Banks including Deutsche Bank, Commerzbank, BNP Paribas, Société Générale and Crédit Agricole also closed lower. Automakers including BMW, Daimler, Volkswagen, Renault and Peugeot also retreated. Sanofi tumbled a day after revealing that it has made an unsolicited all-cash takeover offer worth $9.3 billion for Medivation. Shire advanced after its first quarter EPS rose to $3.19 from $2.84 last year. British Airways parent IAG dropped after cutting its full-year capacity growth target. Shares of Restaurant Group tumbled after the owner of Chiquito and Frankie & Benny’s brands issued a 2016 profit warning and announced departure of its finance director. Britain’s largest state owned lender Royal Bank of Scotland was down after its first quarter net loss widened from last year. Swiss Re was down in Zurich after its quarterly profit fell and the company said it foresees a challenging environment.
Eurozone gross domestic product climbed 0.6 percent from prior quarter after increasing 0.3 percent in the fourth quarter. April flash harmonized index of consumer prices declined 0.2 percent from a year ago.
Asia Pacific
Asian stocks extended their losses from the previous session on Friday, although markets in Australia managed to cling to positive territory. While oil prices slid in Asia after sharp overnight gains, the yen continued its rise against the dollar, keeping investors cautious. Japanese markets were closed for the Showa Day holiday.
Chinese and Hong Kong shares fell as a spate of bond defaults as well as increasing volatility in the commodity market despite a government crackdown on speculation kept investors on edge ahead of the Labor Day holiday. The Shanghai Composite was down 0.2 percent while the Hang Seng lost 1.5 percent. On the week, the former lost 2.2 percent while the latter gained 1.4 percent.
Both the S&P/ASX and All Ordinaries managed to gain 0.5 percent as higher commodity prices lifted resource stocks and a $1.1 billion takeover bid for Pacific Brands stirred speculation of more merger and acquisition activity. Both added 0.3 percent on the week and were up for the month. Economic reports painted a mixed picture with private sector credit rising modestly in March while the producer price index dipped 0.2 percent in the March quarter in contrast to a 0.3 percent rise in the preceding three months. Rio Tinto advanced after deciding to buy back A$1.359 billion of bonds as part of efforts to reduce its debt. Fortescue Metals and BHP Billiton advanced. Atlas Iron jumped on securing court approval for debt restructuring. Newcrest Mining and Evolution Mining rallied as gold prices hit a seven-week high. Woodside Petroleum and Santos also gained each after oil prices hit fresh 2016 highs Thursday, buoyed by a weaker dollar and speculation the global glut will ease. The Sensex was virtually unchanged Friday and added 1.0 percent for the week. The index also gained for the month of April.
Global Stock Markets

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*

Central Bank activities

May 3

Australia

Reserve Bank of Australia Monetary Policy Announcement

The following indicators will be released this week…

Europe

May 2

Eurozone

Manufacturing PMI (April)

Germany

Manufacturing PMI (April)

France

Manufacturing PMI (April)

May 3

Eurozone

Producer Price Index (March)

UK

Manufacturing PMI (April)

May 4

Eurozone

Services & Composite PMI (April)

Retail Sales (March)

Germany

Services & Composite PMI (April)

France

Services & Composite PMI (April)

Merchandise Trade (March)

May 5

UK

Services PMI (April)

Asia/Pacific

May 2

Japan

Manufacturing PMI (April)

May 3

China

Manufacturing PMI (April)

May 5

Australia

Retail Sales (March)

Merchandise Trade (March)

May 6

Japan

Services PMI (April)

May 8

China

Merchandise Trade (April)

Americas

May 2

United States

Manufacturing PMI (April)

ISM Manufacturing Index (April)

Construction Spending (March)

May 4

Canada

International Trade (March)

United States

International Trade (March)

Services PMI (April)

ISM Nonmanufacturing Index (April)

Factory Orders (March)

ADP Private Employment (April)

May 5

United States

Initial Unemployment Claims (week ending prior Saturday)

May 6

Canada

Labour Force Survey (April)

United States

Employment Situation (April)

Source: Fidelity

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