S&P advances to end week at record as Fed signals no rush to normalize policy
The S&P 500 (SPX) ended the week at a record high and all three major averages saw gains for the week. The rebound was definitely fueled by a major advance in the most heavily-weighted tech names, while energy names provided a bit of a drag as oil sold off amid some disappointment in the markets that the deal to extend the duration of OPEC's supply cut agreement didn't also come with a deepening of the cut levels. Along with tech's bounce, the Fed helped pave the way for the rally, as the minutes from the central bank's May meeting were interpreted as dovish and signaling a gradual pace in normalizing monetary policy. MACRO NEWS: In the U.S., the Commerce Department revised U.S. gross domestic product growth to a 1.2% gain in the first quarter from the initially reported 0.7%. Analysts had forecast a smaller bump up to a 0.9% annualized growth rate. The second estimate of Q1 personal consumption growth was raised to 0.6% from the prior 0.3% growth estimate. Durable goods orders for April fell 0.7%, versus expectations for a decline of 1.5%. The final May reading from the University of Michigan consumer sentiment survey inched up to 97.1 from the 97.0 in April, though it was down from the 97.7 preliminary May reading. The FHFA home price index rose 0.6% to 246.2 in March. Existing home sales fell 2.3% in April to a 5.57M home rate, which was a bit worse than expected. Markit's flash composite PMI for May rose to 53.9 from 52.7 in April. The manufacturing and services PMIs were 52.5 and 54.0, respectively, for the preliminary reads, versus April's 52.8 and 53.1. New home sales dropped 11.4% to a 569,000 rate in April, which was a larger than expected decline... In Fed news, minutes from the last Federal Reserve meeting read that most Fed members see the removal of some policy accommodation "soon" and that asset valuation pressure in certain markets were "notable." In addition, the minutes showed that the Fed is discussing a proposed plan for reducing the system's securities holdings in a "gradual and predictable manner"... In Europe, the Eurozone flash manufacturing PMI came in at 57, which was ahead of the consensus 56.5 forecast, while the services flash was 56.2, a bit below 56.4 forecast. The German Ifo institute's business climate index rose to 114.6 in May from 113 in April, beating expectations... In Asia, Japan's flash manufacturing PMI for May slipped to 52 from 52.7 in April. COMPANY NEWS: Ford (F) announced that it has named Jim Hackett as its new president and CEO, replacing Mark Fields, who the company said has elected to retire. Hackett, who was formerly CEO of Steelcase (SCS), has been executive chairman of Ford Smart Mobility since March 2016. Ford gained a bit over 2% on Monday following the announcement... Nokia (NOK) and Apple (AAPL) announced that they have settled all litigation related to their intellectual property dispute and agreed a multi-year patent license. Also, Apple will resume carrying Nokia digital health products in Apple retail and online stores, and Apple and Nokia are exploring future collaboration in digital health initiatives, the companies added. The news gave Nokia shares about a 5% boost on Tuesday... General Motors (GM) slid about 2% on Thursday after Bloomberg reported that owners and leasers of over 705,000 Duramax diesel trucks filed a lawsuit accusing the car maker of using emissions cheating devices in two models from 2011 to 2016. In a statement, GM said that such claims are "baseless" and that it it plans to "vigorously" defend itself... Blackstone (BX) shares advanced nearly 7% on Monday after the asset management giant and the Public Investment Fund of Saudi Arabia announced the execution of a memorandum of understanding in relation to the launch of a new investment vehicle dedicated to infrastructure with an anchor $20B contribution by PIF and $20B to be raised from other investors... Democratic lawmakers, including U.S. Representative from California Maxine Waters, sent a letter to the German lender Deutsche Bank's chief executive officer John Cryan seeking information related to two internal reviews reportedly conducted by the bank: one regarding its 2011 Russian mirror trading scandal and the other regarding its review of the personal accounts of President Donald Trump and his family members held at the bank. The letter said it was "troubling" that Deutsche Bank has refused to disclose or publicly comment on the results of either of its internal reviews... Puma Biotechnology (PBYI) surged after the U.S. FDA Oncologic Drugs Advisory Committee voted in favor of recommending approval of neratinib, its treatment for certain types of breast cancer. M&A NEWS: Huntsman (HUN) announced an agreement to combine with Swiss rival Clariant in an all-stock merger of equals. The merged company, to be named HuntsmanClariant, expects annual sales of approximately $13.2B and to realize more than $3.5B of value creation from approximately $400M in annual cost synergies. Class A shares of Brown-Forman (BF.A) spiked higher for a breif period on Tuesday after CNBC reported that Constellation Brands (STZ) made an approach to purchase the Jack Daniel's maker. Brown-Forman said it was not interested in a sale, however, according to the business news network. Shares of Abercrombie & Fitch (ANF) jumped on Wednesday after the Wall Street Journal reported that Cerberus Capital and American Eagle (AEO) are working on a joint offer for the apparel retailer. According to the report, a "number" of parties continue to be involved in the auction process, including other private equity firms and Express (EXPR). Bloomberg reported that Staples (SPLS) rejected Cerberus Capital's acquisition offer for the company for being too low. EARNINGS: Shares of Best Buy (BBY) surged over 20% higher on Thursday after the electronics retailer reported better than expected earnings and revenue for the first quarter and updated its fiscal 2018 guidance accordingly... On the other side, shares of HP Inc. (HPQ) slipped by more than 3% the same day despite reporting better than expected quarterly results and boosting its earnings guidance for fiscal 2017... Among other companies that announced quarterly results this week, Costco (COST), Sears Holdings (SHLD), PVH Corp. (PVH), Intuit (INTU) and Take-Two Interactive (TTWO) advanced immediately following their reports, while Lowe's (LOW), Tiffany (TIF), DSW (DSW), AutoZone (AZO), Chico's (CHS) and Signet Jewelers (SIG) declined. INDEXES: The Dow gained about 1.3% to close at 21,080.28, the S&P 500 rose about 1.4% to close at 2,415.82, and the Nasdaq advanced about 2% to close at 6,210.19.