Stocks gave up ground in a meaningful way for the first time this year, with the S&P 500 lower by 1.4% to 2,344. Small caps lagged as the Russell 2000 fell 2.65% to 1,355. Bonds were higher, pushing the ten-year treasury yield down to 2.4%. The US Dollar Index fell to 99.44 and a barrel of crude oil declined 2.7% to $47.97.
Q1 2017 earnings growth rate for S&P 500 companies now stands at +9.1%, the highest rate since Q4 2011, when earnings grew +11.6%. Nike (NKE) and FedEx (FDX) were among the companies that reported results last week. NKE beat analysts' EPS estimates, but disappointing futures order growth, especially in North America, soured the results for investors. FDX missed quarterly estimates by a wide margin, but a strong outlook from management boosted shares on the day of the report.
Starbucks (SBUX) held its final Annual Meeting with Howard Schultz as CEO. Incoming CEO Kevin Johnson outlined the growth agenda that he believes will drive the next wave of profitable growth for the company. SBUX plans to invest in coffee, tea, food, digital, China, and partner investments, along with creating 240,000 new jobs globally. IBM (IBM) hosted its cloud conference during week, highlighting three main points regarding its edge in the cloud: enterprise strong, data-first architecture, and cognitive at the core (Watson). Cloud currently accounts for 17% of IBM's total revenue.
Next week, investors will view data related to GDP, pending home sales, and consumer sentiment.