US Stocks Market Overview – Stocks Surge as Q2 Commences, April is Seasonally Strong

US stocks surged out of the starting gates in the Q2, notching up broad based gains. Most sectors were higher led by Financials and Technology, While Utililites and Consumer Staples bucked the trend. US data was mixed on Monday, with stronger than expected ISM Manufacturing data, offsetting weaker than expected retail sales. Before the opening bell, stocks were buoyed by gains in China following a stronger than expected PMI manufacturing report which showed expansion in that space following February’s contractionary results.

Seasonality Points to a Strong April

Seasonality points to higher stock prices in April. Over the past 20-years, the Dow Industrial Average has increased 80% of the time for an average gain of 2.3%. April is generally the best month of the year and on average it it. During the past 5-years, the Dow Industrials has increased 100% of the time with an average gain of 0.6%.

ISM Manufacturing Increased More than Expected

US manufacturing rose more than expected on Monday. The ISM manfacutring PMI rose to 55.3 in March from 54.2 in February. Expectations had been for an increase to 54.4. The employment index rose to 57.5 from 52.3 a month earlier. Expectations called for a reading of 52.4. The new orders index rose to 57.4 from 55.5 in February. The prices paid index rose to 54.3. The production also increased with that index at ticking up to 55.8 from 54.8 the month before.

Construction spending surged to 9-month high

U.S. construction spending increased in February buoyed by increases both private and public construction projects. The Commerce Department reported that construction spending rose 1.0% to a nine-month high after an upwardly revised 2.5% surge in January. Expectations had been for construction spending to decline by 0.2%. Construction spending increased 1.1% on a year-on-year basis in February.

 Retail Sales Disappoints

Retail sales unexpectedly dipped in February by 0.2 compared to expectations that it would increase by 0.2%. January was revised higher to show retail sales increasing 0.7% instead of gaining 0.2% which was previously reported. February retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25.

Energy Shares Rally as Oil Surges

The Energy sector surged higher as oil prices surged 2.3% on Monday is driven by news that OPEC’s oil production in March 2019 fell to its lowest level since February 2015. The impetus for the decline was that Saudi Arabia cut more than it had pledged under the output cut deal and Venezuela continued to struggle amid US sanctions. The combined production of all 14 OPEC members stood at 30.4 million barrels per day last month, down by 280,000 barrels per day compared to February.  Saudi Arabia’s share of the OPEC cuts is 322,000 barrels a day from the October level of 10.633 million, to reduce output to 10.311 million barrels day.