Stocks Losing 'Tug-Of-War' With Rising Rates

US equities pulled back last week despite above expected earnings with concerns rising rates may act as a brake on economy weighing on market sentiment. The SP 500 edged lower 0.01% while the ICE dollar index rose 1.3% for the week.

The SP 500 gained every session last week except Tuesday. It edged up 0.01% Monday. 2 The broad market index dropped 1.3% Tuesday as 10-year Treasury yield hit 3%. It edged up 0.2% Wednesday. The SP 500 recovered 1% Thursday as Facebook’s surge on earnings beat led technology shares rally. SP 500 added 0.1% Friday buoyed by report US economy expanded at a 2.3% annual pace in the first three months of 2018, above the expected 2% growth rate.

The ICE US dollar index rose every session last week except Tuesday and Friday. 3 It gained 0.6% Monday as preliminary readings of Markit’s manufacturing and services purchasing managers’ indexes indicated activities in both sectors expanded in April. The dollar pulled back 0.2% Tuesday. The ICE dollar index rose 0.5% Wednesday and extended gains 0.4% Thursday as durable goods orders climbed 2.6% in March. The dollar index slid 0.1% Friday.

The Federal Reserve and Reserve Bank of Australia policy decisions on Tuesday and Wednesday respectively, and the US nonfarm payrolls report Friday are the top economic events this week. No changes to interest rates are expected, while US payroll likely accelerated in April with the unemployment rate forecast to drop to 4%. Apple, Pfizer, McDonald’s and Adidas are among companies reporting quarterly results this week.