Neighbors, the Seth Rogen flick about family versus frat, opens this week–and could bring in the big bucks. Box Office Mojo predicts the film could bring in $41 million in theaters this weekend and take the top spot from the Amazing Spider Man 2, whose audience isn’t supposed to be very, um, sticky. Neighbors should get a big boost from the reviews that lean heavily towards the positive. The Los Angeles Times’ Betsy Sharkey likes the film to “Animal House on steroids” that “exposes the considerable angst of emerging adulthood.” The Seattle Times’ Moira Macdonald says the “most shocking thing about the hard-R comedy Neighbors is that — surprise — it's actually rather endearing.” Rolling Stones’ Peter Travers says, “You expect hardcore hilarity from Neighbors, and you get it. It’s the nuance that sneaks up on you.”
Universal/Everett There’s a lot of nuance in the stock market this week too. While the Dow Jones Industrial Average gained 0.4% to 16,583.34 this week, a record high, the S&P 500 ticked down 0.1% to 1,878.48. And that loss was nothing compared to the one in the Nasdaq Composite, which fell 1.3% to 4,071.87, or the Russell 2000, which declined 1.9% to 1,107.22. The iShares MSCI Emerging Markets ETF (EEM) was little changed this week. The 10-year Treasury yield rose 0.032% to 2.621%.
Visa (V) gained 3.1% to $210.81 this week, making it the biggest winner in the Dow Jones Industrial Average. Investors seem to have gotten over the risk posed to Visa by Russia.
Over in the S&P 500, the surge in Electronic Arts (EA), which creamed earnings forecasts, was offset by plunge in Whole Foods Markets (WFM), which is feeling the heat from competition that’s impacting its bottom line. Electronic Arts gained 23% to $35.12, while Whole Foods Market fell 21% to $39.32.
The Nasdaq was hit hard by big losses in Tesla Motors (TSLA), which dropped 14% to $182.26 despite beating earnings forecasts on concerns about higher costs, and Wynn Resorts (WYNN), which fell 9.6% to $200.49 on worries that China would crack down on money laundering in Macau.
Bespoke Investment Group marvels at the continued strength of the S&P 500:
The S&P 500 is well above the lows that it made in early February, and this week it tested and held its 50-day moving average multiple times. The resilience of the S&P throughout this period of carnage for momentum names has been a thing to behold, and we think the argument that this is a sign of underlying stability holds just as much weight as the argument that the weakness in momentum will eventually spill over to the broad market.
Citigroup’s Tobias Levkovich considers one of the reasons for continued large-cap outperformance: Easing lending standards from big firms. He writes:
The Federal Reserve Board's senior loan officers' survey continues to support the domestic growth argument. The April survey results were released earlier this week and the trend of easing standards has been maintained, thereby lowering the cost of capital for businesses to use as hurdle rates for determining investment programs…
The better situation for larger firm financing provides another reason for large cap outperformance. Valuation and statistically driven correlated lead economic indicators not to mention high yield credit spreads already have been signaling a shift to large caps. But eased lending standards for larger firms appear to favor larger entities relative stock price performance patterns as well.
Societe Generale’s Benoit Anne thinks it’s time to get bullish on emerging markets. He explains:
Exactly one year ago, we made a call on "the end of the bull market in EM". We now believe that it is time to turn outright bullish again on global emerging markets (GEM). In fact, we have already been constructive on EM for some time. By late February, we decided that the Doom phase was now over, and in late March, we turned outright bullish on EM fixed income, having been already bullish on hard-currency debt. We now stand ready to extend our bullish call to all EM asset classes. This GEM rally has more legs to go, to be measured in months, and not simply in just a couple of weeks…
Who’s jumping on the emerging-market bandwagon?
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