Big news, quiet market

  • Fed trims interest rates by 0.25%, stocks wander
  • Crude oil spikes, retreats after attack on Saudi production
  • This week: GDP—and lots of Fed speeches

Go figure.

There was no shortage of potentially market–shaking news last week, including the biggest one-day crude oil rally in a generation and an eagerly anticipated FOMC interest rate announcement, but when the closing bell rang on Friday, the S&P 500 (SPX) had traded within its narrowest weekly range since June, and posted one of its 10 smallest weekly changes of the year:

S&P 500 (SPX), 7/25/19–9/13/19. S&P 500 (SPX) price chart. Hanging around the highs

Source: Power E*TRADE

And despite a downturn on Friday afternoon amid reports a Chinese trade delegation had cut short its US visit,1 the SPX starts the last full week of September just a little more than 1% below its all-time high.

Last Monday crude oil shot to a nearly four-month high and stocks turned lower in the wake of an attack on Saudi oil facilities, but that turned out to be the week’s crescendo: Oil reversed a big portion of the surge the next day, and the SPX spent the next four days ticking higher, taking in Wednesday’s 0.25% rate cut with the trading equivalent of a yawn, despite the usual post-announcement intraday gyrations and evidence of some internal Fed debate.2

All major US indexes ended the week in the red, with the Russell 2000 (RUT) rotating from the top spot to the bottom of the pile:

US stock index performance table for week ending 9/20/19. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source: Power E*TRADE

Sector roundup: The strongest S&P 500 sectors last week were utilities (+2.2%), real estate (+2.1%), and energy (+1%). The weakest sectors were consumer discretionary (-2.2%), industrials (-1.5%), financials (-1%).

Power moves: Some of the week’s most explosive stock moves occurred on Monday, as Alder Biopharmaceuticals (ALDR) soared +84% to $18.5 and Semgroup (SEMG) jumped +60.5% to $16.50. On the other side of the ledger, (OSTK) tumbled -21% to $19.75 on Monday, the biggest chunk of the stock’s -40% slide for the week. After falling -14% on Wednesday, Roku (ROKU) tumbled another -19% to $108.05 on Friday, bringing its weekly loss to -28%.

Futures action: Oil made its biggest one-day jump in nearly three decades on Monday, with November WTI crude oil futures (CLX9) surging more than 16% to $63.89 in the wake of attacks on Saudi oil production facilities. By the end of the week, though, the market had pulled back to around $58.50. December gold (GCZ9) spent most of the week consolidating between $1,500–$1,520/ounce before closing with an upswing on Friday around $1,523.50.

Coming this week

In addition to Thursday’s final revision of Q2 GDP, Durable Goods, and more housing numbers, various Fed officials will be on the speaking warpath. They’ll probably be sticking to their scripts, but you never know when a potentially market–jolting comment will slip through:

Monday: Chicago Fed National Activity Index. Fed speakers: John Williams, James Bullard, Mary Daly

Tuesday: S&P Corelogic Case-Shiller HPI, FHFA House Price Index, Consumer Confidence 

Wednesday: New Home Sales. Fed speakers: Charles Evans, Robert Kaplan

Thursday: GDP, International Trade in Goods, Corporate Profits, Retail Inventories, Wholesale Inventories, Pending Home Sales Index. Fed speakers: Robert Kaplan, James Bullard, Mary Daly, Neel Kashkari

Friday: Durable Goods Orders, Personal Income and Outlays, Consumer Sentiment, Patrick Harker speaks

Earnings this week include:

●Monday: Cantel Medical Corp (CMD)

●Tuesday: Autozone Inc (AZO), Neogen (NEOG), Cintas (CTAS), Carmax (KMX), Nike (NKE), IHS Markit (INFO), Jabil (JBL)

●Wednesday: HB Fuller (FUL), KB Home (KBH)

●Thursday: Accenture (ACN), Conagra Brands (CAG), FactSet Research Systems (FDS), Micron Technology (MU), Carnival (CCL)

Go to the E*TRADE market calendar (logon required) for an up-to-date earnings schedule and a complete list of splits, dividends, IPOs, and economic reports. The Active Trader Commentary also lists earnings announcements, IPOs and economic report times each morning.

It is prudent risk management, in my view, to cut the policy rate aggressively now and then later increase it should the downside risk not materialize.

St. Louis Fed President James Bullard, on why he wanted a larger rate cut last week.3

Bounce pattern. Last week’s SPX loss broke a three-week winning streak. So far this this year, every down week immediately after a three-week or longer SPX winning streak has been followed by an up week.


Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.

1 Fed approves quarter-point rate cut but is divided on further action this year. 9/18/19.

2 The Wall Street Journal. Stocks Turn Lower in Final Day of a Bumpy Week. 9/20/19.

3 Fed’s Bullard: Dissent was due in part to worries about slowing economy. 9/20/19.

What to read next...

Biopharma company’s immunotherapy drug wins key FDA vote, stock swings.

One of this year’s tech “unicorns” looks for room to zoom.

Airline stocks lose and gain altitude as crude oil adjusts to last weekend’s production shock.

Looking to expand your financial knowledge?