Market challenges highs

  • Stocks post biggest up week since Feb., erase Omicron setback
  • Inflation comes in hot—again
  • This week: Fed meeting, retail sales, PPI

The stock market may not have done much in the middle of last week, but it more than made up for it at the beginning and the end.

The S&P 500 (SPX) posted its biggest up day since March 1 (Tuesday, +2.1%), its biggest two-day gain (+3.3%) of the year—and, despite another elevated inflation report, set a record close on Friday and booked its biggest up week since February:

Chart 1: S&P 500 (SPX), 10/25/21–12/10/21. S&P 500 (SPX) price chart. Two-day surge.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

The headline: Market bounces back despite inflation data.

The fine print: Friday’s Consumer Price Index (CPI) reading was hot—even slightly hotter than the already-heated estimates, with a year-over-year increase of 6.8%. Nonetheless, the SPX closed at 4,712.02, topping its former record close from November 18.

The number: 184,000, the number of weekly jobless claims reported last Thursday—the lowest number since 1969.

The scorecard: The Dow (DJIA) led the market for the second-consecutive week, while the Russell 2000 (RUT) trailed it for the fifth-straight week:

US stock index performance table for week ending 12/10/20. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector roundup: The strongest S&P 500 sectors last week were information technology (+5.6%), energy (+3.6%), and consumer staples (+3.6%). The weakest sectors were consumer discretionary (2.4%), utilities (2.5%), and financials (2.5%).

Highlight reel: Del Taco Restaurants (TACO) +66% to $12.51 on Monday, Trupanion (TRUP) +39% to $155.41 on Tuesday. On the downside, Renren (RENN) -53% to $12.15, Reata Pharmaceuticals (RETA) -47% to $29.11 on Thursday (after failing 38% on Monday).

Futures action: After bouncing to an eight-day high of $73.34/barrel on Thursday, January WTI crude oil (CLF2) closed the week at $71.95. Breakout traders may be keeping closer watch on February gold (GCG2), which ended last week more or less unchanged at $1,783.10 /ounce, well within the confines of a nearly two-week trading range. Biggest up moves: January lumber (LBSF2) +17.9%, January RBOB gasoline (RBF2) +9.9%. Biggest down moves: December VIX (VXZ1) -30.7%, December bitcoin (BTCZ1) -9.7%.

Coming this week

A packed economic calendar features more inflation data, the latest retail sales number, and a Fed announcement:

Tuesday: NFIB Business Optimism Index, Producer Price Index (PPI)
Wednesday: Retail Sales, Import and Export Prices, Business Inventories, NAHB Housing Market Index, Fed interest rate decision
Thursday: Housing Starts and Building Permits, Industrial Production, Capacity Utilization

This week’s earnings include:

Tuesday: CleanSpark (CLSK)
Wednesday: Toro (TTC), Heico (HEI), Lennar (LEN)
Thursday: Accenture (ACN), Adobe (ADBE), FedEx (FDX), Jabil (JBL)
Friday: Darden Restaurants (DRI)

This week’s IPOs include: Fresh Vine Wine (VINE)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Filling in December’s picture

Through Friday, December’s stock-market performance was fairly in step with its historical baseline—despite Omicron-fueled volatility.

The following chart compares the SPX’s performance so far this month with its median December return profile over the past 30 years:1

Chart 3: S&P 500 (SPX): December 2021 vs. 1991–2020 Decembers. Early December rally.

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

The rally so far this month may be bigger than the typical early-December upswing, but it’s still following the broad outline of the intramonth profile. Whether the market also tracks its tendency to pull back in the middle of the month may be dictated by this week’s busy economic calendar—especially Wednesday’s Fed announcement.


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1 All figures reflects S&P 500 (SPX) daily closing prices, 12/31/90–12/31/20. Supporting document available upon request.

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