December starts red, turns green

  • S&P 500 closed week near record high
  • Jobs number blows past estimates, stocks surge
  • This week: The year’s final FOMC meeting

After enjoying its biggest up day in more than a month on Friday, the S&P 500 (SPX) entered the new week not too far removed from its all-time high:

Chart 1: S&P 500 (SPX), 10/30/19–12/6/19. S&P 500 (SPX) price chart. Rebounded from pullback.

Source: Power E*TRADE

That end-of-week up surge followed the release of the November employment report, which crushed estimates for new jobs (266,000 vs. 187,000) and showed unemployment at a 50-year low of 3.5%. The move amounted to an exclamation point on a three-day rebound that reversed a Monday–Tuesday sell-off—the SPX’s biggest pullback in two months—fueled by weak manufacturing data and bearish trade-negotiation headlines.

But while Friday’s rally was enough for the SPX and Russell 2000 (RUT) to notch gains for the week, the Nasdaq 100 (NDX) and Dow Jones Industrial Average (DJIA) posted small losses. Small caps led the market for a second-consecutive week:

US stock index performance table for week ending 12/6/19. 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 energy (+1.5%, credit rising crude oil prices with an assist), health care (+0.93%), and consumer staples (+0.92%). The weakest sectors were industrials (-1.1%), consumer discretionary (-0.8%), and information technology (-0.4%).

Power moves: Biotech stocks rocked and shocked on Tuesday, as Audentes Therapeutics (BOLD) jumped 106% to $58.93, while Cara Therapeutics (CARA) tumbled 35% to $16.94.

Futures action: January WTI crude oil (CLF0) jumped more than 6% last week, and on Friday hit its highest level ($59.85/barrel) since September. February gold (GCG0) ended the week modestly lower (around $1,464/ounce) after a Friday downturn erased Tuesday’s big rally. And despite an intraday downside reversal on Friday, March coffee (KCH0) closed out the week near its 13-month highs, around 125.

Coming this week

Even though everyone expects the Fed to leave interest rates unchanged, Wednesday’s FOMC meeting announcement is the big draw on this week’s economic calendar (there’s always the possibility of a surprise at the post-announcement press conference):

●Tuesday: NFIB small-business index, Productivity

●Wednesday: Consumer Price Index (CPI), FOMC announcement

●Thursday: Producer Price Index (PPI)

●Friday: Retail sales, Import Prices, Business Inventories

This week’s earnings include:

●Monday: Designer Brands (DSW), Toll Brothers (TOL), Chewy (CHWY), Casey's General Stores (CASY), Stitch Fix (SFIX)

●Tuesday: Autozone (AZO), Dave & Buster's (PLAY), Designer Brands (DBI), Ollie's Bargain Outlet (OLLI), Progressive (PGR), Cantel Medical (CMD), HD Supply (HDS)

●Wednesday: Lululemon Athletica Inc (LULU), American Eagle Outfitters Inc (AEO), Children’s Place Inc (PLCE)

●Thursday: Adobe Inc (ADBE), Twist Bioscience Corp (TWST), Ciena Corp (CIEN), Costco Wholesale Corp (COST), Broadcom Inc (AVGO)

●Friday: Oracle Corp (ORCL)

Go to the E*TRADE market calendar (login 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.

Market Mover Update: Roku’s (ROKU) bounce after last Monday’s steep sell-off was enough to drop the cost of the December $100 puts by more than 80% by Friday (see “More than one way for bulls to charge”). RH (RH) has kept the afterburners on the past couple of weeks, gaining more than 23% since November 22 and closing Friday around $242 (see “Covered calls, trading style”).


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