Fab Feb

02/18/20
  • Stocks continued to churn out records despite viral volatility
  • Chip stocks help drive tech, Nasdaq 100 YTD gain tops 10%
  • This week: FOMC minutes, PPI, housing numbers

Earnings continued to roll in, the coronavirus made a return visit to the news ticker—and US stocks hit the halfway point of February at fresh all-time highs.

The S&P 500 (SPX) ended last week with a record close that was just below record intraday high it made on Thursday—which was, ironically, the only down day of the week, courtesy of reports of an uptick in coronavirus cases:1

Chart 1: S&P 500 (SPX), 12/31/19–2/14/20. S&P 500 (SPX) price chart. Up more than 4% in Feb.

Source: Power E*TRADE


The headline: New all-time highs for US stocks.

The fine print: Thursday’s intraday stumble showed the coronavirus still has the potential to trip up the stock market, if only temporarily.

The number: 100.9, Friday’s Consumer Sentiment number, which blew past the 99.7 estimate, and topped last month’s 99.8 reading.    

The move: +8.9%, chipmaker Nvidia’s (NVDA) Friday rally to a new all-time high of $294.97. The PHLX Semiconductor Index (SOX) hit a new record high the same day.

The quote: “Interest rates aren’t going up under his watch without more inflation and that is music to the stock market’s ears.” MUFG Union Bank chief financial economist Chris Rupkey, commenting on Fed Chairman Jerome Powell’s testimony before congress last week.2

The scorecard: The Nasdaq 100 (100) pushed its YTD percentage return to double digits, while the Russell 2000 (RUT) got back into the green for the year:

US stock index performance table for week ending 2/14/20. 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 real estate (+4.7%), consumer discretionary (+2.6%), and utilities (+2.4%). The weakest sectors were energy (+0.3%), financials (+0.7%), and materials (+0.7%).

Highlight reel: Sprint (S) exploded 77.5% to $8.52 on Tuesday after a judge ruled in favor of the company’s merger with T-Mobile (TMUS). On the downside, CarGurus (CARG) slid 27% to 25.05 on Friday.

Futures action: March WTI crude oil (CLH0) started last week with another probe below the $50/barrel threshold, but it then marched higher to close Friday around $52—it’s first weekly gain in a month. Thursday’s coronavirus headlines reversed a two-day slump for April gold (GCJ0), which closed around $1,587/ounce on Friday, up more than $13 for the week.

Last week's biggest futures up moves: March coffee (KCH0) +10.9%, February bitcoin (BTCG0) +6.6%, and March Palladium (PAH0) +5.6%. Last week's biggest futures down moves: March VIX (VIH0) -4.8%, April hogs (LHJ0) -2.9%, and March wheat (ZWH0) -2.9%.

Coming this week

FOMC meeting minutes come out Wednesday—always good for getting a little Street chatter going—along with PPI and the month’s first housing numbers:

●Tuesday: NY Empire State Manufacturing Index, NAHB Housing Market Index,,   

●Wednesday: Producer Price Index (PPI), Housing Starts and Building Permits, FOMC minutes

●Thursday: Philadelphia Fed Manufacturing Survey   

●Friday: Existing Home Sales  

Earnings this week include:

●Tuesday: Verisk Analytics (VRSK), Advance Auto Parts (AAP), Agilent Technologies (A), Vulcan Materials (VMC), Walmart (WMT), NetEase (NTES), Medtronic PLC (MDT)

●Wednesday: Analog Devices (ADI), BioTelemetry (BEAT), Hyatt Hotels (H), Progressive (PGR), Mosaic (MOS)

●Thursday: American Electric Power Company (AEP), Norwegian Cruise Line (NCLH), Pilgrim's Pride (PPC), Dropbox (DBX), Fastly (FSLY), ViacomCBS (VIACA)

●Friday: Berkshire Hathaway (BRKB), Deere (DE)

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.

February halftime report. It didn’t hurt that the market’s most recent pullback happened to bottom on exactly January 31, but February has been quite the month for US stocks so far: Only two down days out of 10, and a 4.8% gain as of Friday that ranks as the fourth-strongest start to the month since 1960.

So is it ironic or just coincidental that historically, the four days after Presidents Day weekend have tended to be so-so for stocks? Since 1971, the four days after Presidents Day weekend haven’t been particularly bullish: Only Tuesday (today) and Friday closed up more often than they closed down, and only Friday had a more than “meh” average return (+0.2%). Wednesday and Thursday both had negative returns, on average, and closed up just 39% and 41% of the time, respectively.

 

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1 CNN.com. Coronavirus cases spike as China sacks senior officials. 2/13/20.

2 CNBC.com. Powell stresses that Fed is ‘closely monitoring’ coronavirus for hit to China and the world. 2/11/20.

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