Stocks snap streak
- First up week in a month, metals/mining stocks jump
- Oil, gold swing to upside, 10-year yield tops 4%
- This week: Powell testimony, jobs report, factory orders
As traders look ahead to some potentially market-moving economic data and congressional testimony from Federal Reserve Chairman Jerome Powell, stocks will be attempting to build on last week’s late pivot, which snapped the market’s first multi-week losing streak of the year.
After falling to a six-week intraday low last Thursday, the S&P 500 (SPX) reversed to close higher, then followed through with a strong rally on Friday to post its first up week since February 3:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.) Note: It is not possible to directly invest in an index.
The headline: Late surge puts market in plus column for week.
The fine print: Some market watchers noted last Thursday’s turnaround appeared to follow comments from Atlanta Federal President Raphael Bostic, who said he favored 0.25% rate hikes rather than more-aggressive 0.5% increases.1 (His statements came a day after Minneapolis Fed President Neel Kashkari said he would consider a 0.5% hike.) The Fed’s next rate decision is schedule for March 22.
The number: 12, the number of months until Morgan Stanley & Co. analysts expect the Fed to begin cutting interest rates—i.e., March 2024.2
The scorecard: The Nasdaq 100 (NDX) tech index led the market by a fairly wide margin:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Sector returns: The strongest S&P 500 sectors last week were materials (+4%, with particular strength in metals and mining stocks), communication services (+3.3%), and industrials (+3.3%). The weakest sectors were utilities (-0.9%), consumer staples (-0.4%), and health care (+0.5%).
Stock movers: Reata Pharmaceuticals (RETA) +199% to $93.17 on Wednesday (after falling 31% on Monday), C3 AI (AI) +34% to $28.48 on Friday. On the downside, National Vision (EYE) -39% to $22.76 on Wednesday, Silvergate Capital (SI) -58% to $5.72 on Thursday.
Futures: A Friday surge helped April WTI crude oil (CLJ3) end last week at a 13-day high of $79.68/barrel. April gold (GCJ3) rallied more than $35 for the week, closing Friday at $1,854.60/ounce. Week’s biggest up moves: April natural gas (NGJ3) +17.5%, April platinum (PLJ3) +8.5%.Week’s biggest down moves: March VIX (VXH3) -12.1%, May orange juice (OJK3) -8.7%.
Coming this week
Before we get to Friday’s jobs report, Fed Chairman Jerome Powell gives the semiannual monetary policy report to Congress on Tuesday and Wednesday:
●Monday: Factory Orders
●Tuesday: Fed Chair Powell congressional testimony, Wholesale Trade, Consumer Credit
●Wednesday: ADP Employment Change, US Trade Balance, Job Openings and Labor Turnover Survey (JOLTS)
●Thursday: Challenger Job Cuts
●Friday: Employment Report
This week’s earnings include:
●Monday: AeroVironment (AVAV), Domo (DOMO), Intrepid Potash (IPI)
●Tuesday: Children's Place (PLCE), CrowdStrike (CRWD), Casey’s General Stores (CASY), Dick’s Sporting Goods (DKS), Korn Ferry (KFY), Maxeon Solar Technologies (MAXN)
●Wednesday: Campbell Soup (CPB), United Natural Foods (UNFI), Korn Ferry (KFY)
●Thursday: BJ's Wholesale Club (BJ), Ulta Beauty (ULTA), DocuSign (DOCU)
●Friday: Buckle (BKE)
Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.
Last week ended the SPX’s string of three consecutive down weeks—its first multi-week downturn of the year. In fact, only two others in 2022 were longer—the four-week decline that concluded last year and the seven-week losing streak that ended on May 20:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. “Net loss” reflects weekly closing prices.)
The table shows that three weeks has been the most common length for an SPX losing streak since the beginning of last year. But the index’s net decline (-4%) during the most recent one was much smaller than its losses during the other three-week downturns.
But snapping a three-week losing streak didn’t necessarily result in an uninterrupted rally. Three of the previous streaks were followed by only one positive week before the SPX had another down week, while the fourth was followed by just two positive weeks. The week ending June 17, however, marked the index’s lowest low for more than three months.
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1 CNBC.com. Fed minutes show members resolved to keep fighting inflation with rate hikes. 3/3/23.
2 MorganStanley.com. The Fed Versus Economic Resilience. 2/28/23.