Pre-holiday bump
- Small caps lead, but defensive sectors anchor SPX
- Bond yields steady, oil tops $71, gold tops $2,700
- This week: Fed inflation, FOMC minutes, Thanksgiving
Last week US stocks bounced back from their third-biggest down week of the year, despite geopolitical disruptions and a muted reaction to Nvidia’s (NVDA) eagerly anticipated earnings announcement.
The S&P 500 (SPX) gained ground every day last week, shaking off early losses on Tuesday after news that Ukraine had launched US-made missiles into Russian territory for the first time. Overall, the rebound marked a successful test of short-term support defined by the index’s October highs:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)
The headline: Bulls bounce into holiday week.
The fine print: Aside from the relative strength in small-cap stocks, last week’s trading had a cautious undertone, with typically defensive sectors—consumer staples, real estate, and utilities—among the biggest gainers.
The number: 0.5%, NVDA’s gain last Thursday—its third-smallest earnings move since November 2020. The stock followed up with a loss on Friday.
The scorecard: The Russell 2000 (RUT) led the pack and posted its third-best week of the year:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Sector returns: The strongest S&P 500 sectors last week were consumer staples (+3.2%), materials (+3%), and real estate (+2.7%). The weakest sectors were communication services (-0.3%), tech (+1.5%), and consumer discretionary (+1.6%).
Stock movers: Bakkt Holdings (BKKT) +162% to $29.71 on Monday, Alpha & Omega Semiconductor (AOSL) +33% to $40.40 on Thursday. On the downside, Neurogene (NGNE) -43% to $19.82 on Monday, Kura Oncology (KURA) -37% to $10.06 on Thursday.
Futures: January WTI crude oil (CLF5) built on last Monday’s bullish intraday reversal to end the week up $4.32 at $71.24. December gold (GCZ4) rallied every day last week, recovering all of its November 11-15 sell-off and closing Friday up $142.10 for the week at $2,712.20. Week’s biggest gains: November bitcoin (BTCX4) +8.4%, December palladium (PAZ4) +7.8%. Week’s biggest declines: January canola (RSF5) -8.4%, January soybean oil (ZLF5) -8%.
Coming this week
The holiday-shortened week has a busy economic calendar, especially on Wednesday:
●Monday: Chicago Fed National Activity Index
●Tuesday: S&P Case-Shiller Home Price Index, FHFA House Price Index, consumer confidence, new home sales, FOMC minutes
●Wednesday: PCE Price Index, Personal Income and Outlays Report, durable goods orders, Q3 GDP (second estimate), advance wholesale and retail inventories, pending home sales
●Thursday: Thanksgiving (US stock exchanges closed)
●Friday: Chicago Business Barometer, US stock exchanges close early (1 p.m. ET)
This week’s earnings include:
●Monday: Agilent (A), Zoom Video Communications (ZM)
●Tuesday: Analog Devices (ADI), Abercrombie & Fitch (ANF), Best Buy (BBY), Burlington Stores (BURL), Dick's Sporting Goods (DKS), Kohl's (KSS), Macy's (M), J.M. Smucker (SJM), CrowdStrike (CRWD), Dell (DELL), HP (HPQ), Nordstrom (JWN), Urban Outfitters (URBN), Workday (WDAY)
●Wednesday: Patterson Companies (PDCO)
●Friday: Frontline (FRO)
Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.
Wrapping up November
Aside from any surprising news that may emerge, the final days of the month may be pitting a short-term seasonal tendency against the market’s historical performance after big up weeks that are followed by larger-than-average sell-offs, such as the move that unfolded between November 4-15.
“Stocks trim rally” showed that after other swings like these, the SPX closed higher the next week 65% of the time, which means last week’s rally appeared to be following this historical script. But the SPX closed lower the week after that (i.e., this week) 55% of the time. On the other hand, “Holiday prep: The market’s Thanksgiving patterns” showed Thanksgiving week has tended to be more bullish than average for the SPX.
And speaking of the holidays, Morgan Stanley & Co. recently shared their thoughts about Black Friday and the retail sector. While they see “more demand tailwinds than headwinds,” they also think there could be a bigger divide this year between holiday leaders and laggards.1
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1 MorganStanley.com. Black Friday Preview: A Potential Shot in the Arm for Apparel Spending? 11/22/24.