Pre-holiday pause
- Stock rally loses momentum, retail earnings mixed
- Defensive sectors lead, oil/energy slide, dollar steadies
- This week: Fed minutes, durable goods, consumer sentiment
This week may mark the beginning of the holiday season, but the stock market appeared to get a head start on working in a little down time.
The S&P 500 (SPX) hit a three-month high last Tuesday as the Producer Price Index (PPI) mimicked the previous week’s Consumer Price Index (CPI) with a lower-than-expected inflation reading. But the market subsequently drifted lower, ending the week with a modest loss:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
The headline: Stock market’s “lower-inflation” bump loses some momentum.
The fine print: The October retail sales number was better than expected, but last week’s high-profile retail earnings were mixed. Two examples: Walmart (WMT) shares jumped after the company beat estimates on the back of strong grocery sales, while Target (TGT) sold off after missing its numbers.
The move: After tumbling 8.2% last Wednesday, Bath & Body Works (BBWI) jumped 25% on Thursday after beating earnings.
The scorecard: The Dow Jones Industrial Average (DJIA), which has outperformed the US market much of this year, barely lost a step last week:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Sector roundup: The strongest S&P 500 sectors last week were consumer staples (+1.5%), health care (+0.8%), and utilities (+0.7%). The weakest sectors were consumer discretionary (-3.3%), energy (-2.6%), and real estate (-2.1%).
Stock movers: Sea (SE) +36% to $62.31 on Monday, 4D Molecular Therapeutics (FDMT) +39% to $18.69 on Tuesday. On the downside, 908 Devices (MASS) -22% to $12.48 on Monday, DLocal (DLO) -51% to $10.46 on Wednesday (and +21% to $12.78 on Friday).
Futures: January WTI crude oil (CLF3) slipped early last week, then went into an outright slide Thursday–Friday, falling more than 7% to a low of $78.18/barrel before closing at $80.25—it’s biggest weekly loss in more than two years. December gold (GCZ2) tagged a four-month high of $1791.90/ounce last Tuesday, then pulled back (as the dollar strengthened) to end the week modestly lower at $1,751.20. Week’s biggest up moves: January natural gas (NGF3) +7.9%, November micro bitcoin (MBTX2) +3.1%. Week’s biggest down moves: January WTI crude oil (CLF3) -9.1%, January Brent crude oil (BF3) -8.6%.
Coming this week
Wednesday is the busy day on this week’s holiday-shortened economic calendar:
●Monday: Chicago Fed National Activity Index
●Wednesday: Revised Building Permits, Durable Goods Orders, New Home Sales, Consumer Sentiment, FOMC minutes.
●Thursday: Thanksgiving
●Friday: Early (1 p.m. ET) close for US stock market
This week’s earnings include:
●Monday: Agilent (A), J.M. Smucker (SJM), Zoom (ZM), Dell (DELL), Urban Outfitters (URBN)
●Tuesday: Analog Devices (ADI), Best Buy (BBY), Burlington Stores (BURL), Dick's Sporting Goods (DKS), Dollar Tree (DLTR), HP (HPQ), VMware (VMW), Nordstrom (JWN), Medtronic (MDT), Dycom (DY), Guess (GES)
●Wednesday: Deere (DE)
●Thursday: Thanksgiving
●Friday: Anavex Life Sciences (AVXL)
Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.
Let’s talk turkey
History suggests that while people may like to take time off around Thanksgiving, the stock market isn’t so inclined.
Even though Thanksgiving week consists of only three-and-a-half trading days (the market also closes early on Friday), from 1950–2021 the SPX moved almost as much (+/-1.5%, on average) during Thanksgiving week as it did during its average five-day trading period (+/-1.6%). Also, while the SPX has closed higher on 53% of days since 1950, the days around Thanksgiving have displayed much different tendencies:
1. The SPX closed up the day before Thanksgiving in 55 of 72 years (76% of the time).
2. The SPX closed up the day after Thanksgiving (Black Friday) in 51 years (71% of the time).
3. The SPX closed down the Monday after Thanksgiving in 44 years (61% of the time).1
Last year mostly went against the grain, though: The SPX rallied the day before Thanksgiving, dropped sharply in the shortened Black Friday session (amid the first reports of the Covid omicron variant), and rallied the following Monday.
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1 Reflects S&P 500 (SPX) daily closing prices, 1/2/50–12/31/21. Thanksgiving week range represents the absolute percentage change in the SPX from the Friday before the holiday to the Friday after it. Supporting document available upon request.