Stocks grind to new highs
- S&P 500 sets new records in sixth-straight up week
- Small caps lead, gold tops $2,700, oil retreats
- This week: durable goods, home sales, consumer sentiment
It wasn’t quite a “statement” week from bulls, but the US stock market still managed to buck mild historical odds and post its first six-week winning streak of the year.
And, of course, set some new records. After rallying 0.8% to a new closing high last Monday, the S&P 500 (SPX) didn’t do all that much the remainder of the week, even big banks and other financials got earnings season off to a solid start. But it squeezed in another (marginal) record close on Friday:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)
The headline: New highs amid first wave of earnings.
The fine print: Last week’s economic calendar was fairly light, but two of the higher-profile numbers highlighted continued strength: retail sales topped estimates, while weekly jobless claims came in lower than expected.
The move: Netflix (NFLX) jumped more than 11% on Friday to a new record high after its earnings beat.
The number: 3, the number of months since the last time the benchmark 10-year T-note yield ended consecutive weeks above 4%.
The scorecard: After three weeks of trailing the other indexes, the Russell 2000 (RUT) small cap index led the market last week:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Sector returns: The strongest S&P 500 sectors last week were utilities (+3.4%), real estate (+3%), and financials (+2.4%). The weakest sectors were energy (-2.6%), health care (-0.6%), and communication services (+0.4%).
Stock movers: Longboard Pharmaceuticals (LBPH) +52% to $58.99 on Monday, Oklo (OKLO) +42% to $16.54 on Wednesday (and +16% to $18.23 on Friday). On the downside, Penguin Solutions (PENG) -23% to $15.62 on Wednesday, MGP Ingredients (MGPI) -24% to $61.86 on Friday.
Futures: December WTI crude oil (CLZ4) pulled back last week amid reports that Israel wasn’t planning to target Iranian oil facilities,1 closing Friday at $68.69, down $6.16 for the week. More records for gold—spot prices topped $2,700 for the first time on Friday and December gold (GCZ4) ended the week up $53.70 at a new all-time high of $2,730. Week’s biggest gains: October bitcoin (BTCV4) +8.7%, October ether (ETHV4) +7.8%. Week’s biggest declines: November natural gas (NGX4) -14.1%, December WTI crude oil (CLZ4) -8.1%.
Coming this week
Traders will get a look at durable goods, home sales, and consumer sentiment this week:
●Monday: Leading Economic Indicators Index
●Wednesday: Chicago Fed National Activity Index, S&P Global Manufacturing and Services PMIs (flash), new home sales
●Thursday: existing home sales, Fed Beige Book
●Friday: durable goods orders, consumer sentiment
Tesla (TSLA) will certainly get its share of coverage, but a busy earnings calendar also includes a wide range of high-profile industrial, consumer, airlines, defense, and mining names. Some highlights:
●Monday: Logitech (LOGI), Medpace (MEDP), Wintrust (WTFC)
●Tuesday: Freeport-McMoRan (FCX), Fiserv (FI), GE Aerospace (GE), General Motors (GM), Kimberly-Clark (KMB), Lockheed Martin (LMT), 3M (MMM), Verizon (VZ), Costar (CSGP), Enphase Energy (ENPH), Stride (LRN), Southern Copper (SCCO), Seagate Technology (STX), Texas Instruments (TXN)
●Wednesday: Boeing (BA), General Dynamics (GD), Coca Cola (KO), AT&T (T), International Business Machines (IBM), Lam Research (LRCX), Mattel (MAT), Newmont (NEM), O'Reilly Automotive (ORLY), Impinj (PI), T-Mobile (TMUS), Tesla (TSLA)
●Thursday: American Airlines (AAL), Dow (DOW), Honeywell (HON), Keurig Dr. Pepper (KDP), LKQ Corp Com (LKQ), Southwest Airlines (LUV), MSC Industrial (MSM), Northrop Grumman (NOC), United Parcel Service (UPS), Edwards Lifesciences (EW)
●Friday: AutoNation (AN), Aon (AON), Colgate Palmolive (CL), Centene (CNC)
Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.
Market cycling to cyclicals?
Two weeks ago, Morgan Stanley & Co. strategists upgraded cyclical stocks relative to defensives on the back of September’s strong jobs report and their economists’ expectations for continued Fed rate cuts.2
They noted that while positioning in defensives and quality growth remained extended, their institutional client base was under-positioned in cyclicals—particularly financials, which they saw as a potential opportunity. (Financials were one of the strongest S&P sectors last week.)
Bottom line, a rising-rate, good-news-is-good environment is better for large-cap cyclical stocks than it is for defensive names. But the strategists also advised keeping an eye on earnings, especially for the “Magnificent Seven” stocks: If earnings revisions point to relative strength, they explain, the market may revert back to these names, which could jeopardize the outlook for cyclicals.
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1 AP News. Israel assures US it won’t strike Iranian nuclear or oil sites, US officials say. 10/15/24.
2 MorganStanley.com. Markets Spin Toward Cyclicals. 10/14/24.