Stocks quiet pre-Fed

06/17/19
  • Stocks post modest gains in range-bound week
  • Latest IPOs got off to solid starts
  • This week: FOMC meeting, housing data

And now, back to work?

After one of its strongest upside bursts of the year, the US stock market seemed to take bit of a siesta ahead of this week’s Fed meeting.

Last week started off strong with a couple of blockbuster mergers and acquisitions: Defense and aerospace powerhouses United Technologies (UTX) and Raytheon (RTN) announced they were joining forces, while sales-management software giant Salesforce.com (CRM) inked a deal to buy data analytics firm Tableau Software (DATA) for $15 billion and change.1

S&P 500 (SPX), 4/23/19–6/14/19. S&P 500 (SPX) price chart. After the surge, a snooze

Source: Power E*TRADE


But strong intraday rallies on Monday and Tuesday shrank to small gains by the close, and mixed trading Wednesday–Friday left the S&P 500 (SPX) toward the middle of the week’s range. What turned out to be the week’s only notable trade-war shot—President Trump’s assertion that he was blocking any trade deal with China until it agreed to uphold terms negotiated earlier this year2—was followed by a slumping market on Wednesday.

There may have been a bit of a domino effect on Friday, with Broadcom’s (AVGO) earnings miss and negative outlook knocking the semiconductor sector for a loop, which in turn weighed on tech, which made it more difficult for the broad market to mount a week-closing rally, although a surge in the final hour of trading came close to wiping out the day’s loss in the SPX.

Here’s where the major US indexes ended the week:

US stock index performance table for week ending 6/14/19. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source: Power E*TRADE


Sector breakdown: The strongest S&P 500 sectors last week were consumer discretionary (+2.6%), communication services (+1.5%), and utilities (+0.6%). The weakest sectors were energy (-0.5%), industrials (-0.2%), and information technology (-0.03%).

Power moves: Beyond Meat (BYND) worked both sides of the volatility street, posting returns of +21%, -25%, and +12.5% from Monday to Wednesday. Tableau Software (DATA) jumped +34% to $167.41 on Monday on the Salesforce.com deal. Dave & Busters (PLAY) dropped -22% to $40 on Wednesday after an earnings miss, while Red Robin Gourmet Burgers (RRGB) surged +31.5% to $33.48 after beating its numbers.

The week’s highest-profile IPOs—CrowdStrike (CRWD), Fiverr (FVRR), and Chewy (CHWY)—all posted solid gains in their debuts.

Futures action: Slumping crude oil jumped on Thursday after oil tanker attacks in the Gulf of Oman stoked supply disruption fears,3 but that still left the August WTI crude oil (CLQ9) down more than 2.5% on the week at around $52.50/barrel

After sliding the first two days of the week, June gold (GCM9) rallied to a nearly four-month high of $1,355.40/ounce on Friday, but reversed intraday to close around $1,340, down slightly for the week.

Coming this week

All eyes will be on Wednesday’s Fed announcement, but don’t overlook the week’s housing data or Leading Indicators:

Monday: Housing Market Index    

Tuesday: Housing Starts, FOMC meeting begins

Wednesday: EIA Petroleum Status Report, FOMC Meeting Announcement

Thursday: Current Account, Leading Indicators

Friday: Existing Home Sales

Earnings this week include:

●Monday: WageWorks (WAGE)

●Tuesday: Adobe Systems (ADBE), Jabil (JBL)

●Wednesday: Winnebago (WGO), Oracle (ORCL)

●Thursday: Darden Restaurants (DRI), Kroger (KR), Canopy Growth (CGC), Red Hat (RHT)

Friday: Carmax (KMX)

Go to the E*TRADE market calendar (logon 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.

Word on the Street

Rate cuts are coming, but not until September.

BTIG’s chief equity and derivatives strategist Julian Emanuel. 4

Fed watch. As this week’s Word on the Street suggests, almost no one expects the Fed to announce a rate cut on Wednesday afternoon. But you can bet everyone will be poring over the document—and the follow-up press conference—for any hints about when, or if, the central bank may take action.

If it sounds like it will be later rather than sooner, traders are likely to express their disappointment by painting the tape red. If there’s language that suggests the opposite, look for shades of green.

Either way, halfway through June, the market will be working from a relatively advantageous spot. The SPX’s 15.16% return as of Friday is the ninth-strongest at this point in the year since 1960.

 

Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.


1 TechCrunch. Salesforce is buying data visualization company Tableau for $15.7B in all-stock deal. 6/10/19.

2 Bloomberg. Trump Says He's Holding Up Trade Deal With China Ahead of G-20. 6/11/19.

3 Reuters. U.S. blames Iran for tanker attacks in Gulf of Oman, oil prices rise. 6/13/19.

4 CNBC.com. ‘Rate cuts are coming, but not until September,’ market bull Julian Emanuel says. 6/11/19.

What to read next...

06/14/19
BYND soars into the Great Beyond—and back—while TSN ups the ante in the faux meat space.

06/13/19
Which stocks are shrugging off trade worries and outpacing the market?

06/12/19
The antitrust story may give swing-trading bulls what they like—multiple buying opportunities.

Looking to expand your financial knowledge?