- Tech slumps as the US and China engage in tit-for-tat
- Gold tops $1,940/ounce, new record highs
- This week: FOMC, GDP, and earnings overdrive
No summer doldrums here.
Last week the broad market got back into the black for the year (temporarily, anyway), the tech sector continued to slump, US-China tensions re-escalated, the gold market continued to push toward all-time highs, and blockbuster earnings rolled in (get ready for more this week).
The S&P 500 (SPX) managed to spend the first three days of last week up on the year, but a tech-led sell-off the next two days pulled the big index back below its 2020 breakeven point on Friday:
Source: Power E*TRADE
The headline: Tech extends pullback as superpowers renew hostilities.
The fine print: The Thursday-Friday downturn that locked in the Nasdaq 100’s (NDX) first back-to-back losing weeks since the beginning of May (and its biggest pullback since March) unfolded as China retaliated for the US closure of its Houston consulate by shuttering the US consulate in Chengdu.
The number: 1.41 million, the number of new US jobless claims announced last Thursday—more than expected and the first weekly increase since March.
The quote: “The catch-up will be fast, and it’s going to catch people off guard.” Noted analyst Tom DeMark of DeMark Analytics, forecasting the S&P 500 will approach 3,500 before running out of gas.1
The scorecard: The NDX led the market lower last week, but kept its year-to-date return above 20%:
Source (data): Power E*TRADE
Sector roundup: The strongest S&P 500 sectors last week were energy (+2.2%), consumer discretionary (+1.2%), and financials (+1.2%). The weakest sectors were information technology (-1.6%), communication services (-1.3%), and health care (-0.9%).
Highlight reel: On Tuesday personal protective equipment (PPE) maker Owens & Minor (OMI) soared 81% to $14.40, while insurer eHealth (EHTH) slid 31% to $79.17 on Friday.
Futures action: All eyes are on precious metals, as August gold (GCQ0) rallied to new contract highs each day last week, pushed above $1,900/ounce, and closed Friday at $1,897.50 before hitting a new record high early Monday. But silver, platinum and palladium futures all gained more (see below). September WTI crude oil (CLQU) wrapped up a quiet week little changed at $41.29/barrel.
Last week's biggest futures up moves: September silver (SIU0) +16.3%, October platinum (PLV0) +12.4%, September Palladium (PAU0) +10.3%. Last week's biggest futures down moves: August Ethanol (ZKQ0) -3.5%, August milk (DAU0) -3.3%, December Cotton (CTZ0) -3%.
Coming this week
If you thought last week’s earnings lineup was stacked (Microsoft, Tesla, Coke, and Chipotle all topped their headline numbers), get ready for Amazon, Apple, and Alphabet this week—along with heavy hitters from almost every other sector of the market:
●Monday: Crispr Therapeutics (CRSP), Beyond Meat (BYND), F5 Networks (FFIV), NXP Semiconductors (NXPI)
●Tuesday: Advanced Micro Devices (AMD), Rockwell Automation (ROK), Amgen (AMGN), McDonald's (MCD), Starbucks (SBUX), New Oriental Education & Technology (EDU), Grubhub (GRUB), Maxim Integrated Products (MXIM), Martin Marietta (MLM), Pfizer (PFE), Juniper Networks (JNPR), Visa (V)
●Wednesday: Archer-Daniels-Midland (ADM), O'Reilly Automotive (ORLY), Boeing (BA), General Electric (GE), General Dynamics (GD), Teladoc (TDOC), PayPal (PYPL), Qualcomm (QCOM), Qorvo (QRVO), Shopify (SHOP), Spotify (SPOT)
●Thursday: Amazon (AMZN), Alphabet (GOOGL), Apple (AAPL), Eli Lilly (LLY), Dunkin' Brands (DNKN), Baxter (BAX), Yum! Brands (YUM), Ford (F), Procter & Gamble (PG), Kraft Heinz (KHC), Kellogg (K), Gilead Sciences (GILD), Mastercard (MA), First Solar (FSLR)
●Friday: Phillips 66 (PSX), Abbvie (ABBV), Exxon Mobil (XOM), Colgate-Palmolive (CL), Caterpillar (CAT), Chevron (CVX)
A Fed announcement and the initial GDP reading for Q2 headline a loaded economic calendar:
●Monday: Durable Goods Orders
●Tuesday: S&P/Case-Shiller Home Price, Consumer Confidence
●Wednesday: Wholesale Inventories, Trade Balance, Pending Home Sales, FOMC Interest Rate Decision
●Thursday: GDP (Q2 initial)
●Friday: Personal Income and Spending, Employment Cost Index, PCE Price Index, Michigan Consumer Sentiment
Go to the E*TRADE market calendar (login 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.
Market Mover Update: After sliding 9.6% last Thursday, Ballard Power Systems (BLDP) tumbled another 10% intraday on Friday—testing the breakout level noted in “Batteries not included”—before rallying more than 7.5% off its low to close down only 3.4%.
With earnings due out tomorrow, Laboratory Corporation (LH) erased a 2.3% intraday loss on Friday to close up on the day (see “From the Street to the Lab”).
1 Bloomberg.com. Tom DeMark Sees S&P 500 Rallying Toward 3,500 Before Topping Out. 7120/20.