Test time for the market

03/04/19
  • Tech leads market to close out February
  • Market unmoved by Powell and Cohen testimony, US–North Korea meeting
  • Jobs report due out this Friday

Despite a boatload of potentially market-rocking news, the US stock market traded quietly last week, consolidating near its October–December 2018 highs.

The week kicked off with President Trump extending the China tariff deadline, followed by two days of Fed Chairman Jerome Powell answering questions on Capitol Hill (along with Wednesday’s long-anticipated congressional testimony from former Trump attorney Michael Cohen). Thursday brought a solid GDP number (+2.6%) but the unexpected collapse of the US-North Korean summit, while Friday’s economic data showed softer-than-expected manufacturing growth.

S&P 500 (SPX), 11/29/18–2/22/19. S&P 500 (SPX) price chart. Hovering near resistance.

Source: Power E*TRADE


When all was said and done, though, the S&P 500 (SPX) never gained or lost more than 0.27% on any of the first four days of the week, and despite a Tuesday-Thursday losing streak, Friday's solid rally (+0.7%) put the index in the green for the week.

Tech stocks were the strongest area of the market (see “Tech’s turn?”), with the Nasdaq 100 (NDX) leading the major US indexes and holding steady at second place for the year:

US stock index performance table for week ending 3/1/19. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Power E*TRADE


Sector action: The top-performing S&P 500 sectors were energy (+1.1%), information technology (+1%), and financials (+0.8%). The worst-performing sectors were materials (-1.6%), real estate (-1.2%), and consumer staples (-0.4%).

Highlight reel: As they have several times in recent weeks, Biotechs elbowed their way into the momentum spotlight. Spark Therapeutics (ONCE) exploded +120% on Monday on news it was being acquired by Roche Holding AG. Fellow gene-therapy company CRSPR Therapeutics (CRSP) jumped 25% the same day on the announcement it had treated its first human patient in a clinical trial (see “The (gene) fix is in”). On the downside, cloud computing company Nutanix NTNX took a -33% hit on Friday after issuing weak forward guidance.

Futures watch: Sharp down days on Monday and Friday left April WTI crude oil (CLJ9) toward the bottom on its recent consolidation, around $55.75/barrel. A Wednesday–Friday downturn dropped April gold (GCJ9) to around $1,293/ounce at the end of the week. And despite a minor Thursday-Friday pullback, March British pound futures (6BH9) ended last week not too far removed from their highest levels of the past few months (around 1.322)—despite the ongoing Brexit saga.

Coming this week

Friday’s jobs report is the big dog on this week’s economic calendar:                                                       

Monday: Construction Spending            

Tuesday: PMI Services Index, New Home Sales, ISM Non-Manufacturing Index

Wednesday: International Trade, Beige Book

Thursday: Productivity and Costs, Consumer Credit

Friday: Employment Situation, Housing Starts   

Some big-time retail names are on the week’s earnings schedule:

Monday: Ascena Retail Group (ASNA), Ctrip (CTRP), HUYA (HUYA), Salesforce (CRM)

Tuesday: Ciena (CIEN), Kohl's (KSS), Target (TGT), Weibo (WB), Fate Therapeutics (FATE), Ross Stores (ROST), Urban Outfitters (URBN)

Wednesday: Baozun (BZUN), Dollar Tree (DLTR), Syneos Health (SYNH), Casey's General (CASY), SailPoint (SAIL)

Thursday: Burlington Stores (BURL), H&R Block (HRB), Intl Game Tech (IGT), Kroger (KR), Costco (COST), Marvell (MRVL), United Natural Foods (UNFI)

Friday: Big Lots (BIG), Tenneco (TEN), Vail Resorts (MTN)

Go to the E*TRADE market calendar (logon required) for an up-to-date earnings schedule, along with a complete list of splits, dividends, IPOs, economic reports, and other market events. The Active Trader Commentary also lists earnings announcements and economic report times every morning.

The starch in March. Friday’s rally was in keeping with March kicking off to the upside. While the “Tides of March” outlined the month’s relatively consistent long-time bullish history, it’s also arriving after one of the strongest January-February runs in years, and as the SPX is hanging around the top of a nearly 20% rally off the December bottom.

 

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What to read next...

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