Down, but not out
11/20/17
US stocks remained in something of a holding pattern last week, with the S&P 500 (SPX) dropping to a three-week low on Wednesday before rebounding Thursday—but without enough follow-through on Friday to close out the week with a gain. It was the first time the SPX made a lower weekly high, low, and close since August 14. But even though the broad market posted a slight loss for the week, tech was strong enough for the Nasdaq 100 to eke another record high.
S&P 500 (SPX), December 9, 2016 – November 17, 2017

Source: OptionsHouse

For the week, the SPX fell -0.13%, the Dow Jones Industrial Average (INDU) declined -0.27%, and—for the second week in a row—the Nasdaq 100 (NDX) bucked the trend by gaining 0.09%, joined by the Russell 2000’s (RUT) 1.19% gain (a reflection of how low the small-cap index closed last week rather than its outperformance this week).

The market’s so-so performance contrasted with a spate of almost universally solid U.S. economic numbers. The producer price index (PPI) showed a (welcome) increase in inflation, retail sales were solid, and Industrial Production and housing market numbers on Thursday and Friday were especially good. But the rally on Thursday that temporarily pushed the S&P 500 back into the black for the week was likely driven by the success on the House side of Congress to pass its tax overhaul bill.1 (This story isn’t over: The Senate has yet to finalize its bill and bring it to a vote.)

S&P 500 (SPX), October 9 – November 17, 2017

Source: OptionsHouse

There was some changing of the guard among the hottest and coldest sectors for the week. Aside from tech, the top-performing S&P sectors for the week were Consumer Discretionary (+1.26%), Consumer Staples (+0.97%), and Telecom Services (+0.81%). Telecom sauntered to the bullish side of the Street after spending the past couple of weeks near the bottom of the return pile. Cisco Systems helped out by shooting up more than 5% after releasing earnings on Wednesday.

The S&P 500 sectors bringing up the rear: Energy (-3.38%), Industrials (-1.06%), and Real Estate (-0.85%). Real Estate slumped after being one of the top-performers for a few weeks, while Energy stocks paid the price for a correction in crude oil prices. January crude oil futures (CLF8) tumbled more than 3% (to $55) on Tuesday—more than 5% below the November 8 high of $58.14—before recouping a good portion of those losses on Friday.

January crude oil futures (CLF8), October 2 – November 17, 2017

Source: OptionsHouse

December Euro FX futures (6EZ7) posted one of the other notable moves in that space, making their largest one-day closing gain (+1.2%) since June on Tuesday before consolidating the rest of the week (see Friday’s Active Trader Commentary).

This week brings Thanksgiving, so (barring unexpected events) don’t expect much activity in the markets. U.S. exchanges will be closed Thursday and Friday the market has a shortened trading day. Despite what should be a relatively quiet stretch, there’s a late clump of earnings on Tuesday, while Wednesday’s release of the minutes from the October 30-November 1 FOMC meeting highlights the week’s economic announcements.

Here’s the day-by-day breakdown for earnings: Agilent (A), Beacon Roofing Supply (BECN), Intuit (INTU), Palo Alto Networks (PANW) on Monday; Analog Devices (ADI), Burlington Stores (BURL), Campbell Soup (CPB), Dollar Tree (DLTR), Dycom (DY), Eaton Vance (EV), Lowe's (LOW), Medtronic (MDT), Copart (CPRT), Hewlett Packard Enterprise (HPE), HP (HPQ), and Salesforce (CRM) on Tuesday; Deere (DE) on Wednesday.

This week’s US economic releases: Leading Indicators, last trade date for December crude oil futures (Monday); Existing Home Sales (Tuesday); MBA Mortgage Applications, Durable Goods Orders, Consumer Sentiment, and FOMC Minutes (Wednesday).

 

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1Bloomberg.com. House Passes Tax Bill in First Step Toward Historic Overhaul. 11/16/17.