Last week could cause traders to question bull market’s mojo

Is the bull market losing its mojo? 

Not only is the S&P 500 below its 50-day moving average for the first time since November. It also just chalked up consecutive losing weeks for the first time since mid-January. All told, the index slid 1.1 percent between Friday, April 7, and Thursday, April 13. (There was no trading on the 14th in observance of Good Friday.) 

The mix of price action was potentially bearish because sectors usually associated with economic optimism and confidence took a tumble: Financials and transports fell almost 3 percent, while materials, industrials, and energy shed roughly 2 percent. On the flip-side, what many consider traditional safe-havens – real-estate investment trusts and utilities – rose more than half a percent.

Market reports and economic headlines offered little explanation for the weakness. After all, the first batch of earnings from major banks like JPMorgan Chase (NYSE: JPM) and Citigroup (NYSE: C) were mostly positive. Jobless claims remained lower than forecast and consumer sentiment continued its advance to multiyear highs.1 Even energy had rays of sunshine as the crude-oil glut eased and Saudi wells cut production.2

But turn away from the business pages, and the news wasn’t as cheery. Tensions mounted between the U.S., Russia, Iran, North Korea, and even Afghanistan. Washington pundits worried that President Trump will struggle to pass the tax cuts and infrastructure bills that some investors hoped would boost growth.3 Then you also have the rise of anti-European Union politicians in France…4

But let’s get back on the S&P.  Whole Foods Market (NASDAQ: WFM) was the index’s top performing company, surging almost 10 percent after activist investor Jana Partners amassed nearly one-tenth of the shares. Cosmetics company Coty (NYSE: COTY) and computer maker HP (NYSE: HPQ) followed with gains of about 5 percent.

S&P 500 6-month chart

Source: OptionsHouse by E*TRADE

Industrial supply company Fastenal (NASDAQ: FAST) and farm-equipment seller Tractor Supply (NASDAQ: TSCO) led to the downside on the heels of mixed results. Both fell about 9 percent.

This week brings housing news and a lot more earnings. Here are some highlights:

  • Today: NAHB’s homebuilder index and the New York Federal Reserve’s Empire Index. Netflix (NASDAQ: NFLX) reports quarterly results tonight.
  • Tuesday: Housing starts and building permits. Earnings from blue chips like Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), and Johnson & Johnson (NYSE: JNJ).
  • Wednesday: Oil inventories, Fed’s Beige Book. Earnings from US Bancorp (NYSE: USB), Textron (NYSE: TXT), Qualcomm (NASDAQ: QCOM), American Express (NYSE: AXP), and eBay (NASDAQ: EBAY).
  • Thursday: Jobless claims, Philadelphia Fed’s index. Earnings from Verizon Communications (NYSE: VZ) and Travelers (NYSE: TRV).
  • Friday: Existing home sales. Earnings from General Electric (NYSE: GE), Honeywell (NYSE: HON), and Schlumberger (NYSE: SLB).

One final note about last week: Despite the S&P’s bigger drop, only a handful of companies made new 52-week lows. They were cereal-maker General Mills (NYSE: GIS), automaker Ford Motor (NYSE: F), and car-parts retailer Autozone (NYSE: AZO). As cited recently, it seems autos just can't catch a break.

1. RTT News: U.S. Weekly Jobless Claims Unexpectedly Edge Down to 234,000. 4/13/17. Consumer sentiment improves in April. 4/13/17.

2. EIA reports first weekly U.S. crude-oil supply decline in a month. 4/12/17. Bloomberg: Saudi Arabia Said to Cut Oil Output to Lowest Since January. 4/11/17.

3. The Washington Times: Trump's legislative agenda mired in fractured Congress. 4/10/17.

4. The Economist: The nightmare option: What if the French second round pits Melenchon against Le Pen? 4/11/17.