Market asks if honeymoon is over

Is the honeymoon over? Some traders may be asking that question today.

After all, the S&P 500 dropped 0.6 percent between Friday, August 11, and Friday, August 18. Combined with a selloff the previous five days, investors are now looking at the worst two-week performance since the November elections. 

Politics took center stage again as business leaders and Senate Republicans distanced themselves from President Trump. That dimmed prospects for major infrastructure spending and tax cuts. It also raised some potentially ominous flags about Washington's ability to navigate debt-ceiling talks next month.

Investors responded by taking refuge in safe-havens like utilities, while dumping riskier sectors like energy, consumer discretionaries, and industrials. Seven stocks in the S&P 500 fell at least 10 percent, while not a single company managed a double-digit advance.

Retail led the carnage as traditional brick-and-mortar names continued their descent. Footlocker (NYSE: FL) lost almost one-third of its value after profit missed estimates by a country mile and management warned that tough times will continue through the holidays.1 Related names like Coach (NYSE: COH), Advance Auto Parts (NYSE: AAP), and L Brands (NYSE: LB) were also down big on the heels of weak results. 

S&P 500, 2/7/17 - 8/18/17

Source: OptionsHouse by E*TRADE

Micron (NASDAQ: MU) was the best performer, up 8 percent as buyers returned to the past year's No. 2 tech stock. Deutsche Bank upgraded casino operator Wynn Resorts (NASDAQ: WYNN), contributing to a 7 percent gain.2

Turning back to the S&P 500, chart watchers were abuzz with technical levels as the index slid back below its 50-day moving average for the second time this month. Buyers have clung to that line like a warm security blanket all year. Will it hold? Others simply shrugged at the U.S. and kept their focus on global stocks—especially high-flying Chinese tech names like Alibaba (NASDAQ: BABA) and Weibo (NASDAQ: WB).

Economic data was mostly a non-event last week, and remains pretty quiet as investors head out for summer vacation. The first noteworthy event is likely to be earnings tomorrow night from cloud darling (NASDAQ: CRM). Wednesday brings oil inventories, new-home sales, and results from home-improvement chain Lowe's (NYSE: LOW). 

Initial jobless claims and existing home sales follow Thursday morning. Federal Reserve officials also begin their annual symposium in Jackson Hole, Wyoming, while chipmaker Broadcom (NASDAQ: AVGO) and software provider Autodesk (NASDAQ: ADSK) issue their numbers in the afternoon. Friday's big items will be durable-goods orders and a speech by Fed Chair Janet Yellen.


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1. Marketwatch: Foot Locker shares tumble 15% after profit and sales fall short of estimates. 8/18/17.

2. Benzinga: VIP Strength Leads Deutsche Bank To Upgrade Wynn To Buy. 8/15/17.