Market fights through Istanbul instability

Last week was a trader’s market—back and forth, up and down. And in the end, mostly up.

Jitters about Turkey’s financial crisis gave the market a couple of jolts, some high-profile earnings beats helped fuel bullish sentiment on other days, and a Thursday-Friday rally left the S&P 500 (SPX) at its highest weekly closing price since—believe it or not—the January 26 all-time high.

Large-cap stocks fared best. The SPX and the Dow Jones Industrial Average (DJIA) ended the week with solid gains, small caps gained more modestly, and tech gave back a little ground.

S&P 500 (SPX), 5/18/18 – 8/17/18. S&P 500 (SPX) daily price chart. In the range.

Source: OptionsHouse

Concerns about Turkey’s financial crisis seemed to weigh on the market on Monday, and especially on Wednesday, when the market was on track for its worst day in several weeks before rebounding to cut its losses by the end of the day. The SPX pulled back to support (the lower boundary of an emerging trading range) while the Nasdaq 100 (NDX) returned to the uptrend line defined by its swing lows over the past few months.

But the long-quiet Dow was the week’s star, getting a big assist from Wal-Mart’s (WMT) blockbuster earnings report and rally on Thursday, which contributed to the Blue Chip Index’s 396-point (1.58%) gain—it’s biggest day since April 10.

Here’s how the major US stock gauges fared for the week:

Index comparison table for week ending August 17, 2018. S&P 500, Nasdaq 100, Russell 2000, Dow Jones Industrial Average.

Source: OptionsHouse (data)

Sector action: Punctuating a roughly three-month attempt to climb out of the basement, telecom services (+3.7) was the week’s strongest S&P 500 sector, followed by consumer staples (+3.2%) and real estate (+2.9%). The week’s worst-performing sectors were energy (-3.6%, second week in a row at the bottom), materials (-0.5%), and consumer discretionary (-0.2%).

Highlight reel: A couple of big retail stocks made big noises last week. Macy’s (M) jumped more than 4% to a record high on Tuesday, dropped more than 14% on Wednesday—after beating its headline earnings and revenue numbers (worries about tight profit margins?1)—and then bounced back 2.5% on Thursday-Friday.

Wal-Mart (WMT) gained nearly 10% on Thursday after an earnings release that showed its best sales growth in a decade.2 The stock topped $100 intraday for the first time since February 16.

Also, the Tesla (TSLA) saga continued, with the stock dropping around 9% on Friday after the publication of a New York Times interview with CEO Elon Musk.

Wednesday’s Turkey talk seemed to generate a “risk-off” mood in commodities, too, with September WTI crude oil futures (CLU8) dropping more than 3% to below $65/barrel, and December gold (GCZ8) falling below $1,200/ounce. Copper (HG) took one of the biggest hits, breaking below support for a 3.7% loss—and that came on the heels of Tuesday’s 1.9% drop.

The week ahead: This week’s economic calendar starts out slow (nothing of note on Monday and Tuesday), but builds momentum with FOMC minutes, more housing numbers, and the annual Jackson Hole economic pow-wow, which is often good for some big financial headlines:

Wednesday: Existing Home Sales, FOMC minutes

Thursday: FHFA House Price Index, New Home Sales, Jackson Hole Annual Economic Symposium 

Friday: Durable Goods Orders, Jackson Hole Annual Economic Symposium

Like last week, several big names (especially retail) are scattered throughout this week’s earnings calendar:

Monday: Estee Lauder (EL), Fabrinet (FN)

Tuesday: DSW (DSW), J.M. Smucker (SJM), Kohl's (KSS),

Medtronic (MDT), TJX (TJX), Jack Henry (JKHY), Keysight (KEYS), Myriad Genetics (MYGN),

Urban Outfitters (URBN)

Wednesday: Analog Devices (ADI), Lowe's (LOW), Momo (MOMO), Royal Bank of Canada (RY), Target (TGT), Huazhu Group (HTHT), L Brands (LB), Williams-Sonoma (WSM), Zayo Group Holdings (ZAYO)

Thursday: Alibaba (BABA), Dollar Tree (DLTR), Hormel Foods (HRL), Sanderson Farms (SAFM), Autodesk (ADSK), Gap (GPS), HP (HPQ), Intuit (INTU), Ross Stores (ROST), Splunk (SPLK), VMware (VMW)

Friday: Big Lots (BIG), Foot Locker (FL)

Go to the E*TRADE market calendar (logon required) for an up-to-date schedule, along with a complete list of splits, dividends, IPOs, economic reports and other market events.

Milestone ahead? Everyone may not agree with the analysis, but some market watchers are citing this week as marking the longest bull market in US history. Specifically, on Wednesday (August 22), the SPX will—if you start counting from March 6, 2009—set a new record for bull market longevity.3

Although some may quibble with the starting point (certainly the market was not widely perceived on March 7, 2009 as suddenly being in a bull market), it’s been impressive run. As of Friday, the SPX was up around 328% from its March 2009 low of 666.80.

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1 Cincinnati Business Courier. Analysts: Here's why Macy's saw largest single-day drop in a year-plus. 8/16/18.

2 Reuters. Walmart posts biggest U.S. sales rise in a decade, shares soar. 8/16/18.

3 The stock market is about to make history. 8/15/18.