Market picks up where it left off
01/07/19

●US market closes out first week of 2019 in the plus column

●Stocks swing to mixed economic, corporate data

●Fed meeting minutes scheduled for Wednesday


 

The Year of the Trader? Well, at least the Week of the Trader.

It may have marked the end of one year and the beginning of another, but last week was a pretty seamless transition for the US stock market, which made it clear that 2018’s volatility wasn’t gone just because the calendar had flipped to a new page.

The fireworks started immediately, with the S&P 500 (SPX) dropping -1.6% early on January 2 (weak manufacturing data out of China as well as the US), only to fight back and end the day in the plus column.

S&P 500 (SPX), 12/7/18–1/4/19. S&P 500 (SPX) price chart. The blow-by-blow.

Source: Power E*TRADE


That bullish sentiment swing didn’t last long, though, because a pessimistic outlook released by Apple (AAPL) after the market closed morphed into a -2.5% SPX sell-off—and a -3.4% drop by the Nasdaq 100 (NDX)—on Thursday. Cue up the “Global economic worries” headlines.

But true to form, the market ended the week with another U-turn, with the SPX rebounding 3.4% on Friday amid an estimate-beating new jobs tally for December (+312,000 vs. +180,000), and comments from Federal Reverse Chairman Jerome Powell that the Fed may proceed cautiously on interest rate hikes.1

Here’s how the major US indexes stacked up:

US stock index performance table for week ending 1/4/19. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source: Power E*TRADE


Sector action: The top-performing S&P 500 sectors were energy (+4.9%), communications services (+3.9%), and consumer discretionary (+3.2%). The worst-performing sectors were real estate (-0.8%), utilities (-0.4%), and information technology (-0.1%).

Highlight reel: Apple’s 10% drop on Thursday wasn’t the biggest down move of the week, but given its impact on the wider market, it was likely the most notable one. (The stock rebounded 4.3% on Friday.) Airlines stocks also got hit hard on Thursday, including American Airlines (AAL), which lost 9%.

But it wasn’t all red that day: Biopharma company Celgene (CELG) jumped more than 30% on news it was being scooped up by Bristol Meyers Squibb (BMY) in a $74 billion deal,2 ultimately settling for a 21% gain. Dunkin’ Brands (DNKN) also bucked the downturn, rallying as much as 5% intraday and following up with a 1.6% gain on Friday.

Futures watch: February WTI crude oil futures (CLG9) ratcheted higher every day last week (including a rebound from a -3% intraday loss on Wednesday), ending the week at a 10-day high above $48/barrel.

On Friday, February gold (GCG9) hit $1,300/ounce for the first time since last June before closing around $1,286.50.

Coffee continued to be decaffeinated, consolidating near its long-term lows around 100. March coffee futures (KCH9) ended the week at 101.60.

The week ahead

The release of the minutes of the most recent FOMC meeting jumps out on this week’s economic calendar:

Monday: Factory Orders, ISM Non-Manufacturing Index

Tuesday: NFIB Small Business Optimism Index, International Trade, JOLTS, Consumer Credit

Wednesday: FOMC Minutes

Thursday: Wholesale Trade         

Friday: CPI                

Earnings this week include:

Monday: Commercial Metals (CMC)

Tuesday: SMART Global (SGH)

Wednesday: Constellation Brands (STZ), Lennar (LEN), Bed Bath & Beyond (BBBY), KB Home (KBH), Progress Software (PRGS), WD-40 (WDFC),

Thursday: Delta Air Lines (DAL), Synnex (SNX)

Friday: Aphria (APHA)

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 day.

A small step for small caps: True, we’re only three trading days into 2019, but last year’s biggest index loser, the small-cap Russell 2000 (RUT, -12.2%), paced the US market to the upside last week.

 

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1 CNBC.com. Dow surges 750 points after Powell comments, blowout jobs report. 1/4/19.

2 Reuters: Factbox - Bristol-Myers' $74 billion Celgene buy has investors looking for next deal. 1/3/19.