Mo slows, but market still goes

Entering the last full week of January, the US stock market is still enjoying the tailwinds of one of the hottest starts to a year on record—despite a slowdown in momentum last week.

Even the threat of a government shutdown didn’t derail another up week for the broad market, although the major indexes traded in progressively tighter ranges as the week progressed.

Although it never traded more than 0.1% above the high it established on the first day of the week (Tuesday), the S&P 500 (SPX) hit new intraday and closing highs on Tuesday and Wednesday, stalled Thursday, then eked out marginal new records on Friday—the day with the smallest high-low range of the week:

S&P 500 (SPX), 12/5/17 – 1/19/18

Source: OptionsHouse

The slowing momentum was most evident in the small-cap Russell 2000 (RUT) index, which followed up on its market-leading strength the previous week by trailing the pack last week. A strong rally (+1.33%) on Friday put it back in the black, though. Here’s the scorecard:

● The S&P 500 (SPX) closed up 0.86% last week.

● The Nasdaq 100 (NDX) rallied 1.12%.

● The Russell 200 (RUT) gained 0.32%.

●The Dow Jones Industrial Average (DJIA) gained 1.04%.

The overall slowdown appeared to be accompanied by some minor rotation, with some recently hot sectors falling into the red, and new faces showing greater strength. The top-performing S&P 500 sectors last week were Consumer Staples (+2.4%), Health Care (+1.9%), and Information Technology (+1.5%)—the first two being new entries this past week.

Two of the three worst-performing sectors last week—Energy (-1.3%) and Industrials (-0.9%)—were top returners the week before that, while longtime laggard Utilities (-0.5%) rounded out the bottom. A downturn in crude oil triggered a change in the fortunes of many energy stocks; after approaching $65/barrel at the beginning of the week, March crude oil futures (CLH8) ended the week around $63.4. The Industrial sector was weighed down by a descent in airline stocks, as well as weakness in “industrial conglomerates” (GE, anyone?).

With a bursting schedule of earnings numbers and economic news this week, the market shouldn’t lack for catalysts. Housing figures prominently in this week’s calendar, which also includes Leading Indicators on Thursday and GDP on Friday:

Monday: Chicago Fed National Activity Index.

Wednesday: FHFA House Price Index, Existing Home Sales.

Thursday: International Trade in Goods, Retail Inventories (advance), Wholesale Inventories (advance), New Home Sales, Leading Indicators.

Friday: Durable Goods Orders, GDP.

Earnings this week include more financials, a smattering of blue-chip names, and several airlines (mostly on Thursday). You can find a complete list of earnings and other market events on the E*TRADE market calendar (login required). Here’s a shortlist:

Monday: Halliburton (HAL), Logitech (LOGI), Netflix (NFLX), ResMed (RMD), Wintrust (WTFC), Zions Bancorp (ZION).

Tuesday: Johnson & Johnson (JNJ), Kimberly-Clark (KMB), Procter & Gamble (PG), State Street (STT), Texas Instruments (TXN), United Continental (UAL).

Wednesday: Abbott Labs (ABT), Baker Hughes (BHGE), General Dynamics (GD), General Electric (GE), Grainger (GWW), Illinois Tool (ITW), Northern Trust (NTRS), NVR (NVR), Rockwell Automation (ROK), F5 Networks (FFIV), Ford Motor (F), Lam Research (LRCX), Xilinx (XLNX).

Thursday: 3M (MMM), Alaska Air (ALK), American Airlines (AAL), Biogen (BIIB), Caterpillar (CAT), Fiat Chrysler (FCAU), JetBlue Airways (JBLU), Northrop Grumman (NOC), Raytheon (RTN), Southwest Air (LUV), Union Pacific (UNP), PerkinElmer (PKI), Starbucks (SBUX), SVB Financial Group (SIVB).

Friday: AbbVie (ABBV), Colgate-Palmolive (CL), Gentex (GNTX), Hill-Rom (HRC), Honeywell (HON), Lear (LEA), NextEra Energy (NEE), Rockwell Collins (COL).

For the record, the S&P 500’s 5.11% gain through the first 13 trading days of the year (as of Friday) was its fourth-strongest showing since 1960, and its largest since 1997. The Dow’s 13-day return of 5.47% was its seventh-largest since 1929.


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