S&P 500 closes above potentially key level
05/30/17

Buy in May and go away? That’s the question some traders seemed to ponder over Memorial Day—the unofficial start to the summer season.

The S&P 500 rose 1.4 percent between Friday, May 19, and Friday, May 26. It was the best weekly performance in a month, and marked the first time ever that the index had consecutive closes above the notable 2400 level.

Gains were broad-based, with almost every major sector pushing higher. Tech aficionados cheered as heavyweights Alphabet (NASDAQ: GOOGL) and Amazon (NASDAQ: AMZN) neared $1,000, but transports were also on the move as airlines soared to altitudes last seen before the invasion of Iraq.

That said, it was a pretty ho-hum week in terms of news. The Commerce Department almost doubled its reading of economic growth in the first quarter to 1.2 percent. While that beat the 0.9 percent expected by economists, the surprise wasn’t too great because upward revisions have been pretty much the norm for this report.1 Durable-goods orders and jobless claims were also slightly better than forecast. Yet home sales missed estimates as realtors begged for listings.2

For retailers, it was the best of times and the worst of times. The best of times if your name is Best Buy (NYSE: BBY), which leapt 15 percent after quarterly results thrashed analysts’ expectations.3 That made it the S&P 500’s top gainer on the week. Signet Jewelers (NYSEL SIG), on the other hand, cratered 16 percent on disappointing sales.4

Other big movers included:

  • Intuit (NASDAQ: INTU) rallied 10 percent on the heels of strong earnings.5
  • American Airlines (NASDDAQ: AAL) climbed 8 percent amid potentially bullish options activity.
  • Alexion Pharmaceuticals (NASDAQ: ALXN) dropped 14 percent amid shakeups in senior management.6
  • TripAdvisor (NASDAQ: TRIP) slid 11 percent, continuing its multiyear southern journey.

The action starts slowly this week as investors trickle back from the holiday, but they’ll be glued to their computers as key economic data starts flowing in. Today’s main items are consumer confidence, personal income/spending, and the Case-Shiller home-price index.

Tomorrow brings the Federal Reserve’s Beige Book survey of economic conditions. 

Thursday features ADP’s private-sector payrolls report and weekly oil inventories. (Both were moved from their normal Wednesday slots because of the shortened week.) The Institute for Supply Management’s manufacturing index and initial jobless claims are due as well.

Last but not least, the Labor Department’s closely watched non-farm payrolls report comes out Friday morning. In addition to economic news, biotechnology stocks may be in focus as investors head to Chicago for the American Society of Clinical Oncology’s (ASCO) annual conference June 2-6.

 

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1. Reuters: U.S. economy slowed less than expected in first quarter; outlook cloudier. 5/26/17. RTTNews: U.S. GDP Growth Upwardly Revised More Than Expected In Q4. 3/30/17.

2. Marketwatch: Existing-home sales stall in April as tight supply pushes properties to record low time on the market. 5/24/17.

3. Reuters: Best Buy unexpectedly beats on sales; shares at record peak. 5/25/17.

4. Barron's: The Biggest Loser: Signet Jewelers Tumbles 7.8%. 5/25/17.

5. Marketwatch: Intuit soars on strong earnings, upbeat outlook. 5/23/17.

6. Wall Street Journal: Alexion’s Shakeup Continues as Four Executives Exit. 5/23/17.