S&P 500 barely stirs last week, still near highs
05/15/17

Sure there were a few big movers last week, but overall it was pretty darned quiet.

The S&P 500 fell 0.35 percent between Friday, May 5, and Friday, May 12 – its smallest move in over a month. The index continued to flirt with all-time highs while the CBOE’s fear-tracking volatility index burrowed into depths last seen in 2006.

Maybe there weren’t enough catalysts. Not only did the pace of economic news slow from the previous week, but the market headlines that did emerge presented few surprises. Jobless claims still at multigenerational lows? Check.1 Inflation still calm? Check. Consumers still optimistic but not actively shopping? Check.2

In another example of “the more things change, the more they stay the same,” technology once again led the market with a weekly advance of almost 1 percent. It’s the best-performing sector by far on a year-to-date basis, partially thanks to the unstoppable force of nature known as Apple (NASDAQ: AAPL).

S&P 500 6-month chart

Source: OptionsHouse by E*TRADE

Technology also featured two of the week’s three-biggest percentage gainers. Chipmaker Nvidia (NASDAQ: NVDA) topped the rankings with a 23 percent surge, and video-game maker Electronic Arts (NASDAQ: EA) popped 14 percent. Consumer-products company Newell Brands (NYSE: NWL) rose a similar amount. All three rallied on the heels of strong quarterly reports.

Materials and financials led to the downside on a sector basis with drops of 1-2 percent. But the real pain occurred at the granular industry-level in retail. Macy’s (NYSE: M) tanked 19 percent, Nordstrom (NYSE: JWN) slid 16 percent, and Kohl’s (NYSE: KSS) fell 9 percent. Experts cautioned the exodus of shoppers away from traditional brick-and-mortar stores isn’t done yet.3

Some options traders still managed to ring the register by snapping up short-term puts in J.C. Penney (NYSE: JCP) on Monday. JCP, which was booted from the S&P three years ago, cratered to new all-time lows on Friday and those puts more than tripled in value.

JC Penney (JCP), 3-month chart

Source: OptionsHouse by E*TRADE

Call buyers also nailed a rally in Petrobras (NYSE: PBR), racking up gains of more than 400 percent after the Brazilian oil giant shot higher on strong earnings. And speaking of Brazil, last week saw continued strength in foreign stocks. S&P’s Global 100 index is now up 3 percent so far this quarter, almost triple the gain of the domestically focused 500.

Themes on the forward calendar include housing and more retail numbers. The New York Federal Reserve’s Empire manufacturing index and NAHB’s homebuilder-sentiment report are due today. Tomorrow features Home Depot (NYSE: HD) results, European gross domestic product, along with housing starts and building permits. Wednesday’s big earnings names are Cisco Systems (NASDAQ: CSCO) and Target (NYSE: TGT). The Energy Department also releases weekly oil inventories. Thursday’s main attractions are Wal-Mart (NYSE: WMT) numbers and jobless claims. Deere (NYSE: DE) wraps things up Friday.

 

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1. RTTNews: U.S. Weekly Jobless Claims Unexpectedly Edge Down To 236,000. 5/11/17.

2. Reuters: U.S. retail sales rise broadly; consumer prices rebound. 5/12/17.

3. Reuters: Nordstrom's comparable sales miss deepens department-store gloom. 5/12/17.