Stocks back on roller coaster
04/23/18

Despite a Thursday–Friday pullback, last week the S&P 500 (SPX) posted back-to-back up weeks—if only by a small margin—for the first time since February as the US market continued to attempt a rally off its early April low.

After starting the week on an upward trajectory, the market gave back most of its Monday–Wednesday gain with a big down day on Friday. Leading the slide was Apple (AAPL), which sold off more than 4% amid reports of downsized iPhone sales estimates1—weighing on tech, and ultimately the market as a whole. The SPX shed more than 1% before paring its losses into the close, while the tech-heavy Nasdaq 100 (NDX) closed down 1.6%.

S&P 500 (SPX) 12/11/17 – 4/20/18. S&P 500 daily price chart. Pullback.

Source: OptionsHouse

The pullback took the SPX back into the consolidation it broke out of at the beginning of last week. Many traders will likely be watching to see if the index drops further below this level (which some technical traders may expect to act as support) early this week or quickly turns back to the upside.

The Russell 2000 (RUT) posted the week's largest return. Here’s the breakdown:

Index Comparison. US stock index comparison, week ending April 20, 2018

Source: OptionsHouse

The top-performing S&P 500 sectors last week were Energy (+2.6%), Industrials (+2.1%), and Consumer Discretionary (+1.7%). The worst performing sectors were Consumer Staples (-4.4%), Real Estate (-1%), and Telecom Services (-0.3%).

Netflix (NFLX) continued to put the bang in FAANG, closing up 9% on Tuesday and hitting a new all-time high of $338.82 following another impressive earnings release, which showed the company added more than seven million subscribers in the first quarter.Alcoa (AA) jumped more than 13% from Monday to Wednesday amid positive earnings and an expected aluminum shortage resulting from US sanctions on Russia.

Despite beating both earnings and revenue estimates, IBM (IBM) went in the opposite direction on Wednesday. The stock fell more than 7% and dropped further on Thursday and Friday as the firm disappointed the market with lowered forward guidance.3

Crude oil futures (CL) pulled back intraday on Friday, but not before trading close to $70/barrel on Thursday amid reports that Saudi Arabia was not inclined to reverse production cuts and was willing for crude prices to climb as high as $100/barrel—something that drew presidential Twitter ire on Friday.

A healthy dose of housing numbers highlights this week’s economic calendar, along with GDP on Friday.

Monday: Chicago Fed National Activity Index, Existing Home Sales

Tuesday: S&P Corelogic Case-Shiller HPI, FHFA House Price Index, New Home Sales, Consumer Confidence

Thursday: Durable Goods Orders, International Trade in Goods, Retail Inventories (Advance), Wholesale Inventories (Advance)

Friday: GDP, Employment Cost Index, Chicago PMI, Consumer Sentiment

Although a trio of FAANG stocks—Facebook (FB), Alphabet (GOOG), and Amazon (AMZN)—will likely be hogging much of the earnings spotlight this week, there’s no shortage of marquee names releasing performance figures, ranging from other tech names to lots of planes, a few trains, and some automobiles. A small sample:

Monday: Alaska Air (ALK), Alphabet (GOOG)

Tuesday: Biogen (BIIB), Caterpillar (CAT), Lockheed Martin (LMT), Masco (MAS), Travelers (TRV), Verizon (VZ), Wynn Resorts (WYNN)

Wednesday: Boeing (BA), Nasdaq (NDAQ), Twitter (TWTR), Advanced Micro Devices (AMD), Allegiant Travel (ALGT), AT&T (T), eBay (EBAY), F5 Networks (FFIV), Facebook (FB), Ford Motor (F), PayPal (PYPL), Qualcomm (QCOM), Visa (V)

Thursday: AbbVie (ABBV), American Airlines (AAL), CME Group (CME), ConocoPhillips (COP), General Motors (GM), Raytheon (RTN), Southwest Air (LUV), Amazon (AMZN), Amgen (AMGN), Microsoft (MSFT), Mohawk (MHK), Starbucks (SBUX), U.S. Steel (X)

Friday: Chevron (CVX), Colgate-Palmolive (CL), Exxon Mobil (XOM), Honda Motor (HMC)

You can find a complete list of earnings, splits, dividends, IPOs, and other market events on the E*TRADE market calendar (logon required).

Futures contracts expiring this week include:

Monday: April gold (GCJ8), April platinum (PDJ8), April copper (HG8), May natural gas (NGK8), April feeder cattle (FCJ8)

Friday: May gasoline (RBK8), May sugar (SBK9), April Fed funds (FFJ8), April live cattle (LCJ8)

Although they haven’t necessarily been on fire recently, small caps have erased some of the relative weakness that plagued them in past months: The Russell 2000 (RUT), which was the strongest index last week, is now closer to its early 2018 record high than any other major US index.

 

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Barron’s. Tech Today: Shrinking iPhone Sales, Twitter’s a Buy, Ericsson Shines. 4/20/18.

2 Reuters. Netflix programming binge pays off with subscriber surge. 4/16/18.

3 CNBC.com. IBM sinks, with the stock on pace for its worst day since 2014. 4/18/18.