Stocks just finished their best week since mid-July, bolstered by strong economic data and renewed interest in biotech companies.
The S&P 500 rose 1.4 percent between Friday, August 25, and Friday, September 1. The surge pushed August from the red into the green, extending the index's winning streak to five months.
What triggered the gain? Traders pointed in several directions. First, most of the data was strong: U.S. consumer confidence beat estimates and second-quarter economic growth was unexpectedly revised up to its highest level since 2014.1 Jobs were mixed but domestic manufacturing was off the charts.2
The global story also lifted spirits as Chinese and European factories whirled into action while prognosticators talked up their growth potential.3 Even laggard India showed signs of getting back on track.4
Then you have Hurricane Harvey. While its flooding was tragic and deadly, pundits said it will force politicians to cooperate and may reduce the risk of a government shutdown.5 This could mean investors have one less bogeyman to worry about.
On top of all that, the biotech sector had its best week since November. The gains started on Monday when Gilead Sciences (NASDAQ: GILD) gobbled up Kite Pharma (NASDAQ: KITE), triggering a firestorm of speculation over other potential targets.6 Regulatory approval of a Novartis (NYSE: NVS) drug also spurred hopes for a new wave of products based on a process known as CAR-T.7 Both headlines, by the way, focused on cancer treatments.
Source: OptionsHouse by E*TRADE
Not surprisingly, biotech stocks were among the S&P 500's biggest gainers on a weekly basis. GILD and Incyte (NASDAQ: INCY) led the charge with a 13 percent gains each. United Rentals (NYSE: URI) and Biogen (NASDAQ: BIIB) also climbed double-digits.
Best Buy (NYSE: BBY), on the other hand, talked down its growth prospects, and Campbell (NYSE: CPB) echoed the woes of other packaged-food companies by warning of a sharp slowdown in volumes.7 That cost both about 12 percent of their value.
There was also broad strength in metals last week, with steels, aluminum, iron-ore, gold, and silver advancing. Utilities were the only major sector to decline.
Most of this week's calendar focuses on the global level as Americans saunter back from the long Labor Day weekend. Today's main item, for instance, was European gross domestic product in the wee hours of morning.
Tomorrow brings the Institute for Supply Management's service-sector index and the Federal Reserve's Beige Book of economic conditions.
Thursday is the busiest session. It starts with a European Central Bank meeting and U.S. jobless claims. It also features oil inventories, pushed one day later because of the holiday.
Several Fed officials speak over the course of this week as well.
1. Bloomberg: U.S. Consumer Confidence at Second-Highest Level Since 2000. 8/29/17. Reuters: U.S. second-quarter GDP growth revised up, fastest in over two years. 8/30/17.
2. RTT News: U.S. Job Growth Falls Well Short Of Estimates In August. 9/1/17. CNBC: Private sector jobs up 237K in Aug vs. 185K expected: ADP. 8/30/17. Marketwatch: ISM manufacturing index jumps to six-year high in August. 9/1/17.
3. Reuters: What slowdown? Factories chug along as global demand holds up. 9/1/17. RTT News: Moody's Lifts China's Growth Forecast. Eurozone To Achieve Above Potential Growth: Moody's. 8/30/17.
4. IndiaToday: Manufacturing sector bounces back into growth zone: PMI. 9/1/17.
5. Business Insider: GOLDMAN SACHS: Hurricane Harvey makes a government shutdown less likely. 8/30/17.
6. Reuters: Novartis gene therapy approval signals new cancer treatment era. 8/30/17.
7. Reuters: Best Buy says strong sales not 'new normal,' shares skid. 8/29/17. Marketwatch: Campbell Soup revenue falls for 11th quarter. 8/31/17.