Stocks bounce as volatility wanes
08/28/17

Stocks bounced last week but are still on pace for their worst month this year.

The S&P 500 rose 0.7 percent between Friday, August 18, and Friday, August 25. Eight of nine major sectors advanced, although the index remained trapped near the same 50-day moving average that's marked its uptrend since March. 

The world's two most powerful central bankers—Janet Yellen and Mario Draghi—said next to nothing in speeches at the Federal Reserve's Jackson Hole confab.1 That probably disappointed traders hoping for more excitement after volatility spiked earlier in the month.

There were still ups and downs on the news front. Most of the winners were overseas as Eurozone manufacturing and German business confidence beat estimates.2 Optimism toward Chinese growth also boosted metals.

Things weren't so wonderful for the U.S. housing market, with sales of both existing and new abodes lagging forecasts.3 Food companies were dealt an even tougher hand as earnings lagged and a top advertising firm warned their business was slowing.4 That made consumer staples the only negative sector on the week, down 0.8 percent.

Real-estate investment trusts led to the upside with a gain of more than two percent. Energy, health care, utilities and technology also rose more than one percent.

S&P 500, 1/6/17 - 8/25/17

Source: OptionsHouse by E*TRADE

Signet Jewelers (NYSE: SIG) was the top-performing single company in the S&P 500 last week, advancing 17 percent on the heels of strong quarterly results. Western Digital (NASDAQ: WDC) took the blue ribbon with an 8.5 percent gain.

On the flipside, cosmetics firm Coty (NYSE: COTY) tanked 15 percent after missing on profit, while warning that some brands it acquired from Procter & Gamble (NYSE: PG) were losing the battle for shelf space. JM Smucker (NYSE: SJM) came up short across the board (earnings, revenue, guidance) as customers shunned Folgers.5 That sent it down 14 percent. Ulta Salon (NASDAQ: ULTA) fell 13 percent despite beating estimates. 

Saturday was National Dog Day, and it's likely to be the "dog days" of summer this session with no major events scheduled and many traders on vacation. Tomorrow's a bit more interesting, with consumer confidence and earnings due from Best Buy (NYSE: BBY). 

Wednesday brings ADP's private-sector payrolls report, revised gross domestic product, and the government's oil-inventory report. Initial jobless claims, personal income and spending, and pending home sales follow Thursday.

The week wraps up with non-farm payrolls and the Institute for Supply Management's manufacturing index Friday morning. Then most folks will probably skedaddle for the three-day Labor Day weekend.

 

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1. Bloomberg: Yellen Issues Broad Defense of Post-Crisis Financial Rules. 8/25/17. CNBC: Janet Yellen: System is safer now, though 'all-too-familiar' risks remain. 8/25/17. RTT News: ECB's Draghi Urges Central Banks To Continue Preparing For New Challenges. 8/23/17.

2. Marketwatch: German Ifo business-sentiment index eases. 8/25/17. Reuters: German factories drive solid private sector growth in August: PMI. 8/23/17.

3. Marketwatch: New-home sales skid to 7-month low in July. 8/23/17. RTT News: U.S. Existing Home Sales Unexpectedly Drop To Eleven-Month Low In July. 8/24/17.

4. Advertising Age: WPP Will Barely Grow This Year -- Sorrell Points to Packaged-Goods as Culprits. 8/23/17.

5. Reuters: Coty says some of its P&G brands to stay under pressure until 2018. 8/22/17. Marketwatch: JM Smucker shares fall 4% premarket after earnings miss. 8/24/17.