Stocks break out to new highs, led by tech
07/17/17

So much for the bulls resting this summer.

The S&P 500 rose 1.4 percent between Friday, July 7, and Friday, July 14, to close a new record high. It was also the index's best weekly performance since late May.

But who cares about the S&P? Traders were arguably more focused on the Nasdaq, which rallied more than twice as much, and had its best move since early December. Technology led the charge as money flocked back to the year's top performing sector. 

Sure, the news wasn't much to write home about. Jobless claims disappointed for a second straight week, retail sales missed estimates by a country mile, and mounting frustrations over gridlock in Washington hurt consumer and small-business sentiment.1 But there were positive developments on the energy front and abroad as the oil glut showed signs of easing and major global economies like Germany and China reported strong trade numbers.2

Power generating company NRG Energy (NYSE: NRG) leapt from obscurity to lead the S&P 500 with a 43 percent gain for the week after announcing it would sell assets as part of a broad-ranging turnaround plan.3 Cloud-storage pure-play NetApp (NASDAQ: NTAP) took the blue ribbon, climbing 13 percent despite a lack of news. Nvidia (NASDAQ: NVDA), followed close behind, cheered by analysts.4

But tech wasn't the only show in town. Energy stocks also muscled their way from long-term lows to end the week up more than two percent. Materials rose a similar amount as money streamed into metals and fertilizers.

Overall it was a pretty good run—unless you were a greenback. The U.S. dollar crumbled to 10-month lows as capital streamed to emerging markets like Brazil, China, and Russia.

S&P 500, 3-month chart

Source: OptionsHouse by E*TRADE

Banks, which have mostly tracked domestic sentiment, also struggled and made financials the only major sector to fall last week. Some traditional retailers took a hit as e-commerce continued to devour their businesses. Michael Kors (NYSE: KORS) was the S&P's worst performer on the week with a drop of almost 6 percent. Ulta Salon (NASDAQ: ULTA) and Best Buy (NYSE: BBY) took beatings, as well.

The forward calendar brings plenty of earnings and some potentially important economic news. It's also crunch time for Congress to pass some version of a health care bill. Here's a rundown of key items:

  • Monday's main data point is the New York Federal Reserve's Empire index, plus Netflix (NASDAQ: NFLX) results after the closing bell.
  • Tuesday brings NAHB's homebuilder index, plus earnings from Bank of America (NYSE: BAC), Goldman Sachs (NYSE: GS), Johnson & Johnson (NYSE: JNJ), UnitedHealth (NYSE: UNH), and CSX (NYSE: CSX).
  • Wednesday's big items are housing starts, building permits, oil inventories, plus earnings from Textron (NYSE: TXT), Qualcomm (NASDAQ: QCOM), and American Express (NYSE: AXP).
  • Attention shifts across the Atlantic Thursday morning as the European Central Bank announces monetary policy. Jobless claims and the Philadelphia Fed's manufacturing index are the main reports on the home front. Earnings are due from Travelers (NYSE: TRV), Union Pacific (NYSE: UNP), Microsoft (NASDAQ: MSFT), and EBay (NASDQ: EBAY).
  • There are no major economic releases Friday, but earnings include Honeywell (NYSE: HON) and General Electric (NYSE: GE).

 

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1. Marketwatch: U.S. retail sales fizzle out in June. 7/14/17. RTT News: U.S. Consumer Sentiment Drops Amid Notable Decline In Expectations. 7/14/17. Marketwatch: Small-business sentiment falls as economic expectations slide sharply. 7/11/17. RTT News: U.S. Weekly Jobless Claims Edge Down To 247,000. 7/13/17.

2. RTT News: German Exports Growth Tops Expectations. 7/10/17. Business Insider: China's trade data just breezed past expectations. 7/13/17.

3. Reuters: NRG Energy to raise up to $4 billion through asset sales, shares soar. 7/12/17.

4. Benzinga: Semiconductors Are Leading To Another Tectonic Shift In Computing: Which Players Will Be Beneficiaries? 7/10/17. Marketwatch: Nvidia stock rallies toward 6th-straight gain after SunTrust RH upgrade. 7/12/17.