Stocks hold ground amid geopolitical drama
07/23/18

And then there was one.

One more looming target for the S&P 500 (SPX) to take a shot at, that is—its all-time high from January.

The SPX and the Dow Jones Industrial Average (DJIA) are the only two major US indexes that haven’t yet topped their record peaks from early this year, and while the Dow still has quite a ways to go to accomplish that feat, the SPX’s push above its March swing high last week brought it to within 1.99% of its record high before a minor pullback kicked in. (In fact, the index registered its 10th-highest closing price in history last Wednesday.)

S&P 500 (SPX), 12/29/17 – 7/20/18. S&P 500 (SPX) daily price chart. Breakout. Within range.

Source: OptionsHouse

What on Tuesday and Wednesday looked like a potential running-of-the-bulls week—the Nasdaq 100 (NDX) trading to a new record high, the SPX edging to its highest level in more than six months, and the Russell 2000 (RUT) back on the upswing—got corralled a bit on Thursday and Friday amid White House criticism of the Federal Reserve’s rate hikes1 and renewed tariffs threats on $500 billion of Chinese imports.2 After retreating on Thursday, the SPX opened lower but closed flat on the day.

The week also represented bit of a flip-flop from the previous one, with small-cap stocks swapping places with tech as the market leader. Large caps, meanwhile, continued to hold the middle ground; the SPX ended the week just a hair above where it started. Here’s the index round-up for last week:

Index comparison table for week ending July 20, 2018. S&P 500, Nasdaq 100, Russell 2000, Dow Jones Industrial Average.

Source: OptionsHouse (data)

The week’s sector rankings may have reflected the kick-off of earnings season: The mostly positive stats (and bullish stock moves) from the many financial stocks releasing their quarterly numbers may have contributed to the financial sector outperforming its next closest competitor by a more than 2:1 margin. The top-performing S&P 500 sectors were financials (+2.2%), Industrials (+0.9%), and information technology (+0.1%). The worst-performing sectors were energy (-1.9%), telecom services (-1.8%), and real estate (-1.6%).

Not surprisingly, earnings were responsible for many of the week’s more notable individual stock moves. Tool maker Snap-on (SNA) got a 10%-plus bump on earnings, rallying more than $18 to a nearly six-month high on Thursday and Friday. Netflix (NFLX) was the story early in the week, dropping 17% after releasing earnings on Monday (post-earnings), but rallying more than 10% off its low on Tuesday.

In futures, metals continued to lose their shine, while crude oil (CL) slipped to a three-week low on Wednesday before rebounding. Copper futures (HG) dropped to a one-year low and completed their sixth straight down week, while August gold (GCQ8) and July silver (SIN8) also tumbled, falling to fresh contract lows before notching up days on Friday.

The week ahead. The Econ calendar this week starts with three straight days of housing numbers, and finishes off on Friday with GDP.

Monday: Chicago Fed National Activity Index, Existing Home Sales

Tuesday: FHFA House Price Index

Wednesday: New Home Sales

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

Friday: GDP, Consumer Sentiment 

The second full week of earnings season has something for everyone—lots of tech (including FAANG stocks Amazon, Facebook, and Google), health care, airlines (one of the hottest industries last week), carmakers, energy, and assorted blue chips. Here’s a taste: 

Monday: Halliburton (HAL), Netgear (NTGR), Alphabet (GOOG), Whirlpool (WHR), Zions Bancorp (ZION)

Tuesday: Biogen (BIIB), Eli Lilly (LLY), Harley-Davidson (HOG), JetBlue Airways (JBLU), Kimberly-Clark (KMB), Lockheed Martin (LMT), Quest Diagnostics (DGX), Verizon (VZ), AT&T (T), Texas Instruments (TXN)

Wednesday: Boeing (BA), Coca-Cola (KO), Fiat Chrysler (FCAU), General Motors (GM), GrubHub (GRUB), Advanced Micro (AMD), Allegiant Travel (ALGT), F5 Networks (FFIV), Facebook (FB), Ford Motor (F), Gilead Sciences (GILD), PayPal (PYPL), Qualcomm (QCOM), Visa (V), Wynn Resorts (WYNN)

Thursday: Alaska Air (ALK), American Airlines (AAL), Baxter (BAX), Bristol-Myers (BMY), CME Group (CME), ConocoPhillips (COP), MasterCard (MA), McDonald's (MCD), Southwest Air (LUV), Spotify (SPOT), Amazon (AMZN), Amgen (AMGN), Baidu.com (BIDU), Intel (INTC), Juniper Networks (JNPR), Starbucks (SBUX), VeriSign (VRSN)

Friday: AbbVie (ABBV), Aon (AON), Chevron (CVX), Colgate-Palmolive (CL), Exxon Mobil (XOM), Merck (MRK), Twitter (TWTR)

Go to the E*TRADE market calendar (logon required) for an up-to-date schedule, along with a complete list of splits, dividends, IPOs, and other market events.

Futures contracts expiring this week include July gold (GCN8), July copper (HGN8), and July platinum (PLN8). 

No summer doldrums so far. Heading into the last full week of the July, the SPX has a shot at closing out its third-straight month of higher highs, lows, and closes. The higher monthly high is already a done deal, and the index would have to fall around 3% from Friday’s close by July 31 to close lower for the month.

 

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1 CNN.com. Trump escalates his war with the Fed. 7/20/18

2 Bloomberg.com. Trump Says He’s ‘Ready To Go’ With $500 Billion in Tariffs on All China Imports. 7/20/18.