Stocks paused near highs toward end of earnings season

The streak is dead—long live the streak.

Although the S&P 500 (SPX) didn’t close at a weekly high for the ninth straight week, it still made a new daily record close last Wednesday and an intraday/intraweek high of 2,597.02 last Tuesday, extending its run of weekly highs to nine. But nine or more higher weekly closes is something the S&P has matched or exceeded only three previous times over the past 50 years (in 1985, 1989, and 2004), so tacking on another week was a bit of a longshot. The stock market cannot, after all, move in one direction forever.

S&P 500 (SPX), weekly, 12/5/16 – 11-10-17

Source: OptionsHouse

The broader market did, in fact, inch higher last week until Thursday—which turned out to be déjà vu all over again. Just when it looked like sellers would knock stocks off their lofty perch (the S&P was down more than 1% at its lowest point), the market rallied furiously to close near the top of the day’s range—just like it did exactly one week earlier on Thursday, November 2. On Friday, though, the market seemed like it didn’t have enough energy left to make up the slack and push the market into positive territory for the week.
S&P 500 (SPX), weekly, 9/15/17 – 11/10/17

Source: OptionsHouse

For the week, the SPX lost -0.21%, the Dow Jones Industrial Average (INDU) declined -0.5%, the small-cap Russell 2000 (RUT) shed -1.31%, and the tech-driven Nasdaq 100 (NDX) gained 0.21%.

Turning to the hit parade, the top-performing S&P sectors for the week: Real Estate (+3.32%), Consumer Staples (+2.14%), and Energy (+1.08%). Strong performances from Real-Estate Investment Trusts (REITs) such as American Tower Corp. (AMT, +5.6%) and Crown Castle International (CCI, +6%) helped keep real estate in first place for a second straight week, while energy benefited from crude oil hanging around its 52-week high.

The worst-performing S&P 500 sectors: Financials (-2.54%), Telecom Services (-1.26%), and Materials (-1.18%).

Last week’s minor dip nudged volatility readings higher. After closing out the week ending November 3 at a record low close of 9.14, the CBOE Volatility Index (VIX) edged back into double digits last week, closing on Friday at 11.18--for perspective, a reading that was still in the bottom tenth of all VIX closes in the past 12 years.

This week includes a modest rollout of US economic numbers: Producer Price Index (PPI) on Tuesday; Consumer Price Index (CPI), Retail Sales, and Business Inventories on Wednesday; Industrial Production, Housing Market Index, Import and Export Prices on Thursday, and Housing Starts and E-commerce Retail Sales on Friday.

The Q3 earnings release season is winding down. This week’s lineup features lots of pharma stocks and several well-known retail and consumer staple names: Tyson Foods (TSN) on Monday; Home Depot (HD), TJ Maxx parent company TJX (TJX) and Chinese consumer finance company Yirendai (YRD) on Tuesday; Target (TGT), Cisco Systems (CSCO), Enanta Pharmaceuticals (ENTA), and NetApp (NTAP) on Wednesday; and Best Buy (BBY), Wal-Mart (WMT), Applied Materials (AMAT), Gap (GPS) and Ross Stores (ROST) on Thursday.

Don’t forget Capitol Hill: Any delays or discord associated with the House and Senate tax plans have the potential to spook a market that many observers say is in a prime position to be spooked.


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