Traders hit snooze
01/28/19

●Stock market flat after four weeks of gains

●US government shutdown halted—temporarily

●Jobs report, FOMC meeting, more earnings highlight this week’s market calendar


 

Although traders had to consider the possibility that a pullback could occur after such a high-momentum rally earlier this month, if last week’s “downturn” was all the bears could throw at the stock market, bulls have to be pretty happy—at least for now.

That’s especially true in light of (new) pessimistic comments about the state of US-China trade affairs,1 a gloomy mood appearing to hold sway at the Davos World Economic Forum, and increasingly vocal frustration regarding the US government shutdown, which got a short-term (three-week) reprieve on Friday.2

Even so, after three days of sluggish trading, stocks ended things on an up note, with all the major US indexes notching solid gains on Friday, and three of four closing out the week in the green. The S&P 500 (SPX) closed slightly down for the week, but still in the vicinity of its 2019 highs.

S&P 500 (SPX), 11/30/18–1/25/19. S&P 500 (SPX) price chart. Friday turnaround.

Source: Power E*TRADE


Although tech and small caps came on strong Thursday and Friday, the Dow Jones Industrial Average (DJIA) led US indexes for a second-straight week, hitting a new 2019 high in the process. But the Russell 2000 (RUT) still leads the US market on the year, boasting a year-to-date return just shy of 10%:
US stock index performance table for week ending 1/25/19. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source: Power E*TRADE


Sector action: The top-performing S&P 500 sectors were real estate (+1.5%), information technology (+1%), and utilities (+0.4%). The worst-performing sectors were energy (-1.5%), consumer staples (-1.4%), and health care (-1.3%).

Highlight reel: Beaten, battered, and bruised PG&E (PCG) made the move of the week—to the upside. After tanking nearly 80% between January 4 and January 15, the California utility provider jumped 75% (to $13.95) on Thursday—triggering a temporary trading halt—after state investigators cleared it of responsibility in the 2017 Tubbs fire. (The company had, however, already been found negligent in other fires that year.)2

Thursday also saw a surge in semiconductor stocks, paced by Xilinx’s (XLNX) 18% gain. On the downside, medical tech firm ResMed (RMD) took a -19% hit on Friday after missing revenue estimates.

Futures watch: February gold (GCG9) uncorked its biggest up day of the year on Friday, rallying more than 1.5% to around $1,300/ounce.

It was a quiet week for oil, with March WTI crude futures (CLH9) dropping modestly on the week to around $53.60/barrel.

With another Brexit vote looming, March British pound futures (6BH9) start this week at their highest level since early November after pushing above 1.3200 on Friday.

Coming this week

There are so many earnings scheduled this week, the following list is merely the highlights of the highlights. Big tech names are in the mix, along with energy and defense/aerospace stocks:                  

Monday: Caterpillar (CAT), Royal Caribbean (RCL), Celanese (CE).   

Tuesday: 3M (MMM), Allergan (AGN), Biogen (BIIB), First Bancorp (FBP), L3 Technologies (LLL), Lockheed Martin (LMT), Pfizer (PFE), Rockwell Automation (ROK), Verizon (VZ), Xerox (XRX), Advanced Micro (AMD), Amgen (AMGN), Apple (AAPL), eBay (EBAY), Juniper Networks (JNPR).

Wednesday: Alibaba (BABA), AT&T (T), Boeing (BA), Check Point Software (CHKP), General Dynamics (GD), McDonald's (MCD), NASDAQ (NDAQ), Cree (CREE), Facebook (FB), Microsoft (MSFT), Mondelez Int'l (MDLZ), PayPal (PYPL), Qorvo (QRVO), Qualcomm (QCOM), Tesla (TSLA), U.S. Steel (X), Visa (V), Wynn Resorts (WYNN).

Thursday: Altria (MO), Baker Hughes (BHGE), Baxter (BAX), Celgene (CELG), ConocoPhillips (COP), DowDuPont (DWDP), General Electric (GE), Hershey Foods (HSY), MasterCard (MA), Northrop Grumman (NOC), Raytheon (RTN), UPS (UPS), USG (USG), Amazon (AMZN), Cypress Semi (CY), Edwards Lifesciences (EW), Mattel (MAT), Symantec (SYMC).

Friday: Chevron (CVX), CIGNA (CI), Dominion Energy (D), Exxon Mobil (XOM), Honda Motor (HMC), Merck (MRK), Sony (SNE), Spirit Aerosystems (SPR), Weyerhaeuser (WY).           

Also, the economic calendar doesn’t get much busier than this week’s—jobs, an FOMC meeting, manufacturing data (US and international), and another Brexit vote:

Monday:Chicago Fed National Activity Index.          

Tuesday: UK Parliament votes on Brexit Plan B, FOMC Meeting starts, S&P Corelogic Case-Shiller HPI, Consumer Confidence, International Trade in Goods, Retail Inventories, Wholesale Inventories.

Wednesday: GDP, ADP Employment Report, Pending Home Sales Index, FOMC Meeting Announcement. 

Thursday: European Union Unemployment Rate, Personal Income and Outlays, Employment Cost Index, China PMI Manufacturing Index.

Friday: Employment report, PMI Manufacturing Index, ISM Manufacturing Index,Construction Spending, Consumer Sentiment, Germany PMI Manufacturing Index, European Union PMI Manufacturing Index.

Go to the E*TRADE market calendar (logon required) for an up-to-date earnings schedule, along with a complete list of splits, dividends, IPOs, economic reports, and other market events. The Active Trader Commentary also lists earnings announcements and economic report times every day.

Rally check. The S&P 500’s (SPX) year-to-date return as of Friday—the 17th trading day of the year—was 6.3%. Although that’s down slightly from last week, it’s still higher than the 17-day return for all but four other years since 1950, placing it at the 95th percentile. It was the seventh consecutive day the SPX’s YTD return was above the 90th percentile—just two days shy of the index’s run last January.

 

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1 Bloomberg.com: Wilbur Ross Says U.S., China ‘Miles and Miles’ From Resolving Trade War. 1/24/19.

2 MarketWatch.com. ‘It’s extremely negative’ if shutdown lasts much longer: Morgan Stanley CEO. 1/24/19.

3 CNBC.com. PG&E shares spike 70% after California investigators clear utility of blame for a 2017 fire. 1/24/19.