Week starts with whimper, ends with bang
12/04/17

Political intrigue left some fingerprints on the markets last week when news broke on Friday morning that retired Lt. Gen. and former Trump advisor Michael Flynn was pleading guilty to lying to the FBI about his previous contacts with the Russian ambassador, fueling worries of more headaches for the Trump administration.1 Stocks dropped in early trading on Friday (S&P 500 off -1.6% at its worst), but the market pared its losses later in the day.

In a reversal of one of the year’s primary trading themes, tech stocks were a drag on the overall market last week. While the S&P 500 (SPX), Dow Jones Industrial Average (DJIND), and Russell 2000 (RUT) closed out the week in the black, the Nasdaq 100 (NDX)—which stubbed its toe on Wednesday—ended the week in the red. It was the technology index’s first lower weekly close since mid-September.

Index comparison, 11/27/17 – 12/1/17

Source: OptionsHouse

For the week, SPX closed up 1.5% at 2642, RUT gained 1.17%, and NDX declined -1.11%. Perhaps the most notable performance was the Dow’s market-leading 2.9% gain, aided by an 8.3% rally in Verizon’s (VZ) and strong moves by Chevron (CVX, +2.5%) and Exxon Mobil (XOM, +2.4%), among others. All the indices put in new record highs and closes before Friday, though.
S&P 500 (SPX), 10/30/17 – 12/1/17

Source: OptionsHouse

In between a mildly bearish Monday and a volatile Friday, Wednesday’s tech drop provided some mid-week fireworks. Attributed in part to some rotation out of tech and into small-caps and other areas of the market more likely to benefit from a tax overhaul (see “Small-caps stir as tax reform takes shape”), the NDX tumbled more than 2% intraday on Wednesday and closed down -1.73%—on the same day the Russell 2000 and Dow gained ground and the S&P 500 essentially closed flat.

Again, most of the week’s economic data was solid, with housing and construction numbers exceptionally strong and GDP in line with estimates (+3.3%).

The top-performing S&P sectors for the week: Telecom Services (+6.7%), Financials (+5.2%), and Industrials (+2.9%). It was the second-straight week the pack was led by Telecom; F5 Networks (FFIV) made a representative move, racking up a 9% gain on the week.

Of the worst-performing S&P 500 sectors, only two were actually in the red for the week: Information Technology (-2.02%) and Real Estate (-0.49%) lost ground, but Materials gained +0.39%. Lam Research (LRCX, -13.4%) and Qorvo (QRVO, -8%) were among the info tech names that took mean hits.

Friday’s down move kicked the CBOE Volatility Index (VIX) to its highest level (14.58) since August, but it backed off to close at 11.24.

S&P 500 (SPX), 4/11/17 – 12/1/17

Source: OptionsHouse

As far as this week’s US economic release schedule is concerned, all roads lead to the jobs report on Friday. But there are a few others to pay attention to before that: Factory Orders (Monday); Productivity and Costs (Wednesday); Employment Situation, Consumer Sentiment, and Wholesale Trade (Friday).

Earnings for this this week include GW Pharma (GWPH) and Coupa Software (COUP) on Monday; AutoZone (AZO), Bank of Montreal (BMO), and Toll Brothers (TOL) on Tuesday; Analogic (ALOG), Broadcom (AVGO), Greif (GEF), NCI Building Systems (NCS), and Verint Systems (VRNT) on Wednesday; Dollar General (DG), GMS (GMS), Methode Electronics (MEI), FIZZ (FIZZ), and Cooper (COO) on Thursday.     

 

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1 ABCnews.com. Flynn pleads guilty, reaches deal on charge of lying to FBI. 12/1/17.