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Leigh Baldwin & Co.

112 Albany Street, Cazenovia, NY 13035 | Phone: (315) 655-2964 Toll Free: 1-800-659-8044

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The Week In Review

6/24/13-6/28/13

Stocks concluded their down week on a lower note as the S&P 500 shed 0.4%.

Equities slipped out of the gate amid weakness in Treasuries. The 10-yr note sold off into the cash session open before erasing most of its losses. The benchmark 10-yr yield ended higher by two basis points at 2.493%.

A disappointing Chicago PMI report for June (51.6 actual, 55.5 Briefing.com consensus, 58.7 prior) also contributed to the early weakness, but stocks were able to find support shortly thereafter.

Today's session lows coincided with the release of a better-than-expected final University of Michigan Consumer Sentiment Index (84.1 final, 82.7 consensus, 82.7 preliminary).

Stocks spent the following hour in a steady climb, allowing the S&P to erase its opening losses. However, the early buying interest fizzled out after the benchmark average returned to its flat line, where it held until the closing minutes of the session.

The final five minutes of action saw the index return into the red as the small cap Russell 2000 index underwent its annual rebalancing.

The S&P was anchored to its unchanged level for most of the afternoon as financials and technology weighed. The financial sector ended with a loss of 0.7% while the tech space shed 0.4%.

While the tech sector was able to settle above its lows, not all components were as fortunate. Accenture (ACN 71.96, -8.26) tumbled 10.3% after its earnings beat was overshadowed by below-consensus revenue as well as downside fourth quarter revenue guidance. Separately, BlackBerry (BBRY 10.46, -4.02) plunged 27.8% after the company reported disappointing first quarter earnings and revenue. In addition, BB10 shipments of 2.7 million disappointed as investors expected BlackBerry to ship about 3.5 million units of its latest device.

On the flip side, discretionary shares and utilities ended in positive territory. The discretionary sector received a boost from retailers after Finish Line (FINL 21.86, +0.66) surprised to the upside with its earnings and revenue. Meanwhile, homebuilders kept the discretionary space from logging further gains. Most major builders settled in the red while the iShares Dow Jones US Home Construction ETF (ITB 22.38, -0.37) shed 1.6%.

Also of note, a 0.4% advance in utilities extended the sector's weekly gain to 3.0%, placing it atop this week's leaderboard. Meanwhile, the materials sector was the weakest group of the week, ending with a loss of 1.5%. However, gold miners had a strong showing today as the Market Vectors Gold Miners ETF (GDX 24.49, +1.70) surged 7.5%. On a related note, gold futures gained 1.6% to $1230.70 per ounce while silver futures jumped 5.6% to $19.60 per ounce.

Week in Review: S&P 500 Tests 100-Day Moving Average

On Monday, the stock market began the week on a fitful note as rising interest rates at home and falling equity markets abroad conspired to keep the major averages in negative territory throughout the day. The S&P 500 registered its first close below its 100-day moving average this year. Overseas, the drop in China was attributed to a growing sense of angst that a liquidity crisis and credit crunch are brewing there. The growth concerns weighed heavily on the cyclical sectors throughout the day. Financials (-1.8%) led the losses and were joined by materials (-1.7%), industrials (-1.7%), energy (-1.5%), and technology (-1.4%) as the worst-performing areas.

Equities ended Tuesday's session near their highs, but were unable to erase their Monday losses. The S&P 500 climbed 1.0% as all ten sectors ended with gains. The bulk of the advance occurred in the first 90 minutes of the session amid a global rebound. Interestingly, two rate-sensitive sectors vaulted to the top of this month's leaderboard despite the continued climb in Treasury yields. The telecom services sector rose 2.0%, which turned its month-to-date loss to a gain of 1.0%.

Wednesday began on an upbeat note despite some disappointing economic news. The final first quarter GDP reading was revised down to 1.8% from 2.4%. Typically, revisions to GDP in the third estimate are very minor. The large decline in this report was very unusual and caught all economists by surprise. Most of the downward revision came from consumption in services. In the previous estimate, services spending increased 3.1%. That was revised down to 1.7% growth and contributed 0.6 percentage points less to GDP growth. Stocks received this news in stride as sluggish growth suggests the Federal Reserve is less likely to withdraw its support from the markets. To that end, the Treasury complex received an aggressive bid immediately after the GDP revision crossed the wires. The benchmark 10-yr yield ended lower by seven basis points at 2.542%.

On Thursday, the S&P 500 settled higher by 0.6% as nine sectors posted gains. Equities were off to the races at the sound of the opening bell, aided by the personal income report, which pointed to an increase of 0.5% in May. The Briefing.com consensus expected personal income to rise 0.2%. Stocks received a secondary boost from the pending home sales report as May sales rose 6.7% (1.5% consensus). The S&P notched its high of 1620 shortly after the market digested the latest housing data point. However, the index was unable to rise above that level as the 20- and 50-day moving averages served as resistance at the session high.