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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

6/27/14

The major averages ended the Friday session on a higher note thanks to a final-hour rally that sent the indices to session highs. The S&P 500 added 0.2%, narrowing its weekly loss to 0.1%, while the Nasdaq Composite settled higher by 0.4% to bring its weekly advance to 0.7%.

In general, equity indices respected narrow ranges until the last hour of action with the S&P 500 confined to a five-point range. The subdued activity was also reflected by below-average intraday trading volume, which received a big boost at the close from rebalancing of the Russell indices. Thanks to the final surge, almost 1.5 billion shares changed hands at the NYSE.

Only three sectorsenergy, health care, and materialsended in the red with materials (-0.4%) registering the largest decline. The smallest cyclical sector by weight (just 3.5% of the S&P 500) slumped out of the gate amid noteworthy weakness in the shares of DuPont (DD 65.44, -2.26). The Dow component tumbled 3.3% after lowering its Q1 and full-year guidance. Steelmakers also weighed with Market Vectors Steel ETF (SLX 47.44, -0.35) sliding 0.7%.

Meanwhile, the other commodity-related sectorenergy (-0.1%)also pressured the broader market, but erased the bulk of its loss in the late afternoon to end the week higher by 4.9%. For its part, crude oil settled little changed at $105.76/bbl.

Also of note, the health care sector (-0.2%) lagged throughout the session amid weakness in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 256.73, +0.35) was down as much as 0.9% intraday, but settled on its high.

The underperformance of the biotech space did not stop the Nasdaq from outpacing the benchmark index. Large cap components contributed to the outperformance with Apple (AAPL 91.98, +1.08) and Microsoft (MSFT 42.25, +0.53) advancing close to 1.2% apiece. High-beta chipmakers struggled to keep up as the PHLX Semiconductor Index added 0.2%.

In addition to technology, three other influential sectorsconsumer discretionary (+0.3%), financials (+0.2%), and industrials (+0.3%)contributed to the afternoon spike to highs. Apparel retailers underpinned the discretionary space after Finish Line (FINL 29.56, +0.41) and Nike (NKE 77.68, +0.82) reported better than expected results.

Treasuries ended little changed with the 10-yr yield at 2.53%.

Economic data was limited to the Michigan Consumer Sentiment survey for June, which increased to 82.5 in its final reading for June. That was up from a preliminary report of 81.2 and up from 81.9 in May. The Briefing.com consensus expected the Index to increase to 81.7. The preliminary June report initially showed a decline in confidence. That didn't jive with the big improvements in equity prices and employment conditions. However, the final reading brought the Consumer Sentiment Index in-line with the Conference Board's Consumer Confidence Index, which increased to 85.2 in June from 82.2 in May.

On Monday, the Chicago PMI report for June (Briefing.com consensus 61.0) will be released at 9:45 ET and the Pending Home Sales report for May (consensus +1.5%) will cross the wires at 10:00 ET.

S&P 500 +6.1% YTD
Nasdaq Composite +5.3% YTD
Dow Jones Industrial Average +5.3% YTD
Russell 2000 +2.2% YTD

Week in Review: Range-Bound Ahead of Quarter End

The major averages started the week on a quiet note with the S&P 500 shedding less than a point. To be fair, the slight downtick was a function of some profit taking after the benchmark index registered six consecutive gains. Equity indices started the day in the red and maintained narrow ranges throughout the session. The S&P 500 tried to regain its flat line shortly after the open, but could not do so as three influential sectors weighed. Specifically, consumer staples (-0.6%), health care (-0.3%), and industrials (-0.6%) slumped out of the gate and pressured the market throughout the session. Industrials finished the trading day at the bottom of the leaderboard due to broad weakness among transport stocks. The Dow Jones Transportation Average lost 0.5% with 17 of 20 components ending in the red. Despite the loss, the Transportation Average remained higher by 7.8% for the quarter.

The stock market ended the Tuesday session on a lower note despite seeing early strength. The Dow Jones Industrial Average and S&P 500 posted respective losses of 0.7% and 0.6%, while the Nasdaq Composite shed 0.4%. Equity indices displayed modest losses at the start, but were quick to regain their flat lines after a pair of economic data points surprised to the upside. Briefly, the New Home Sales report for May came in well ahead of estimates (504K versus Briefing.com consensus 440K), while the Consumer Confidence report (85.2) registered its highest reading since early 2008. The economic news gave a boost to the consumer discretionary sector (-0.2%) and especially homebuilders. DR Horton (DHI) and Toll Brothers (TOL) both jumped 1.2%, while the iShares Dow Jones US Home Construction ETF (ITB) advanced 0.9%. For its part, the discretionary sector fell into the red during the afternoon when the overall market reversed and surrendered its gain.

On Wednesday, stocks advanced as participants looked past a pair of disappointing economic reports. The S&P 500 rose 0.5% with nine sectors ending higher, while the Nasdaq Composite (+0.7%) outperformed. Prior to the open, the S&P 500 appeared to be on track for its third consecutive decline after first quarter GDP was revised down to -2.9% from -1.0% (Briefing.com consensus -1.8%). In addition, a more recent reportMay Durable Ordersalso surprised to the downside. Despite starting on a lower note, the major averages were able to rebound swiftly with the move likely supported by some short covering.

Equity indices posted modest losses on Thursday, but a daylong rebound off the early lows helped the indices retrace the bulk of the decline. The S&P 500 shed 0.1% with six sectors ending in the red. Stocks did not waste any time this morning, sliding to session lows within the first 30 minutes of action. All ten sectors participated in the early retreat with financials (-0.3%) leading the market lower. Earlier in the week, the financial sector struggled to keep pace with the broader market, but Thursday's opening loss was large enough to pressure the S&P 500. Citigroup (C) was the weakest performer among the majors, while European financials also struggled. Most notably, Barclays (BCS) fell 7.4% after New York Attorney General announced fraud charges against the company.