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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

2/9-2/13/15

The stock market finished a strong week on an upbeat note with the S&P 500 (+0.4%) setting a fresh closing record high at 2,096.99. The benchmark index posted a weekly gain of 2.0% while the Nasdaq Composite (+0.8%) outperformed to end the week higher by 3.2%.

 

Equity indices climbed out of the gate after the futures market received an early morning boost from a better than expected Eurozone Q4 GDP reading (+0.3%; expected +0.2%) that was largely driven by a 0.7% quarter-over-quarter expansion in Germany (expected 0.3%).

 

Meanwhile, Greece was not a focal point on Friday, but Eurogroup chief Jeroen Dijsselbloem did say he is "very pessimistic" that Monday's meeting can produce a concrete solution as Greece maintains high ambitions despite limited possibilities.

 

Six of ten sectors finished in the green with cyclical groups setting the pace, which was the case throughout the week. The energy sector jumped 2.0% to extend its weekly advance to 2.6% thanks to a rally in crude oil. WTI crude advanced 2.9% to $52.67/bbl and held its ground through the release of the latest Baker Hughes U.S. rig count, which revealed a decline of 98 to 1358, representing the 10th consecutive weekly decline.

 

Another commodity-linked group—materials (+0.9%)—rallied behind miners and steelmakers. Rio Tinto (RIO 49.37, +2.22) surged 4.7% after reporting better than expected results, boosting its dividend 12.0% to $2.15/share, and adding $2 billion to its buyback authorization. As for steelmakers, ArcelorMittal (MT 11.20, +0.74) jumped 7.1% despite reporting a Q4 loss. The broader Market Vectors Steel ETF (SLX 35.20, +1.14) gained 3.4%.

 

Elsewhere, the top-weighted technology sector (+0.7%) began among the laggards, but ended in a position of relative strength. The influential group finished the week in the lead, up 4.3%, with Apple (AAPL 127.08, +0.62) tacking on 0.5% to extend its weekly gain to 6.9%. Chipmakers kept pace with the sector, sending the PHLX Semiconductor Index higher by 0.7%.

 

Also of note, the financial sector (-0.1%) lagged throughout the day and its underperformance caused the S&P 500 to make a brief afternoon appearance in the red. However, other sectors held their own through the intraday slip, which in turn, helped the market springboard to a fresh high just ahead of the close.

 

Meanwhile, countercyclical sectors struggled, but health care (+0.5%) caught up to the market during afternoon action. On the flip side, consumer staples (-0.5%), telecom services (-0.1%), and utilities (-1.6%) settled in the red. Notably, shares of Kraft (KRFT 64.42, -1.75) lost 2.7% after concerns regarding potential currency headwinds overshadowed better than expected results.

 

Treasuries spent the day in a steady retreat, sending the 10-yr yield higher by five basis points to 2.03%.

 

Today's participation was below-average, which was the case throughout the week. Only 744 million shares changed hands at the NYSE floor (50-day average 835 mln), which likely reflected some caution ahead of a long weekend, which is expected to include the implementation of a Russia-Ukraine ceasefire on February 15. Despite the scheduled truce, the past two days featured reports of increased clashes in the contested rail hub city of Debaltseve.

 

Economic data was limited to Import/Export Prices and the advance reading of the Michigan Sentiment Index:

 

Export prices, excluding agriculture, decreased 2.1% in January after decreasing 1.2% in the prior reading 

Excluding oil, import prices fell 0.7%, which followed last month's 0.1% decline

The University of Michigan Consumer Sentiment Index declined to 93.6 in the preliminary February reading from 98.1 in January while the Briefing.com consensus expected an increase to 98.3 

Despite the large and unexpected decline, the sentiment level is the same as it was in December

The Current Conditions Index declined to 103.1 in February from 109.3 in January while the Expectations Index dropped to 87.5 from 91.0

Bond and equity markets will be closed on Monday for Presidents' Day. On Tuesday, the Empire Manufacturing Index for February will be released at 8:30 ET while the February NAHB Housing Market Index will be reported at 10:00 ET.

 

Nasdaq Composite +3.3% YTD

S&P 500 +1.9% YTD

Russell 2000 +1.6% YTD

Dow Jones Industrial Average +1.1% YTD

 

Week in review: Nasdaq Composite Reaches March 2000 Levels

 

The stock market kicked off the week on a sleepy note with the S&P 500 (-0.4%) spending the day in a 15-point range. The benchmark index settled ahead of the Dow (-0.5%), but that was a small victory considering the S&P 500 finished near its session low. Above all, the trading volume was well below average with just 760 million shares changing hands at the NYSE floor. Equity indices faced some pressure at the start, brought on by lingering concerns about the eurozone after Greek Prime Minster Alexis Tsipras spoke in front of parliament, reiterating his intention to push back against austerity measures imposed by the troika. The concerns contributed to a lower start, but the S&P 500 did not go down without a fight. The index tried to reclaim its flat line, and was able to do so briefly on the third attempt; however, the third time was hardly the charm as a slide to a fresh session low followed.

 

The major averages snapped their two-day losing streak with a Tuesday rally that allowed the S&P 500 (+1.1%) to settle at its best level of the year. The benchmark index finished ahead of the Dow (+0.8%) and Russell 2000 (+0.6%), but behind the Nasdaq Composite (+1.3%). The rumor mill was active from the early morning, starting with a Bloomberg report indicating the European Commission will propose a six-month extension for Greece. The report cited unnamed sources and was met with a swift denial from the European Commission spokeswoman, who said there is no formal proposal on the table at this time, but talks are "intensive." German Finance Minister Wolfgang Schaeuble also offered a denial, simply calling the report "wrong." Lost in the whirlwind was the fact that the Bloomberg report took place not long after Greek Defense Minister Panos Kammenos entertained the possibility of looking for financial support elsewhere, naming the United States, Russia, and China as potential options. The market rallied happily following the initial report and held its ground through the subsequent denials. The S&P 500 spent the bulk of the early afternoon in a narrow range, but powered to a fresh high ahead of the close. It is worth noting that market breadth did not turn positive until the final 90 minutes, meaning the number of advancers equaled that of decliners even as the market sported a solid gain at midday.

 

Equity indices ended the midweek session on a mixed note. The S&P 500 settled just below its flat line after respecting a 15-point range while the Nasdaq Composite (+0.3%) outperformed throughout the session. The final NYSE volume (732 million) came in below average, continuing a weeklong trend. However, the limited participation was not all that surprising as some investors treaded lightly, trying to avoid potential whiplash associated with headlines out of Europe. The EU finance ministers meeting took place in Brussels, but hopes for a swift deal were dampened by Germany's Finance Minister Wolfgang Schaeuble who said he did not expect a resolution on Wednesday, echoing comments made by Eurogroup Chief Jeroen Dijsselbloem. Meanwhile, leaders from France, Germany, Russia, and Ukraine met in Minsk, and agreed to reaffirm the cease-fire agreement that was struck at the first Minsk conference on September 5, 2014, but was violated shortly after being put into place.

 

The market finished the Thursday session on a broadly higher note. The S&P 500 (+1.0%) settled just six points below its record high that was registered in late December while the Nasdaq Composite (+1.2%) outperformed. Equity indices began the day with modest gains and continued their advance in undisturbed fashion throughout the day. However, participation was limited once again with 786 million shares changing hands at the NYSE floor (50-day average 836 million). Stocks received an opening boost after it was confirmed that leaders from France, Germany, Russia, and Ukraine struck a ceasefire agreement, set to go into effect over the weekend. As for Greece, Bloomberg reported that Germany is ready to soften its negotiating stance while Eurogroup chief Jeroen Dijsselbloem and Greek Prime Minister Alexis Tsipras agreed to begin a "technical assessment" of the common ground between Greece and the current program in preparations for the next Eurogroup meeting on Monday.