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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

6/8-6/12/15

The stock market ended the week on a lower note with the Dow Jones Industrial Average pacing the Friday decline. The price-weighted index lost 0.8%, but added 0.3% for the week, while the S&P 500 settled lower by 0.7%, narrowing its weekly gain to a slim 0.1%.

The Friday session started amid selling pressure in Europe and the U.S. as it became clear that another week will go by without a deal between Greece and its creditors. The continued uncertainty had markets in France and Germany down more than 2.0% apiece, but a well-timed rumor helped the indices slash a percentage point off their losses just in time for the close. Specifically, an unnamed Greek government official was quoted as saying a new counter-proposal has been sent to the lenders and the two sides are "closer than ever" to an agreement.

Despite the rumors, safe-haven demand boosted Germany's 10-yr bund, dropping its yield six basis points to 0.83%. Conversely, selling in Greek and Spanish debt securities caused their yields to spike. Greece's 10-yr yield surged 51 basis points to 11.56% while Spain's 10-yr yield jumped 12 basis points to 2.27%.

In addition to helping European equities trim their losses, the news helped the S&P 500 rally six points off its low, but the index returned to its worst level of the day during the afternoon, ending well below its 50-day moving average (2,103), which was violated at the open.

It is worth pointing out that today's trading volume was well below average with just 645 million shares changing hands at the NYSE floor, suggesting a fair share of participants chose to forego today's session altogether.

All ten sectors registered losses with energy (-1.2%) and health care (-1.1%) spending the day behind the remaining eight groups. The energy sector retreated alongside crude oil, which fell 1.3% to $59.93/bbl. For its part, the sector lost 0.9% for the week, while only two other groups registered weekly losses with technology and utilities surrendering 0.7% and 0.5%, respectively.

The technology sector underperformed for the second day in a row amid broad weakness. Large cap names like Apple (AAPL 127.17, -1.42), IBM (IBM 166.99, -1.79), Microsoft (MSFT 45.97, -0.47), and Qualcomm (QCOM 67.02, -0.57) lost between 0.9% and 1.1% while the high-beta PHLX Semiconductor Index fell 0.9% to end the week lower by 1.7%.

Generally speaking, today's session was devoid of corporate news, but Twitter (TWTR 35.90, +0.06) made headlines after Chief Executive Officer Dick Costolo announced he will step down from his post on July 1 with co-founder and Chairman Jack Dorsey taking Mr. Costolo's place in the interim. Shares of TWTR opened higher, but a daylong retreat resulted in a flat close for the stock.

Elsewhere, the financial sector (-0.4%) ended ahead of most other groups, locking in a 1.0% gain for the week with investors angling to take advantage of rising rates.

Speaking of rates, the 10-yr note rallied at the start, but reversed after the Greece-related rumor crossed in the late morning. The benchmark note registered a four-tick loss with its yield inching up a basis point to 2.39%. For the week, the benchmark yield slipped two basis points after testing the 2.49% level on Wednesday.

Economic data included PPI and Michigan Sentiment:

Producer prices saw their largest one-month increase since April 2011, rising 0.5% in May after declining 0.4% in April while the Briefing.com consensus expected an increase of 0.4% 

Almost the entire increase in the PPI can be attributed to higher energy costs, and namely higher gasoline prices as total energy costs increased 5.9% in May after declining 2.9% in April 

Gasoline prices jumped 17.0% in May following a 4.7% decline in April

Food prices increased 0.8% in May after declining 0.9% in April

Excluding food and energy, core PPI increased 0.1% in May after decreasing 0.2% in April, which is what the consensus expected

The University of Michigan Consumer Sentiment Index increased to 94.6 in the preliminary June reading from 90.7 in May while the Briefing.com consensus expected an increase to 91.5

On Monday, the Empire Manufacturing Index for June (Briefing.com consensus 6.0) will be released at 8:30 ET while May Industrial Production (consensus 0.3%) and Capacity Utilization (consensus 78.3%) will both be reported at 9:15 ET. The day's data will be topped off with the 10:00 ET release of the NAHB Housing Market Index for June (expected 56).

 

Nasdaq Composite +6.7% YTD

Russell 2000 +5.0% YTD

S&P 500 +1.8% YTD

Dow Jones Industrial Average +0.5% YTD

Week in Review: Greek Debt Deal Remains Elusive

 

The major averages began the trading week on a cautious note with the S&P 500 (-0.6%) settling beneath its 100-day moving average (2,085) for the first time since late March. The benchmark index retreated into the afternoon while the Nasdaq Composite (-0.9%) underperformed throughout the day. Broadly speaking, the Monday session was very quiet with no corporate news to account for the decline; however, the continued lack of progress between Greece and its creditors weighed on investor sentiment in Europe and the U.S.

The stock market ended the Tuesday session near its flat line with the S&P 500 registering a slight gain (+0.04%) while the Nasdaq Composite (-0.2%) settled in the red. Equity indices slumped at the start with investor sentiment pressured by the continued lack of progress between Greece and its creditors. The ongoing uncertainty weighed on European markets, but they were able to climb off their lows into the close. Meanwhile, U.S. stocks hit their lows not long before Europe closed for the day before returning to their flat lines. The ensuing rebound helped stocks turn positive during afternoon action, but the S&P 500 could not overtake its 100-day moving average (2,085), settling below that mark for the second consecutive day. Interestingly, this was the first time that the benchmark index registered back-to-back settlements below the 100-day average since late October.

After struggling with its 100-day moving average (2,086) on Tuesday, the S&P 500 wasted no time charging back above that mark on Wednesday. The benchmark index gained 1.2% while the Dow (+1.3%) and Nasdaq Composite (+1.3%) outperformed throughout the session. In addition to regaining its 100-day average, the S&P 500 climbed above the 50-day average (2,102) after Bloomberg reported Germany may be willing to offer a staggered deal to Greece. This deal would allow the disbursement of additional bailout funds in exchange for a Greek commitment to executing one of the reforms requested by the creditors. On a related note, the European Central Bank increased Greece's allowance to Emergency Liquidity Assistance funds by EUR2.30 billion to EUR83 billion. The news jolted global equities, helping Germany's DAX end the day higher by 2.5%. Furthermore, selling in Germany's 10-yr bund resulted in the first test of the 1.00% level since October. Germany's benchmark yield ended the day below its session high of 1.06%, at 0.98% (+3 bps).

The market ended Thursday on a modestly higher note with the S&P 500 (+0.2%) posting its third consecutive advance. Equity indices rallied out of the gate, hitting their highs during the opening hour of action; however, the market was knocked back into the middle of its range after it was reported that International Monetary Fund representatives left Brussels for Washington due to insufficient progress between Greece and the creditors. Furthermore, IMF spokesman Gerry Rice stressed the continued presence of major differences, saying, "We are well away from an agreement." Despite the continued macro uncertainty, seven of ten sectors registered gains while consumer staples (-0.1%) and energy (-0.4%) spent the day in the red. In addition, technology (-0.1%) turned negative during the afternoon.