The Week In Review
The major averages ended the week on an upbeat note with the S&P 500 climbing 1.2%. Thanks to the advance, the benchmark index returned above its 200-day moving average (2,056), ending the week little changed.
Equities surged out of the gate after reports from last evening indicated that Greek officials sent a bailout request to the country's creditors, seeking EUR53.50 billion to cover loan obligations until June 2018. Interestingly, the proposal was very similar to the one that was rejected by 61.3% of voters in the Greek referendum on July 5. According to reports from Athens, the Greek parliament is expected to ratify the offer, but there was no official statement from the Eurogroup before the closing bell.
Furthermore, the Greek proposal includes a requirement for the creditors' commitment to restructure long-term debt; however, securing that commitment will be very difficult considering Germany's Finance Minister Wolfgang Schaeuble was quoted yesterday by Reuters as saying debt restructuring is not possible because it would "infringe the system of the European Union."
The lack of a response from the creditor side did not stop global equities from rallying with France's CAC leading European markets higher with a 3.3% advance. Meanwhile, selling in Germany's 10-yr bund sent its yield higher by 17 basis points to 0.89% while U.S. Treasuries also retreated with the 10-yr yield rising ten basis points to 2.42%.
Treasuries extended their losses during the early afternoon after Federal Reserve Chair Janet Yellen spoke in Cleveland, reiterating that the Fed still believes it will be appropriate to raise rates later this year. That being said, the Fed Chair said the outlook for the economy and inflation remains uncertain with unanticipated events having the potential to delay or accelerate the first rate hike.
All ten sectors posted gains with eight groups adding more than 1.0%. Most notably, the top-weighted technology sector (+1.6%) held the lead throughout the session while the second-largest group by market cap—financials (+1.2%)—followed not far behind.
The technology sector rallied behind its largest components like Apple (AAPL 123.30, +3.23), Google (GOOGL 556.11, +11.46), and Facebook (FB 87.95, +2.07) while high-beta chipmakers also displayed relative strength with the PHLX Semiconductor Index spiking 1.9%. To be fair, the index ended the week lower by 3.9% after both Advanced Micro Devices (AMD 1.96, -0.02) and QLogic (QLGC 11.48, +0.48) issued cautious guidance.
Elsewhere, the industrial sector (+1.0%) settled a bit behind the broader market, but that masked broad strength among transport stocks. The Dow Jones Transportation Average gained 1.9% to end the week higher by 1.0%. Airlines led today's advance with Alaska Air (ALK 70.55, +4.01) spiking 6.0% in reaction to upbeat traffic flow data.
For the week, four sectors registered gains with countercyclical consumer staples (+1.1%) and utilities (+0.5%) logging respective weekly gains of 2.0% and 1.7%. On the flip side, growth-sensitive energy (+0.6%) and materials (+1.5%) both lost near 1.5% for the week.
Today's participation was roughly in-line with recent totals as 720 million shares changed hands at the NYSE floor.
Monday's data will be limited to the 14:00 ET release of the Treasury Budget for June.
Nasdaq Composite +5.5% YTD
Russell 2000 +3.9% YTD
S&P 500 +0.9% YTD
Dow Jones Industrial Average -0.4% YTD
Week in Review: China and Greece in the Spotlight
Monday was a busy day for equities across the globe, beginning with an overnight slide in the futures market after the Greek referendum produced 61.3% 'no' vote, rejecting the bailout terms previously proposed by eurozone creditors. The results of the referendum allowed Greece's Syriza party to stay in power, but Finance Minister Yanis Varoufakis stepped down with Oxford-educated Euclid Tsakalotos assuming Mr. Varoufakis' place. The continued uncertainty about Greece's future in the eurozone pressured European markets with Germany's DAX and Italy's MIB losing 1.5% and 4.0%, respectively. Domestically, the S&P 500 (-0.4%) began the session just above its 200-day moving average (2,055), but an aggressive bid lifted the index back to its flat line about an hour after the opening bell. However, that rebound was short-lived, fading into the afternoon.
On Tuesday, the stock market was on track for a sharp decline in the early going, but the opening weakness became a distant memory by the end of the trading day. The S&P 500 gained 0.6% after being down 1.2% at the start while the Nasdaq Composite (+0.1%) underperformed throughout the day. Equity indices struggled at the start amid rising macroeconomic uncertainty overseas. Greece was in the headlines, but the day's Eurogroup meeting ended rather quickly with Chief Jeroen Dijsselbloem saying the Eurogroup expects Greece to submit a formal request for access to the European Stability Mechanism the following day. As for China, the Shanghai Composite lost 1.3% in the Tuesday session despite Monday's CNY1.80 trillion liquidity injection from the People's Bank of China and other emergency measures undertaken by the government. As a result nearly 25% of A-share listings were halted over the past seven days as companies scrambled to protect their market values. Investors appeared to be concerned with the overseas uncertainty at the start of the session, but the heavy selling abated just as markets across Europe closed for the day. The S&P 500 then returned above its 200-day moving average (2,055) and continued its charge into positive territory.
The major averages ended the midweek session on a lower note following a trading day that featured numerous trading halts at home and abroad. The S&P 500 fell below its 200-day moving average (2,056), ending lower by 1.7% while the Nasdaq Composite (-1.8%) underperformed. Equities slumped at the start of the session in response to the overnight weakness in the futures market that could be traced back to the continued selling efforts in China. The Shanghai Composite lost 5.9% on Wednesday, which resulted in the number of companies suspended from trading for volatility increasing to 50%+. Futures on the S&P 500 held a 30-point decline during the overnight session, but cut their losses in half ahead of the New York open. The rebound took place amid a rally in Europe, following reports that Greek officials have requested a three-year bailout program that includes tax reforms; but the offer was very similar to the one that was rejected by Greek voters during Sunday's referendum.
The market ended Thursday in the green, but not before enduring a daylong retreat from its opening high. The S&P 500 was up more than 1.3% at the start, but narrowed its advance to 0.2% by the closing bell. Equity indices charged out of the gate after the overnight session featured a rebound in China's Shanghai Composite, which climbed 5.8%. The advance occurred as officials in China continued introducing measures aimed at halting the recent market plunge with reports indicating a special taskforce targeting "hostile short-sellers" will be established by China's Public Security Ministry and China Securities Regulatory Commission. Elsewhere, optimistic-sounding remarks from top Eurozone officials also contributed to the opening strength as European Council President Donald Tusk said he expects Greece to submit concrete, realistic reform proposals. The opening spike sent the S&P 500 above its 200-day moving average (2,056), but the index returned below that mark during the afternoon. Cyclical sectors displayed broad strength in the early going, but the top-weighed technology sector (-0.3%) faded from its high during the afternoon, ending among the laggards.