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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

7/13-7/17/15

The major averages finished an upbeat week on a mixed note with the Nasdaq Composite (+0.9%) posting a solid gain while the Dow (-0.2%) and S&P 500 (+0.1%) underperformed throughout the day. For the week, the Nasdaq spiked 4.3% while the Dow and S&P 500 climbed 1.8% and 2.4%, respectively.

Equity indices diverged at the start with the Nasdaq Composite receiving a boost from Google (GOOGL 699.62, +97.84) after the index heavyweight reported better than expected earnings. The stock soared 16.3% to a new record high, lifting the Nasdaq Composite to a fresh record close of its own (5,210.14). Furthermore, Google underpinned the technology sector (+1.8%) which was the only group that spent the entire day in positive territory.

Meanwhile, many other technology components struggled with high-beta chipmakers showing relative weakness throughout the day. The PHLX Semiconductor Index was down as much as 1.0%, but narrowed its loss to 0.2% by the close. For the week, the chipmaker index added 1.2% while the technology sector spiked 5.3%.

Elsewhere among cyclical sectors, consumer discretionary (-0.2%) and financials (-0.2%) lagged throughout the day, which kept the S&P 500 below its flat line into the afternoon. Similarly, the energy sector (-1.1%) spent the day behind other groups as crude oil marked a new low for the week ($50.16/bbl) before erasing its loss by the pit close to end at $50.88/bbl.

Staying on the growth-sensitive side, the industrial sector (unch) slipped behind the S&P 500 during afternoon action after several sector components reported earnings. Transport stocks outperformed with Kansas City Southern (KSU 98.60, +6.05) spiking 6.5% after reporting a one-cent beat while JB Hunt (JBHT 85.69, -0.10) shed 0.1% after reporting a two-cent miss. For its part, the broader Dow Jones Transportation Average gained 0.7% to extend its weekly advance to 1.1%.

Moving to large cap industrial components, General Electric (GE 27.24, +0.20) and Honeywell (HON 105.54, +1.97) registered respective gains of 0.7% and 1.9% after the former reported in-line results while the latter beat estimates; however, their strength could not offset losses among the likes of Boeing (BA 146.84, -1.65), Caterpillar (CAT 83.16, -0.60), and Deere (DE 96.96, -0.37).

Things did not look much better on the countercyclical side where the utilities sector lost 1.1% while consumer staples (-0.1%), health care (-0.2%), and telecom services (-0.3%) registered slimmer losses.

Treasuries held modest gains throughout the day, ending near the middle of their trading ranges with the 10-yr yield lower by a basis point at 2.34%.

Today's participation was ahead of average as options expiration led to increased activity with more than 850 million shares changing hands at the NYSE floor.

Economic data included CPI, Housing Starts/Building Permits, and Michigan Sentiment:

The CPI increased 0.3% in June after a 0.4% increase in May while the Briefing.com consensus expected an increase of 0.3% 

As expected, energy costs continued their upward move with prices rising 1.7% in June after a 4.3% increase in May 

Gasoline prices made up the bulk of the increase, rising 3.4% in June after a 10.4% increase in May

Excluding food and energy, core CPI increased 0.2% in June after a 0.1% increase in May while the consensus expected an increase of 0.2%

Housing starts increased 9.8% in June from an upwardly revised 1.069 million (from 1.036 million) in May to 1.174 million while the Briefing.com consensus expected an increase to 1.120 million 

At first glance, the jump in starts looks impressive, but the entire increase came from the volatile multifamily construction sector 

Multifamily construction increased 29.4% to 489,000 in June from 378,000 in May, which was the highest level since 501,000 units were started in April 1988

The University of Michigan's Consumer Sentiment Index declined to 93.3 in the preliminary July reading from 96.5 in June while the Briefing.com consensus expected a decrease to 96.1 

Consumer sentiment typically follows trends in gasoline costs, stock market movements, employment, and media reports 

In this case, dire economic reports about Greece and the eurozone and some volatility in the equity market likely offset recent improvements in gasoline prices and employment conditions

Investors will not receive any economic data on Monday or Tuesday.

 

Nasdaq Composite +9.9% YTD

Russell 2000 +5.2% YTD

S&P 500 +3.2% YTD

Dow Jones Industrial Average +1.5% YTD

Week in Review: Nasdaq Sets New Record High

 

The stock market began the trading week on an upbeat note with the S&P 500 registering the bulk of its 23-point gain shortly after the opening bell. The benchmark index padded that advance during the final hour, settling just below its 50-day moving average (2,100). Equity indices spiked at the start after lengthy weekend negotiations between Greek representatives and eurozone officials produced a framework for the third rescue package for Greece. The agreement, which includes EUR25 billion in bank recapitalization funds, was cheered by global equity markets with risk assets surging while outflows from the Treasury market weighed on the 10-yr note, sending its yield higher by three basis points to 2.43% after testing the 2.47% level in the early morning. All ten sectors ended in the green with five groups adding 1.0% or more. Heavily-weighted sectors fueled the advance with the technology sector (+1.6%) holding the lead throughout the session.

 

The major average registered their fourth consecutive advance on Tuesday with the S&P 500 climbing 0.5%. The benchmark index reclaimed its 50-day moving average (2,100) at the start of the session while the tech-heavy Nasdaq Composite (+0.7%) outperformed throughout the trading day. Equity indices began near their flat lines after overnight reports from Vienna revealed that P5+1 negotiators agreed to a nuclear deal with Iranian representatives. The news had little impact on the market, but crude oil was down about 2.0% overnight amid expectations that global oil supplies will increase once Iran begins selling its oil on the open market. However, an intraday rebound resulted in crude oil climbing 1.7% to $53.06/bbl. Accordingly, the energy sector (+0.8%) climbed alongside crude oil to end the day among the leaders, while only the health care sector (+1.0%) had a better showing. Biotechnology led the sector higher with iShares Nasdaq Biotechnology ETF (IBB 387.94, +8.79) spiking 2.3%, which contributed to the relative strength in the Nasdaq.

 

The key indices snapped their four-day win streak on Wednesday as the market slipped into the red during afternoon action. The S&P 500 shed 0.1% to narrow its weekly gain to 1.5%. Equities started the day near their flat lines, seeing little reaction to a busy overnight session that featured the release of China's Q2 GDP (+7.0% year-over-year; consensus 6.9%) and news that the Bank of Japan lowered its GDP forecast for the fiscal year to 1.7% from 2.0%. Stocks climbed out of the gate, but the S&P 500 could not extend too far above its flat line as most sectors displayed early losses; however, relative strength in financials (+0.8%), health care (+0.1%), and technology (+0.1%) kept the market in positive territory into the afternoon. The financial sector held the lead throughout the session thanks to support from three large components. Specifically, Bank of America (BAC 17.68, +0.55) PNC (PNC 98.32, +0.82), and U.S. Bancorp (USB 45.53, +1.65) gained between 0.8% and 3.8% after reporting earnings. Bank of America and PNC reported better than expected results while U.S. Bancorp's report was in-line with estimates.

 

The stock market finished Thursday on a higher note with the Nasdaq Composite (+1.2%) settling at a new record high. Meanwhile, the S&P 500 (+0.8%) and the Dow Jones Industrial Average (+0.4%) ended the day closer to their flat lines. Equity indices spiked at the start, responding to overnight strength in the futures market. Shortly after Wednesday's close, Intel (INTC 29.90, +0.21) and Netflix (NFLX 115.81, +17.68) reported better than expected results, which led to a surge in Nasdaq futures. Earnings notwithstanding, Nasdaq and S&P 500 futures received a second boost after the Greek parliament voted 229-64-6 in favor of austerity measures that will allow bailout negotiations to continue with the country expected to receive EUR86 billion in rescue funds. Furthermore, the European Central Bank, which held a policy meeting on Thursday, raised the country's allowance to Emergency Liquidity Assistance by EUR900 million, which will pave the way for Greek banks to open as soon as Monday.