The Week In Review
The stock market finished the abbreviated trading week on a higher note. The S&P 500 added 0.5%, extending its weekly gain to 2.1% while the Nasdaq Composite (+0.5%) outperformed slightly, adding 3.0% for the week.
Broadly speaking, the Friday session was very quiet and did not feature any major macroeconomic or company-specific developments. Instead, stocks began the day under modest pressure as noteworthy weakness in the energy sector (-0.8%) fueled the opening retreat. The energy sector settled not far above its low while the remaining groups fared much better and helped the market erase its early loss.
Staying in the energy sector, the cyclical group represented the lone decliner of the week, losing 0.7% since last Friday. Crude oil contributed to underperformance in the sector as the energy component settled lower by 2.8% at $44.63/bbl after briefly dipping below $44.20/bbl in the morning. For the week, WTI crude surrendered 3.1% with today's decline following cautious comments from Goldman Sachs. Specifically, the investment bank cut its 2015 price forecast to $48.10/bbl from $52.00/bbl and lowered the 2016 outlook to $45.00/bbl from $57.00/bbl.
Elsewhere, the other commodity-related sector—materials (-0.2%)—also settled in the red while other groups posted gains. Notably, consumer discretionary (+0.7%), technology (+0.6%), and health care (+0.7%) gathered steam as the market climbed off its session low.
Thanks to today's gain, the technology sector gained 3.1% for the week, which was good enough for the sector to end ahead of its peers. The influential sector followed Apple's (AAPL 114.02, +1.45) lead as the stock jumped 1.3% on Friday and 4.4% for the week.
The relative strength in technology helped the Nasdaq stay ahead of the broader market through the week, but the tech-heavy index also received a measure of support from health care, and specifically, biotechnology. To that point, the health care sector (+0.7%) finished among today's leaders, extending its weekly gain to 2.8%. As for biotechnology, the high-beta group enjoyed a strong week, evidenced by the iShares Nasdaq Biotechnology ETF (IBB 354.74, +4.02), which climbed 1.2% on Friday to end the week higher by 5.2%.
The afternoon recovery in stocks had little impact on Treasuries as the 10-yr note remained near its high with the benchmark yield ending the day lower by four basis points at 2.18%.
Today's participation was below recent averages as roughly 810 million shares changed hands at the NYSE floor.
Economic data included PPI, Michigan Sentiment, and Treasury Budget:
Producer prices were flat in August after increasing 0.2% in July while the Briefing.com consensus expected a decline of 0.1%
Energy prices declined 3.3% in August, which was the largest downturn since a 10.1% drop in January, after falling 0.6% in July
Food prices increased 0.3% in August after declining 0.1% in July with the aftermath of the bird flu epidemic continuing to wreak havoc on the egg supply, driving egg prices up 32.2%
Excluding food and energy, core PPI increased 0.3% for a third consecutive month in August while the consensus expected an increase of 0.1%
The University of Michigan Consumer Sentiment Index dropped to 85.7 in the preliminary September reading from 91.9 in August while the Briefing.com consensus expected a drop to 91.5
The Current Conditions Index fell to 100.3 in September from 105.1 in August while the Expectations Index declined to 76.4 from 83.4
The overall decline in the Consumer Sentiment Index can be traced to the pullback in stock prices that began at the end of August while other measures that typically impact confidence levels --gasoline prices and employment conditions—continued to improve over the past few weeks
The Treasury Budget statement for August showed a deficit of $64.40 billion while the Briefing.com consensus expected a deficit of $62.00 billion
The Treasury data are not seasonally adjusted so the August deficit cannot be compared to the $149.20 billion deficit recorded in July Investors will not receive any economic data on Monday.
Nasdaq Composite +1.8% YTD
Russell 2000 -3.7% YTD
S&P 500 -4.8% YTD
Dow Jones Industrial Average -7.8% YTD
Week in Review: Stocks Advance Ahead of FOMC Rate Decision Week
On Monday, bond and equity markets were closed for Labor Day.
On Tuesday, the restless stock market began the holiday-shortened week with a broad-based surge. The Nasdaq Composite led the way, spiking 2.7% while the S&P 500 jumped 2.5% with the bulk of the advance taking place at the opening bell. The buying surge at the start reflected a build-up of strength in the futures market that took root on Monday as U.S. futures labored their way higher alongside European equities. Once the Tuesday session began in Asia, China's Shanghai Composite rallied 2.9% with speculation of continued state support for equities overshadowing mediocre trade data (trade balance $60.24 billion; expected $48.20 billion) that showed a 5.5% year-over- year decline in exports (expected -6.0%) and a 13.8% drop in imports (expected -8.2%; prior -8.1%). The late-afternoon gains in China stirred up overall risk tolerance, leading to more gains in the U.S. futures market while European equities enjoyed an opening surge. Better than expected economic data highlighted the European session as eurozone Q2 GDP was unexpectedly revised up to 0.4% quarter-over-quarter from 0.3%.
The stock market ended Wednesday on a defensive note despite enjoying an upbeat start to the session. The S&P 500 began the day with a 15-point gain, which morphed into a 27-point loss by the close. The benchmark index surrendered 1.4% while the Nasdaq Composite (-1.2%) settled a bit ahead. Equity indices hit their highs shortly after the opening bell with the early move fueled by strengthening risk appetite overseas. To that point, Asian markets posted solid gains with China's Shanghai Composite jumping 2.3% amid continued speculation about government involvement in the market while Japan's Nikkei soared 7.7%, registering its largest one-day gain since October 2008, after Prime Minister Shinzo Abe pledged to lower the corporate tax rate by at least 3.3%. The positive vibes carried into the European session, but the demand for equities began receding once the U.S. market opened. The S&P 500 spent the first 90 minutes of the day in a slow retreat from its high and hovered near its flat line into the early afternoon. The index then dipped into negative territory alongside Apple (AAPL 110.15, -2.16) as the largest stock by market cap slid to a session low in reaction to the company's underwhelming product refresh event. Shares of Apple settled lower by 1.9% while the broader technology sector (-1.3%) had a better showing than its leading component, ending just ahead of the market.
Equity indices ended the Thursday session on a higher note after enduring a shaky start to the trading day. The S&P 500 added 0.5% while the Nasdaq Composite (+0.8%) outperformed. The key indices opened near their flat lines after the futures market was whipped around during pre-market action. The early-morning volatility followed a defensive session in Asia while European markets also struggled. Once the U.S. session got going, the market traded in sideways fashion through the first hour before climbing higher. However, the S&P 500 found resistance near the 1,965 level in the early afternoon, slipping into the close. Heavily-weighted technology (+1.0%) and health care sectors (+0.9%) displayed strength from the start, and that dynamic kept the S&P 500 from sliding too far below its flat line during the opening hour. The top-weighted tech sector rallied behind Apple (AAPL 112.57, +2.42), which spiked 2.2%, while other large cap components posted slimmer gains.