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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

10/9/15

The stock market ended a strong week on a subdued note. The S&P 500 added 0.1% after spending the day in a 13-point range while the Nasdaq Composite (+0.4%) outperformed. For the week, the benchmark index climbed 3.3% while the Nasdaq Composite advanced 2.6%.

 

The Friday session made for a quiet finish to a week that saw all ten sectors register gains. The S&P 500 began the trading day above its flat line, but slipped into the red around midday. The index traded just below its unchanged level into the afternoon, but turned green during the final hour.

 

With the benchmark index settling near its flat line, five sectors registered gains while the other five ended lower. Most notably, energy (-0.7%) and financials (-0.6%) spent the day below their flat lines, which prevented the market from stretching its legs.

 

Even though the energy sector lost 0.7% on Friday, the group still gained 7.8% for the week, finishing well ahead of its peers. To little surprise, the move was supported by strength in crude oil futures as the energy component climbed 0.4% to $49.67/bbl. For the week, WTI crude soared 9.1% to mid-July levels.

 

On the flip side, the technology sector (+0.5%) finished in the lead, giving a boost to the Nasdaq Composite. Top-weighted sector components like Apple (AAPL 112.09, +2.59), Alphabet (GOOGL 671.24, +4.24), Facebook (FB 93.24, +0.77), and Oracle (ORCL 38.10, +0.36) gained between 0.6% and 2.4% while high-beta chipmakers underperformed with the PHLX Semiconductor Index falling 0.8%. That being said, the SOX Index gained 3.5% for the week.

 

Elsewhere, the health care sector (+0.4%) settled just behind technology to lock in a weekly gain of 0.3%. The influential group outperformed on Friday, but struggled earlier in the week due to continued volatility in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 308.45, +1.25) climbed 0.4% on Friday, but still lost 2.2% for the week.

 

Also of note, the industrial sector (+0.3%) finished among the leaders thanks to relative strength among transport stocks. The Dow Jones Transportation Average rallied 0.8%, extending its weekly gain to 4.8%. Only five DJTA components ended in the green while airlines saw broad strength with United Continental (UAL 55.71, +3.45) soaring 6.6% after reporting a 1.4% year-over-year increase in September consolidated traffic.

 

Similar to stocks, Treasuries spent the day inside narrow ranges, posting slim gains, with the 10-yr yield slipping one basis point to 2.10%.

 

Economic data was limited to Import/Export Prices and Wholesale Inventories:

 

Export prices, excluding agriculture, decreased 0.6% in September after decreasing 1.3% in the prior reading

Excluding oil, import prices decreased 0.3%, which followed last month's decrease of 0.4%

Wholesale inventories increased 0.1% in August after a downwardly revised 0.3% decline (from -0.1%) while the Briefing.com consensus expected no change

Durable wholesale inventories increased 0.3% after declining 0.1% in July with a 0.3% decline in automotive inventories offsetting a 0.9% increase in electrical inventories and a 0.5% increase in machinery inventories

Nondurable wholesale inventories declined 0.2% in August after declining 0.5% in July with lower oil prices helping reduce petroleum inventories (-1.4%) for the second month in a row. Meanwhile, farm product inventories declined 3.1% after declining 1.2% in July

Monday's session will be free of economic data.

 

Nasdaq Composite +2.0% YTD

S&P 500 -2.1% YTD

Dow Jones Industrial Average -4.1% YTD

Russell 2000 -3.3% YTD

Week in Review: Cyclical Sectors Lead Stocks Higher

 

The stock market enjoyed an upbeat start to the trading week with the S&P 500 returning near its rebound high from the middle of September. The benchmark index climbed 1.8% while the Nasdaq Composite (+1.6%) followed not far behind. The Monday buying frenzy was not fueled by quarterly earnings considering the first busy portion of the reporting period was still a couple weeks away. Instead, the advance was a continuation of the Friday rally, which was predicated on the belief that a disappointing September Nonfarm Payrolls report would prevent the Federal Reserve from raising rates at the October meeting. In that same vein, the bad-is-good dynamic appeared to be on display overseas as Japan's Nikkei (+1.6%), Germany's DAX (+2.7%), and France's CAC (+3.5%) vaulted higher even though Services PMI readings in Japan (51.4; prior 53.7) and the eurozone (53.7; expected 54.0) disappointed.

 

The market endured a shaky session on Tuesday with the Dow Jones Industrial Average (+0.1%) eking out a slim gain while the S&P 500 (-0.4%) and Nasdaq Composite (-0.7%) underperformed throughout the day. For the second day in a row, the U.S. trading day began after the release of some disappointing economic data overseas. This time, it was Germany's Factory Orders report for August, which showed a 1.8% decline while the market had expected an increase of 0.5%. That being said, European equities were able to register gains after erasing their early losses, but the strength did not carry over the U.S. session as continued weakness in the biotech space kept the broader market under pressure. Specifically, the iShares Nasdaq Biotechnology ETF (IBB 301.91, -11.29) lost 3.6% after surrendering 0.7% on Monday. On a related note, the health care sector tumbled 2.3% while most other influential sectors also struggled.

 

The Wednesday session ended on a higher note with the S&P 500 climbing 0.8% while the Nasdaq Composite (+0.9%) settled a bit ahead despite showing relative weakness in the early going. Overall, the midweek affair was very quiet, but there was some volatility present in the market as stocks surrendered their opening gains going into the afternoon, but returned into the middle of their ranges by the closing bell. It is worth noting that the pullback from opening highs occurred after the S&P 500 made a brief appearance above its 50-day moving average (1,997), which also served as resistance during afternoon action. Commodity-sensitive energy (+1.3%) and materials (+1.3%) paced the opening move higher, but both sectors surrendered a portion of their gains as the session wore on. The energy sector was up nearly 2.5% at the start, but retreated from its high as crude oil erased its intraday gain. The energy component settled lower by 1.5% at $47.81/bbl after sliding from its intraday high in reaction to the latest Energy Information Administration's inventory report, which showed a 3.07 million barrel build.

 

Thursday ended on an upbeat note after equities erased their opening losses. The S&P 500 climbed 0.9% while the Nasdaq Composite (+0.4%) underperformed throughout the day. Equity indices struggled at the start of the trading day, responding to a mixed overnight session that featured losses among most Asian indices while European stocks fought to end the day with modest gains. The advance in Europe followed the release of the latest policy meeting minutes from the European Central Bank, which stressed that a lot more stimulus still has to work its way through the financial system. Once the U.S. session got going, stocks spent the first half in the red as heavily-weighted technology (+0.5%) and health care (+0.4%) struggled; however, the two sectors were lifted off their lows during afternoon action as the S&P 500 climbed above its 50-day moving average (1,995). The afternoon rebound accelerated after the release of the September FOMC minutes, which revealed that only one Committee member believed that economic conditions do not warrant a rate hike while other members believed that a rate hike will be appropriate before the end of 2015. Despite the majority view regarding the timing of the first rate hike, several members expressed concern over downside risks to inflation.