The Week In Review
The stock market endured a sleepy Friday session that capped an upbeat week. The S&P 500 added 0.5%, extending its weekly gain to 0.9%, while the Nasdaq Composite (+0.3%) underperformed on Friday, but still ended the week higher by 1.2%.
Overall, the Friday affair was pretty uneventful as the S&P 500 spent the bulk of the day in a ten-point range, climbing to a new high during the final hour. Four sectors settled ahead of the S&P 500 while the remaining six ended in-line with or behind the benchmark index.
Consumer staples (+1.0%) and health care (+1.0%) settled in the lead with the health care space holding up well despite an intraday swoon in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 314.32, -0.44) shed 0.1% after being up 1.1% at the start of the trading day. For the week, the health care sector gained 1.9% while the biotech ETF also climbed 1.9%.
Moving to the cyclical side, consumer discretionary (+0.6%) and financials (+0.4%) displayed relative strength since the opening bell while energy (+0.2%), industrials (-0.2%), materials (unch), and technology (+0.3%) spent the bulk of the session in the red.
Interestingly, the energy sector faced a daylong struggle even though crude oil erased its early loss to end the day higher by 1.9% at $47.26/bbl.
Elsewhere, the industrial sector (-0.2%) spent the day behind the remaining nine groups to widen its weekly decline to 1.2%. Top-weighted sector component General Electric (GE 28.98, +0.95) spiked 3.4% after reporting operating earnings of $0.32/share, which may not compare to estimates as the company continues divesting GE capital assets, but that strength could not offset broad weakness among transport stocks. The Dow Jones Transportation Average fell 1.6% with KC Southern (KSU 87.37, -10.63) diving 10.9% in reaction to disappointing quarterly results.
Similar to stocks, Treasuries drifted inside narrow ranges, but unlike equities, the 10-yr note settled on its low with the benchmark yield rising two basis points to 2.03%.
Despite the quiet intraday action, more than 900 million shares changed hands at the NYSE floor with options expiration boosting the final tally.
Economic data was limited to Industrial Production, Michigan Sentiment, and JOLTS:
Industrial production declined 0.2% in September after declining an upwardly revised 0.1% (from -0.4%) in August while the Briefing.com consensus expected a drop of 0.2%
Manufacturing production declined for a second consecutive month and for a third time over the past four months. Production fell 0.1% in September after declining 0.4% in August
The decline in manufacturing production was the result of a 0.1% decline in durable goods production. Despite lower output in the petroleum sector, nondurable goods production was flat in September
The University of Michigan Consumer Sentiment Index increased to 92.1 in the preliminary October reading from 87.2 in September while the Briefing.com consensus expected an increase to 88.4
The Current Conditions Index increased to 106.7 in October from 101.2 in September while the Expectations Index increased to 82.7 from 78.2
The August Job Openings and Labor Turnover Survey showed that job openings decreased to 5.370 million from 5.668 million
Monday's data will be limited to the 10:00 ET release of the NAHB Housing Market Index for October (Briefing.com consensus 62).
Nasdaq Composite +3.2% YTD
S&P 500 -1.3% YTD
Dow Jones Industrial Average -3.4% YTD
Russell 2000 -3.6% YTD
Week in Review: Stimulus Chatter Picks Up
The stock market began the trading week on a sleepy note with a Monday session that saw the S&P 500 bounce around an eight-point range. The benchmark index settled higher by 0.1% while the Nasdaq Composite (+0.2%) outperformed slightly. With the bond market closed for Columbus Day, a fair share of participants elected to forego the Monday session. The subdued activity was highlighted by below-average trading volume as fewer than 700 million shares changed hands at the NYSE floor. Eight sectors finished the day with gains while commodity-sensitive energy (-1.1%) and materials (-0.9%) underperformed throughout the session. The energy sector finished at the bottom of the leaderboard, narrowing its October gain to 10.9% while crude oil surrendered 5.2% to settle at $47.19/bbl.
The market ended Tuesday on a lower note after the major averages failed to hold their slim intraday gains. The S&P 500 settled lower by 0.7% while the Nasdaq Composite (-0.9%) underperformed. Overall, the Tuesday affair was relatively quiet with trading volume surpassing Monday's total by a relatively slim margin. To that point, fewer than 850 million shares changed hands at the NYSE floor. Equity indices faced some selling pressure after China's September trade balance ($60.34 billion; expected $46.79 billion) showed a 20.4% decline in imports (expected -15.0%), which was the 11th consecutive drop in that category, stirring up concerns about China's demand for goods and services from its neighbors. Accordingly, most Asian markets posted losses on Tuesday and the defensive sentiment infiltrated the European session.
The major averages ended the midweek session on a lower note with the S&P 500 (-0.5%) registering its second consecutive decline. The benchmark index settled near its worst level of the day while the Nasdaq Composite (-0.3%) outperformed. Equities displayed modest gains in the early going, but relative weakness in several influential sectors prevented the S&P 500 from holding its early gain. The index made another brief appearance above its flat line during the early afternoon, but slid to lows before the closing bell. The reasons for the retreat were not particularly difficult to find as economic data reported in the morning disappointed while quarterly earnings received since Tuesday's closing bell did not inspire confidence either. Eight sectors registered losses with four falling 1.0% or more. The financial sector (-1.0%) settled among the laggards after showing relative weakness throughout the day.
Equities charged higher on Thursday, erasing their entire decline from the early portion of the week. The S&P 500 spiked 1.5% while the Nasdaq Composite (+1.8%) outperformed. The broad-based rally in the U.S. followed an overnight session that featured dovish comments from two European Central Bank members, setting expectations for more monetary easing from the central bank. This started with Vitor Constancio who spoke in Hong Kong, joining the chorus of voices calling on the Federal Reserve to delay its first rate hike while Ewald Nowotny said that more needs to be done by the ECB in light of soft inflation data. The dovish remarks from two ECB policymakers weighed on the euro, sending the single currency lower by 0.8% against the dollar to 1.1383. To be fair, the Dollar Index (94.46, +0.47), which gained 0.5%, spiked to highs after the release of economic data, which included a 42-year low initial claims reading (255,000; Briefing.com consensus) and an in-line CPI report (+0.2%).