Market Recap- S&P 500 Endures Worst Week Since 2008

The stock market endured its worst week since 2008, as the S&P 500 fell 11.5% while the Dow Jones Industrial Average surrendered 12.4%.

Equities faced heavy selling pressure throughout the week as coronavirus-related fears caught up to the market, which appeared immune to these concerns just a week ago. The accelerating spread of the coronavirus outside of China was the main worry, leading to greater uncertainty about the viability of global supply chains. Intel (INTC) ordered its employees to avoid travel to China and several other countries, but on the bright side, Apple (AAPL) CEO, Tim Cook, said on Thursday that his company is working toward resumption of full production.

U.S. health officials acknowledged that the coronavirus is likely to spread through the U.S., which contributed to the pressure on stocks. The CBOE Volatility Index jumped more than 23 points to 40%, ending the week at its highest level since February 2018 when an inverse volatility ETN imploded.

The communication services sector (-9.5%) was the only group with a slimmer loss than 10.0% while the remaining sectors retreated between 10.4% (consumer staples) and 15.4% (energy). The growth-sensitive energy sector widened its Q1 loss to 24.7% while crude oil lost $8.54, or 16.0%, since last Friday, falling to its lowest level since late 2018.

Treasuries charged higher throughout the week, sending the 10-yr yield lower by 34 basis points to a fresh record low of 1.13%.

Market Recap - Stock Market Hits New Highs Mid-Week but Sells Off at the End

The S&P 500 (-1.3%) and Nasdaq Composite (-1.6%) set new intraday and closing records this week as investors remained unconcerned by the coronavirus, but stocks sold off to end the week amid a pervasively defensive tone. The Dow Jones Industrial Average lost 1.4%, and the Russell 2000 lost 0.5%.

The week started with Apple (AAPL), the world’s largest technology company by market cap, providing a revenue warning for the March quarter due to the coronavirus. Shares recouped initial losses a day later, as investors viewed the situation as temporary and China-specific, but it was hard to ignore the widening spread of the virus and the defensive positioning in the market.

U.S. Treasuries, gold ($1649.90, +67.20, +4.3%), and the CBOE Volatility Index (17.08, +3.40, +24.9%) advanced noticeably during the week, and barely moved even when the market hit new highs and momentum stocks like Tesla (TSLA) and Virgin Galactic (SPCE) extended their parabolic runs. Part of the defensiveness could be attributed to the elevated valuations in the market clashing with growth risks due to the coronavirus.

Cyclical sectors, and mega-cap stocks, underperformed, with the S&P 500 information technology (-2.5%), financials (-1.3%), and industrials (-1.2%) sectors leading the retreat. The defensive-oriented real estate sector (unch) was the lone group to avoid a weekly loss.

If one were to remain constructive on the market, one could point to this week’s upbeat economic data. Building permits climbed to a near 13-year high in January, weekly jobless claims remained at low levels, and the Philadelphia Fed Index surged to 36.7 in February (Briefing.com consensus 10.7) from 17.0 in January. The data wasn’t enough to prevent this week’s profit taking, though.

The 2-yr yield declined seven basis points to 1.35%, and the 10-yr yield declined 11 basis points to 1.47%. The U.S. Dollar Index closed 0.2% higher to 99.32 after setting a three-year high (99.61) during the week. WTI crude rose 2.8%, or $1.44, to $53.37/bbl.

Market Recap -Market Stays Bullish in February

It was another record-setting week, as the market remained undeterred by the coronavirus and stayed on its bullish trend. The Nasdaq Composite (+2.2%) and Russell 2000 (+1.9%) set the pace, followed by the S&P 500 (+1.6%) and Dow Jones Industrial Average (+1.0%).

Most of this week’s gains came on Monday as investors continued to pile into shares of mega-cap technology companies. Reports that highlighted the slowing rate of the coronavirus solidified the gains, and the market barely reacted to follow-up reports indicating a spike in new cases

All 11 S&P 500 sectors finished with gains, including four that rose at least 2.0% -- real estate (+4.8%), consumer discretionary (+2.6%), utilities (+2.4%), and information technology (+2.3%). The energy sector (+0.3%) underperformed despite a 3.1% bounce in WTI crude ($51.93/bbl, +1.58).

The Philadelphia Semiconductor Index regained momentum, rising 5.0% this week amid positive analyst recommendations and encouraging results and guidancefrom NVIDIA (NVDA). Shares of NVIDIA climbed 15% this week

The Philadelphia Semiconductor Index regained momentum, rising 5.0% this week amid positive analyst recommendations and encouraging results and guidancefrom NVIDIA (NVDA). Shares of NVIDIA climbed 15% this week

There was still a defensive tone, though, evidenced by the gains in the real estate and utilities sectors. U.S. Treasuries finished the week little changed from the prior week. The 2-yr yield increased three basis points to 1.42%, while the 10-yr yield remained unchanged at 1.58%. The U.S. Dollar Index advanced 0.4% to 99.12.

Market Recap-Stock Market Snaps Back to Record Highs

The stock market rallied to new heights this week, as investors looked past coronavirus concerns and drew support from positive fundamentals. The Nasdaq Composite outperformed with a 4.0% weekly gain, followed by the S&P 500 (+3.2%), Dow Jones Industrial Average (+3.0%), and Russell 2000 (+2.7%).

The prevailing view was that the economy is fine and any negative impact resulting from the coronavirus will be minimal, based on economic actions taken by China, reports of progress being made toward a vaccine, and upbeat U.S. economic data. In other words, the buy-thedip trade was backed by several positive developments this week

Ten of the 11 S&P 500 sectors contributed to the advance, especially the information technology (+4.5%) and materials (+4.2%) sectors. The utilities sector (-0.6%) was the lone holdout.

Data showed nonfarm payrolls grow by 225,000 in January (Briefing.com consensus 164,000), the January ISM Manufacturing Index return into expansion territory after five straight months of contraction, the ISM NonManufacturing Index accelerate for the second straight month for January, and weekly jobless claims fall to their lowest level in nine months.

China shored up confidence after it injected liquidity into its markets to help offset any impact from the coronavirus and said it will cut tariffs on $75 billion of U.S. imports by 50% on Feb. 14. In addition, reports indicated that the People’s Bank of China is planning additional stimulus that will encourage lending activity.

The coronavirus isn’t in the rear-view mirror just yet, as some companies like Walt Disney (DIS) and Nike (NKE) said it will have a negative impact on financial results, but the market is optimistic it won’t get worse. Apple (APPL) for its part temporarily closed its China stores but shares still rose more than 3% this week.

Tesla (TSLA) was arguably the story stock of the week after shares rose as much as 48.9% in a span of less than two days in a short squeeze. Shares finished the week higher by 15.0%. Separately, Alphabet (GOOG) reported revenue that was below expectations, but shares overcame initial weakness.

U.S. Treasuries finished the week lower, driving yields higher across the curve. The 2-yr yield increased seven basis points to 1.39%, and the 10-yr yield increased six basis points to 1.58%. The U.S. Dollar Index rose 1.3% to 98.69. WTI crude fell 2.4%, or $1.23, to $50.35/bbl, unable to draw enthusiasm from talk of possible OPEC+ production cuts.

Market Recap - Coronavirus Outbreak Causes More Widespread Selling

The stock market fell for the second straight week, as the continued outbreak of the coronavirus dampened risk sentiment and raised concerns about growth prospects. The S&P 500 (-2.1%), Dow Jones Industrial Average (-2.5%), and Russell 2000 (-2.9%) dropped more than 2%, while the Nasdaq Composite (-1.8%) fared slightly better.

The Nasdaq was the lone index to close the month higher (+2.0%). Losses were made most prevalent in the S&P 500 energy (-5.7%), materials (-3.5%), and health care (-3.3%) sectors. The consumer discretionary (+0.1%) and utilities (+0.8%) sectors finished higher, but the 7% post-earnings gain in Amazon (AMZN) helped mask the weakness in the consumer discretionary space.

Although investors tried to dismiss the seriousness of the coronavirus amid several buy-the-dip efforts, the virus was ultimately impossible to ignore. Reports proliferated about the rising death toll in China, the reduced economic activity in the region, the first confirmed case of a personto-person transmission of the virus in the U.S., and the growing cases around the world.

The World Health Organization declared a global health Week Ending 1/31/2020 emergency but did not recommend restricting the movement of people and goods since evidence showed it may be ineffective. That didn’t stop President Trump from enacting temporary travel restrictions or Delta Air Lines (DAL), United Airlines (UAL), and American Airlines (AAL) from suspending U.S.-China flights, though.

The underlying view was that a reduction in global economic activity would adversely impact the earnings expectations that lofty stock valuations have been predicated on. Others viewed the virus as a convenient excuse to take profits from a market that had gotten too overextended.

There were plenty of discouraging earnings news that fed into the growth concerns, too. Facebook (FB), Caterpillar (CAT), Visa (V), UPS (UPS), 3M (MMM), Pfizer (PFE), and DuPont (DD) were among the many disappointments. Tech titans Apple (AAPL) and Microsoft (MSFT), however, did report strong results.

Separately, the Fed left the target range for the fed funds rate unchanged at 1.50-1.75% and extended repurchase operations though at least April. The latter was perhaps the only surprising thing to come out of the policy meeting.

U.S. Treasuries ended the week with more gains amid the growth concerns. The 2-yr yield and the 10-yr yield dropped 16 basis points each to 1.32% and 1.52%, respectively. The U.S. Dollar Index declined 0.5% to 97.37. WTI crude fell 4.9%, or $2.63, to $51.58/bbl.

Market Recap - WALL STREET INFLICTED BY A VIRUS

Stocks Struggled To Fend Off Coronavirus Headlines And Overvaluation Talk During This Holiday-Shortened Trading Week. The S&P 500 (-1.0%), Dow Jones Industrial Average (-1.2%), And Nasdaq Composite (-0.8%) Set New Highs Mid-Week But Were Hit With Noticeable Losses On Friday. The Russell 2000 Continued To Underperform With A 2.2% Weekly Decline. 

A new strain of coronavirus originated in Wuhan, China and forced the country to lock down several cities right before the Lunar New Year festivities. There were two confirmed cases in the U.S., one in Seattle and the other in Chicago, but the World Health Organization did not declare an international virus alert or public health emergency.

There were concerns that economic activity would slow down, as well as earnings growth as a result, which provided sellers a convenient excuse to sell a market some think is overvalued. Growth concerns were manifested in the 7.4% weekly drop in WTI crude ($54.21/bbl, -$4.34), the advance in Treasuries, and the heavy losses in the cyclical energy (-4.3%), materials (-2.3%), and financials (-2.2%) sectors.

Conversely, the rate-sensitive utilities (+2.4%) and real estate (+1.0%) sectors finished comfortably higher amid the decline in yields. The information technology sector (+0.3%) followed suit, thanks to earnings-driven gains in IBM (IBM) and Intel (INTC). Shares of Intel surged 8% on Friday. 

Staying in the semiconductor space, Bloomberg reported that Apple (AAPL) will begin producing low-cost iPhones next month and asked Taiwan Semi (TSM) to increase its chip supply to meet strong iPhone demand. Broadcom (AVGO) reached two, separate multi-year agreements with Apple to supply it with high-performance wireless components and modules.

Other notable stories included Tesla (TSLA) reaching a $100 billion market-cap valuation, Comcast (CMCSA) saying it expects video subscriber losses to increase in 2020, and Boeing (BA) delaying its 737 MAX timeline to mid-2020. A report on Friday indicated the FAA could approve the 737 MAX before mid-year, though. 

The U.S. Treasury market experienced some curve-flattening activity. The 2-yr yield dropped eight basis points to 1.48%, and the 10-yr yield dropped 16 basis points to 1.68%. The U.S. Dollar Index advanced 0.3% to 97.86.

Market Recap - S&P 500 Climbs Past 3300 in Strong Start to Earnings Season

The stock market plowed to new records this week, as earnings reports, economic data, trade news, and the bullish price action continued to bolster risk sentiment. The S&P 500 (+2.0%), Nasdaq Composite (+2.3%), and Russell 2000 (+2.5%) rose at least 2.0%, and the Dow Jones Industrial Average (+1.8%) followed right behind.

Six of the 11 S&P 500 sectors finished with gains of at least 2.0%, including a 3.8% gain in the defensive oriented utilities sector. The energy sector (-1.1%) was the only sector to finish lower, as oil prices ($58.55/bbl, -0.44, -0.8%) continued to falter.

The macro news flow remained mostly positive and ultimately indicated that the economy is still growing at a steady pace, which could continue to favor equities. In economic data, retail sales and housing starts showed healthy gains in December, while inflation pressures remained muted. In trade news, the U.S. removed China from its currency manipulator list, the Phase One trade deal was signed, and the USMCA trade deal was passed in the Senate.

Earnings reports were generally positive, too. Financial Week Ending 1/17/2020 companies, most notably Morgan Stanley (MS), kicked off the fourth quarter reporting season with solid results, although investors will have to wait until next week for guidance from a broader set of companies.

Strikingly, Alphabet (GOOG) became the fourth U.S. company to reach the $1 trillion market-cap valuation this week. General concerns about valuations were subdued this week considering all the pieces of good news, which also helped the market look past relatively disappointing holiday sales results from Target (TGT) and earnings results from several transportation companies. U.S. Treasuries were little changed in another quiet week of trading despite the rally in equities. The 2-yr yield was unchanged at 1.56%, and the 10-yr yield increased one basis point to 1.84%. The U.S. Dollar Index increased 0.3% to 97.662. On a related note, the Treasury Department said it will start issuing 20-yr bonds in the first half of this year.

Market Recap - Stock Market Returns to Winning Ways as GeopoliticalTensions Subside

The Large-Cap Indices Hit New Record Highs This Week, As Tensions In The Middle East Were De-Escalated And Technology Stocks Continued To Outperform. The Nasdaq Composite Rose 1.8% To Climb Past The S&P 500 (+0.9%) And Dow Jones Industrial Average (+0.7%). The Russell 2000 (-0.2%) Underperformed For The Third Straight Week.

Iran remained a focal point, at least in the first half of the week after it escalated its hostile rhetoric against the U.S. and fired more than a dozen ballistic missiles against U.S. and coalition forces in Iraq. Any equity weakness was bought, and a risk-on mindset followed de-escalation comments from President Trump amid no American casualties.

The mega-cap stocks within the S&P 500 information technology (+2.2%) and communication services (+2.0%) sectors continued to provide influential leadership. The energy sector (-1.1%), on the other hand, was this week's laggard amid a 6.4% drop in the price of oil ($58.99, -4.04). Crude was pressured by bearish inventory data and skepticism that the Middle East situation would disrupt production.

On Friday, the December jobs report showed 145,000 jobs were added to nonfarm payrolls in December, which was less than the Briefing.com consensus of 160,000 and less than the readings for November and October. The soft report could have been a good reason to take some profits from what many viewed to be an overbought market, as stocks did end the week on a lower note. 

Separately, a Boeing (BA) 737-800 jetliner crashed shortly after takeoff in Tehran this week, killing all 176 passengers on board. President Trump and U.S. allies believed that the plane was shot down by Iranian missiles, but there was no indication that the U.S. would reconsider its de-escalation strategy. 

U.S. Treasuries ended the week slightly higher. The 2-yr yield declined two basis points to 1.56%, and the 10-yr yield declined four basis points to 1.83%. The U.S. Dollar Index advanced 0.5% to 97.36.

Market Recap - New Year Brings End to S&P 500’s Five-Week Winning Streak

The Stock Market Ended A Stellar 2019 On A Quiet Note, Started 2020 With A Bang, Then Succumbed To Some Profit Taking After A U.S. Airstrike Escalated Tensions In The Middle East. By Week's End, The S&P 500 Declined 0.2%, The Dow Jones Industrial Average Declined 0.04%, And The Russell 2000 Declined 0.5%. The Nasdaq Composite, However, Did Increase 0.2%.

The positive, yet short-lived, catalyst this week was China announcing it will cut the reserve requirement ratio for small and large banks by 50 basis points on Jan. 6. The accommodative policy provides about $115 billion in additional liquidity that can be lent out.

Stocks quickly gave back gains the following day on Friday after a U.S. airstrike in Iraq killed Iran's top military leader, General Qasem Suleimani, which prompted retaliatory threats from Iran. In addition, the release of the ISM Manufacturing Index for December, which fell to its lowest level since June 2009, dampened risk sentiment.

Given the gravitas of the Middle East situation, the disappointing manufacturing data, and how far the market's record run has come, investors did not overreact. Selling pressure was modest on the presumptions that the geopolitical angst isn't something to get overly concerned about yet and that central bank easing will help the manufacturing sector overcome weakness.

Separately, President Trump said the Phase One trade deal will be signed at the White House on Jan. 15 and that he will later travel to Beijing for Phase Two talks. Market reaction was muted to the news, indicating it was already priced into the market.

U.S. Treasuries ended the week higher, as investors did assume some defensive positioning. The 2-yr yield fell seven basis points to 1.51%, and the 10-yr yield fell eight basis points to 1.79%. The U.S. Dollar Index finished flat at 96.90. WTI crude rose 2.1%, or $1.29, to $63.03/bbl.

Market Recap - Major Indices Hit New Records as U.S. and China Reach Phase One Trade Deal

It Was Another Record-Setting Week In Which The U.S. And China Reached A Phase One Trade Deal That Helped Avoid The Dec. 15 Tariffs. The S&P 500 (+0.7%), Dow Jones Industrial Average (+0.4%), And Nasdaq Composite (+0.9%) Set New Intraday Highs. The Russell 2000 Increased 0.3%.

Nine of the 11 S&P 500 sectors finished higher, with the information technology sector (+2.0%) outperforming by a wide margin amid strength in the semiconductor space. The Philadelphia Semiconductor Index rose 4.2%. The real estate sector (-2.6%) greatly underperformed, and the communication services sector (-0.7%) finished modestly lower. 

These results were mostly solidified before the trade announcement on Friday, which was largely expected given the gains posted beforehand and the muted reaction after the official decision. Specifically, the USTR confirmed that the tariff rate on $250 billion of Chinese imports will remain at 25%, the tariff rate on $120 billion of Chinese imports will be cut to 7.5% from 15%, and China will commit to purchase additional U.S. farm goods. 

Agricultural purchases will reportedly be between $40-50 billion over a two-year period. President Trump added that Phase Two discussions will begin immediately, which should focus on issues pertaining to forced technology transfers and IP rights, according to NEC Director Kudlow. 

Trade dominated the headlines and dictated price action, but this week also included FOMC and ECB policy decisions, a UK election, government deals, and the Retail Sales Report and Consumer Price Index for November:

• Both central banks left rates unchanged, with the Fed signaling no rate hike in 2020.

• The Conservative Party won in a landslide, setting up a Brexit by Jan. 31.

• A USMCA deal was reached and a bipartisan budget deal was reportedly reached, as well.

• Retail sales and consumer prices for November increased less than expected. 

U.S. Treasuries had another week of wild swings but ultimately finished near their unchanged marks from last week. Both the 2-yr yield and 10-yr yield declined one basis point each to 1.60% and 1.82%, respectively. The U.S. Dollar Index fell 0.5% to 97.19. WTI crude rose 2.8% (+$1.66) to $60.11/bbl.