Market Recap - A Week to Remember for the Small-Caps

Technology Stocks Performed Well This Week But Not As Well As Many Small Cap/Value/Cyclical Stocks, As Investors Felt More Confident In A Recovery. The Russell 2000 Rallied 6.4%, Comfortably Outpacing The S&P 500 (+3.8%), Nasdaq Composite (+4.6%), And Dow Jones Industrial Average (+3.3%).

Highlighting the week's biggest stories: President Trump essentially recovered from the coronavirus, removing some political uncertainty. The White House was reportedly drafting a $1.8 trillion stimulus bill, bolstering relief expectations. Eli Lilly (LLY) and Regeneron (REGN) requested emergency use authorization for their COVID-19 antibody treatments, potentially aiding consumer sentiment.

The market rose four of the five days, and every sector in the S&P 500 ended the week in positive territory. The materials (+5.1%), energy (+5.0%), information technology (+4.6%), and utilities (+4.6%) sectors advanced more than 4.0%, while the real estate sector underperformed with a 1.4% gain. 

The semiconductor space was boosted by Taiwan Semiconductor (TSM) reporting strong revenue growth in September, NXP Semi (NXP) raising Q3 revenue guidance above consensus, and news that Xilinx (XLNX) is in talks to be acquired by AMD (AMD) for $30 billion. The Philadelphia Semiconductor Index surged 8.0%. 

The one day the market closed lower was when President Trump said he called off stimulus negotiations until after the election. He later clarified that he still wanted stimulus but in the form of standalone bills for airlines, small businesses, and households -- this was ultimately superseded by the $1.8 trillion news at the end of the week. 

U.S. Treasuries declined amid the risk-on mindset among investors, pushing yields higher in a curve-steepening trade. The 2-yr yield increased three basis points to 0.16%, and the 10-yr yield increased eight basis points to 0.78%. The U.S. Dollar Index fell 0.9% to 93.06. WTI crude futures rose 9.9%, or $3.59, to $40.64/bbl.

Market Recap - Stocks Rebound in Politically-Minded Week

The S&P 500 (+1.5%) And Dow Jones Industrial Average (+1.9%) Snapped Four-Week Losing Streaks This Week, And The Nasdaq Composite Performed Comparably With A 1.5% Gain. The Real Winner, However, Was The Russell 2000 With A 4.4% Gain.

Ten of the 11 S&P 500 sectors finished in positive territory. The real estate (+4.9%), financials (+3.3%), utilities (+3.3%), and consumer discretionary (+2.5%) sectors outperformed. The energy sector (-2.9%) was the lone holdout, as sentiment was pressured by an 8% decline in crude prices ($37.05/bbl, -3.17) amid growth/demand concerns.

Prior to Friday, the market had already established the week's gains, largely on technically-oriented trading activity in oversold stocks. Early in the week, cyclical stocks benefited from M&A activity, better-than-expected economic data (although less consequential reports), analyst upgrades, and stimulus optimism.

The mega-caps also participated in the rebound, with the market shaking off any residential weakness that followed the first presidential debate on Tuesday. Friday, however, is when the real news flowed in and the mega-caps sold off to end the week.

Briefly, President Trump tested positive for COVID-19, September nonfarm payrolls increased by 661,000 (Briefing.com consensus 800,000), and there were indications that a fiscal relief bill could soon be reached. The latter remains a show-me story, but value/cyclical stocks did benefit from the hopeful-sounding reports.

Highlighting other key economic reports, weekly jobless claims remained elevated at 837,000 (Briefing.com consensus 850,000), personal income declined 2.7% m/m in August (Briefing.com consensus -2.0%), and the ISM Manufacturing Index for September decelerated to 55.4% (Briefing.com consensus 56.0%) from 56.0% in August.

U.S. Treasuries finished lower on the longer-end of the curve. The 2-yr yield was flat at 0.13%, and the 10-yr yield increased four basis points to 0.70%. The U.S. Dollar Index fell 0.9% to 93.84.

Market Recap - S&P 500 Extends Losing Streak to Four Weeks, butNasdaq Ends Higher

This Week Was A Classic Roller Coaster Ride For The Market That Ultimately Left The S&P 500 Down 0.6% -- Its Fourth Straight Weekly Decline. The Dow Jones Industrial Average Declined 1.8%, And The Russell 2000 Declined 4.0%. The Nasdaq Composite, However, Gained 1.1%.

There wasn't one thing market participants could point to and say this is why the broad market struggled. Instead, it was another week filled with events that fed into the general uncertainty and the negative momentum seen this month.

Growth concerns were evident in the declines in the cyclical energy (-8.6%), materials (-4.6%), financials (-4.2%), and industrials (-2.6%) sectors. The information technology (+2.1%), consumer discretionary (+1.2%), and utilities (+1.2%) sectors closed higher.

The Nasdaq turned positive at the end of the week, as shares of Apple (AAPL), Amazon (AMZN), and Microsoft (MSFT) rebounded nicely on no news. These stocks rose between 3.5% and 5% this week.

In Washington, the passing of Supreme Court Justice Ginsburg, as viewed through the lens of the market, was another factor that investors initially thought could take focus away from a fiscal relief bill before the election. Democrats are reportedly preparing a $2.4 trillion relief bill, but it's unlikely to have the support of Republicans.

On the coronavirus front, Johnson & Johnson (JNJ) advanced its COVID-19 vaccine candidate to Phase 3 trials, while several countries in Europe reinstated business restrictions to help curb a resurgence of the virus. On China, Beijing updated its trade blacklist without naming any affected companies.

U.S. Treasuries finished mostly higher, particularly on the longer-end of the curve. The 10-yr yield declined three basis points to 0.66%. Gold futures fell 4.9% to $1866.30/ozt. The U.S. Dollar Index gained 1.8% to 94.59.

Market Recap - Large-cap Indices Decline for the Third Straight Week

It Was Another Bad Week For The Mega-Cap Stocks, But Some Rotation Into Cyclical And Value Stocks Did Limit The Index Declines. The S&P 500 (-0.6%) And Nasdaq Composite (-0.6%) Both Lost 0.6%, And The Dow Jones Industrial Average (-0.03%) Finished Just Below Its Flat Line. The Russell 2000 Rose 2.6% In A Catch-Up Trade.

The week started on a bullish note, with the market rebounding from back-to-back weekly declines, but general weakness originated on Wednesday after the FOMC policy decision. The Fed did as expected, so one can't really blame the central bank this week. Briefly, the Fed kept rates unchanged and signaled they will remain near zero through 2023.

The mega-caps showed weakness way before the decision and extended losses throughout the rest of the week amid valuation concerns following a spectacular IPO from Snowflake (SNOW), options-expiration activity on Friday, and news that TikTok and WeChat will be banned from U.S. downloads on Sunday.

Apple (AAPL) fell 4.6% this week, dragging the S&P 500 information technology sector (-1.0%) down with it. The communication services (-2.3%), consumer discretionary (-2.3%), and consumer staples (-1.7%) sectors fell even more, while the energy (+2.9%), industrials (+1.5%), materials (+0.9%), and health care (+0.8%) sectors benefited from a rotational trade.

Factors that contributed to the rotation included AstraZeneca (AZN) resuming its COVID-19 vaccine trials in the UK, rebounding oil prices ($41.09/bbl, +3.75, +10.0%) that favored energy stocks, upbeat guidance out of the steel industry, and General Electric (GE) providing positive cash-flow expectations. GE shares rose 15% this week.

The financials sector (-0.2%) outperformed on a relative basis, but the Fed's acknowledgement of lower rates for longer, and profitability concerns, weighed on sentiment. Citigroup (C) fell 12% on news it could get reprimanded for failing to improve its risk-management systems.

In other developments, NVIDIA (NVDA) agreed to acquire Arm Holdings from Softbank for $40 billion in cash and stock, and House Speaker Pelosi (D-CA) repeated that a stimulus deal must be at least $2.2 trillion. Ms. Pelosi's comments came after centrist lawmakers proposed a $1.5 trillion relief bill that President Trump said he liked.

U.S. Treasuries traded near their flat lines all week. The 2-yr yield remained unchanged at 0.13%, and the 10-yr yield increased two basis points to 0.69%. The U.S. Dollar Index declined 0.4% to 92.95.

Market Recap - Fed Provides New Inflation Policy in Record-setting Week

This Was The Fifth Straight Weekly Gain For The S&P 500 And Nasdaq Composite, Which Ended The Week Higher By 3.3% And 3.4%, Respectively. Both Set New Record Highs While The Dow Jones Industrial Average Turned Positive For The Year With A 2.6% Gain. The Russell 2000 Increased 1.7%.  

Financial stocks were among the week's biggest winners, benefiting from some curve-steepening activity after Fed Chair Powell outlined a shift towards an average inflation target. Under the new framework, the central bank would allow PCE inflation to run moderately beyond 2.0% over time to make up for years when it ran below 2.0%.

The S&P 500 500 financials sector rose 4.4%, following closely behind the communication services (+4.8%) and information technology (+4.5%) sectors atop the standings. Only the utilities sector (-0.7%) closed lower. 

Sprinkled throughout the week were positive coronavirus updates: the FDA approved emergency use authorization for convalescent plasma in hospitalized COVID-19 patients, Abbott Labs (ABT) received emergency use authorization from the FDA for its $5.00, 15-minute COVID-19 antigen test, and Moderna (MRNA) said its COVID-19 vaccine generated a promising immune response in ten elderly patients.

Notably, the latest gauge on consumer confidence offered a pessimistic perspective. The Conference Board's Consumer Confidence Index dropped to 84.8 in August (Briefing.com consensus 93.0) from 91.7 in July for its lowest reading since May 2014. Clearly, investors were more optimistic.

Microsoft (WMT) and Walmart (WMT) rose more than 6.5% this week, helped by reports that the companies are teaming up to possibly acquire TikTok US. Facebook (FB) rose 10.0% in a momentum trade.

Separately, the Dow will look slightly different on Monday. Salesforce (CRM), Amgen (AMGN), and Honeywell (HON) will replace Exxon Mobil (XOM), Pfizer (PFE), and Raytheon Technologies (RTX) prior to Monday's open. Salesforce gained 30% this week, a bulk of those gains coming after its earnings report. 

The 2-yr yield was unchanged at 0.15%, while the 10-yr yield rose nine basis points to 0.73%. The U.S. Dollar Index fell 1.0% to 92.32. WTI crude futures gained 1.6%, or $0.66, to $42.97/bbl.

Market Recap - Rally Continues

The S&P 500 added 0.7% this week while the Nasdaq continued its show of strength, rallying 2.7%. The Dow underperformed, ending the week unchanged.

There was some focus on trade‐related headlines over the course of the week after the August 15 meeting between officials from China and the U.S. did not materialize. An official from China’s commerce ministry said on Thursday that representatives from the two sides will talk “in the coming days.” On a related note, the U.S. took more steps to restrict Huawei’s access to components and there was more pressure on ByteDance to sell TikTok.

Meanwhile, lawmakers in Washington made no progress on the next fiscal stimulus while House Speaker Nancy Pelosi said that she opposes a smaller package.

Concerns about delayed trade and stimulus talks barely registered with the stock market, allowing the S&P 500 and the Nasdaq to finish the week at new record highs.

Five out of eleven sectors ended the week with losses between 1.3% (materials) and 6.1% (energy) while communication services (+1.7%), consumer discretionary (+2.4%), and technology (+3.5%) ended the week in positive territory.

Apple (AAPL) jumped 8.2% during the week, recording its fourth consecutive weekly advance.

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Market Recap - Short of Record Highs

It was another positive week for the market, and it was almost a record-setting week for the S&P 500. The benchmark index gained 0.6% and nearly closed at a record high twice this week amid relative strength in the cyclical and value-oriented stocks.

The Dow Jones Industrial Average outperformed with a 1.8% gain. The Russell 2000 increased 0.6%, and the Nasdaq Composite increased 0.1%.

With the majority of Q2 earnings behind the market, investors looked to economic data for the latest indications on the economy. It remained mostly positive.

Weekly initial claims decreased by 228,000 to 963,000 (Briefing.com consensus 1.150 mln), which was the first time since March that claims checked in below one million; retail sales increased 1.2% in July (Briefing.com consensus 1.8%), and Q2 preliminary labor productivity climbed 7.3% (Briefing.com consensus 5.5%).

Cyclical sectors took the data in stride. The industrials (+3.1%), energy (+2.3%), consumer discretionary (+1.6%), materials (+1.5%), and financials (+1.3%) sectors advanced the most. The utilities (-2.1%), real estate (-1.8%), and communication services (-0.3%) sectors were the only sectors that closed lower.

There were no coronavirus relief talks this week, but that didn’t deter trading sentiment. The Senate adjourned for August recess until after Labor Day, and House Speaker Pelosi (D-CA) said she will only resume talks with White House officials if they are willing to agree to at least a $2 trillion deal.

Separately, Tesla (TSLA) surged 20% in three days after announcing a 5:1 stock split on Tuesday.

The U.S. Treasury curve steepened noticeably this week amid a sell-off in longer-dated maturities. The 10-yr yield rose 15 basis points to 0.71%, while the 2-yr yield was unchanged at 0.13%. The U.S. Dollar Index declined 0.3% to 93.10. WTI crude futures rose 2.1%, or $0.88, to $42.05/bbl.

Market Recap - Taking the Good News in Stride, But No Agreement on Coronavirus Relief Bill

It was a strong week for stocks as the S&P 500 closed higher in every session for a 2.5% weekly gain. The Russell 2000 rose 6.0%, the Dow Jones Industrial Average rose 3.8%, and the Nasdaq Composite rose 2.5%.

The gains were broad, with all 11 S&P 500 sectors finishing in positive territory. The industrials (+4.8%), financials (+3.3%), energy (+3.1%), and communication services (+3.0%) sectors outpaced the benchmark index, while the health care (+0.9%) and real estate (+0.7%) sectors increased the least.

Within the communication services sector, Walt Disney (DIS) surged 11% after reporting a surprise quarterly profit and positing strong subscriber numbers for its streaming platform. Facebook (FB) gained 6%, as investors chased the stock higher in a momentum trade.

In other well‐received corporate news, Microsoft (MSFT) resumed talks to acquire TikTok, and Novavax (NVAX) provided an encouraging vaccine update on a Phase 1/2 trial for healthy adults ages 18‐59.

This week’s economic data continued to depict a rebounding labor market. Nonfarm payrolls increased by 1.763 million in July (Briefing.com consensus 2.000 million), the unemployment rate improved to 10.2% (Briefing.com consensus 10.5%) from 11.1% in June, and weekly initial claims decreased by 249,000 to 1.186 million (Briefing.com consensus 1.400 million) for its lowest level since March.

In addition, data from the ISM showed manufacturing activity and non‐manufacturing activity continue to expand in July.

Separately, Democrats and the White House remained far apart on key relief provisions and were unable to strike a deal. Treasury Secretary Mnuchin said he will recommend to President Trump signing executive orders that extend the eviction moratorium and enhanced unemployment benefits.

U.S. Treasuries declined modestly this week. The 2‐year yield increased three basis points to 0.13%, and the 10‐ yr yield increased two basis points to 0.56%.

The U.S. Dollar Index increased 0.1% to 93.41. WTI crude futures rose 2.6%, or $1.04, to $41.17/bbl.

Market Recap - S&P 500 & Nasdaq Boosted by Mega‐cap Earnings and Dovish Reminder from the Fed

The S&P 500 rose 1.7%, and Nasdaq Composite rose 3.7% in a busy week that concluded with stellar mega‐cap earnings results (and reactions). The Dow Jones Industrial Average declined 0.2%, and the Russell 2000 declined 0.9%.

Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), and Facebook (FB) exceeded quarterly expectations, sending shares, except GOOG, noticeably higher on Friday. Naturally, investors entered the weekend wondering if these stocks can sustain these gains and, consequently, mitigate a possible market pullback. Earlier in the week, shareholders were unfazed by the House Judiciary Committee’s antitrust hearing.

The S&P 500 information technology (+5.0%), real estate (+4.1%), and consumer discretionary (+2.1%) sectors advanced the most this week, while the energy (‐4.3%), materials (‐1.8%), financials (‐0.9%), and industrials (‐0.2%) sectors under performed.

These cyclical sectors were pressured by economic data that showed Q2 GDP decline at an annualized rate of 32.9% (Briefing.com consensus ‐35.0%), initial and continuing jobless claims increase on a weekly basis, and consumer confidence and consumer sentiment decline in July versus June. In addition, lawmakers extended their coronavirus relief bill talks into the weekend.

The Fed was in the spotlight, too. The FOMC left rates unchanged, Fed Chair Powell made it abundantly clear that the central bank is not going to raise rates anytime soon, and the Fed extended its lending facilities through the end of the year.

Other notable developments included the U.S. Dollar Index (93.46) falling to a 2‐year low and gold futures ($1986.20/ozt) breaking out to new highs. The 2‐yr yield declined four basis points to 0.10%, and the 10‐yr yield declined four basis points to 0.54%. WTI crude fell 2.3%, or $0.95, to $40.13/bbl.

Market Recap - Pressured By the Mega‐caps

The week started with a mega‐cap rally that powered the Nasdaq Composite to new heights, but the rest of the week saw money flow out of these mega-cap stocks following earnings.

The Nasdaq ended the week down 1.3% for its second straight weekly decline, followed by modest losses in the Dow Jones Industrial Average (‐0.8%), S&P 500 (‐0.3%), and Russell 2000 (‐0.4%).

The sector standings offered a more mixed picture. The information technology (‐1.5%), communication services (‐1.1%), and health care (‐0.7%) sectors underperformed the benchmark index, while the energy (+2.1%), financials (+1.3%), and consumer discretionary (+1.3%) sectors rose more than 1.0%.

Within the mega‐caps, Microsoft (MSFT) and Tesla (TSLA) reported better‐than‐expected earnings results, but disappointing earnings reactions appeared to cause concern about similar responses in Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), and Facebook (FB) when they report given their huge runs off their March lows.

Amazon, which surged 8% on Monday after its price target was raised to a Street‐high of $3800 at Goldman Sachs and Jefferies, still ended the week higher by 1.6%.

Intel (INTC) disappointed investors with a six‐month delay of its next-generation 7nm chip technology, sending shares down 16% on Friday. Advanced Micro Devices (AMD) gained 16.5% on the news.

Investors were also provided with positive COVID‐19 vaccine data from the Pfizer (PFE) and BioNTech (BNTX) collaboration and the AstraZeneca (AZN) and the University of Oxford collaboration. In addition, Pfizer and BioNTech secured a $1.95 billion vaccine supply agreement with the U.S. government upon FDA approval, but none of the news was market‐moving.

In other developments, the EU agreed to a €750 billion fiscal stimulus package, weekly initial jobless claims increased by 109,000 to 1.416 million (Briefing.com consensus 1.285 million), China ordered the closure of the U.S. consulate in Chengdu in response to the U.S. ordering the closure of the Chinese consulate in Houston, and a GOP coronavirus relief bill was delayed until next week.

U.S. Treasuries were mixed this week. The 2‐yr yield remained unchanged at 0.14%, while the 10‐yr yield declined four basis points to 0.58%. Gold futures settled at their highest price ever at $1897.50/ozt amid a 1.6% decline in the U.S. Dollar Index (94.40, ‐0.30).

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