Market Recap - Stock Market Finds a Friend in the Fed

The S&P 500 overcame a slow start to the week to finish higher by 1.6% with earnings coming in better than feared and a dovish-minded Federal Reserve easing the market. In the process, the benchmark index also notched its best January since 1987.

The Dow Jones Industrial Average gained 1.3%, the Nasdaq Composite gained 1.4%, and the Russell 2000 gained 1.3%.  The S&P 500 energy (+3.2%), real estate (+2.9%), consumer staples (+2.9%), and industrial (+2.6%) sectors led this week’s advance. On the other hand, the consumer discretionary (-0.1%),  financials (+0.1%), and materials (+0.8%) sectors underperformed.  What proved to be a rallying cry for the market this week was the Fed. In particular, the idea  that the Fed has pivoted from being a foe to a friend with its monetary policy outlook sparked broad-based buying interest and allowed the S&P 500 to break above its 2700 level for the first time since Dec. 7.

Specifically, the Federal Open Market Committee and Fed Chair Powell on Wednesday indicated the Fed is content with being patient with its policy approach and is open to curtailing its balance sheet normalization effort if necessary.  Also, the FOMC voted unanimously to keep the fed funds target rate range unchanged at 2.25% to 2.50%, as expected.  This week also saw the U.S. and China resuming trade talks in Washington and a host of earnings reports that were generally mixed but were not as bad as anticipated.  Regarding earnings, Dow components Apple (AAPL), Boeing (BA), 3M (MMM), Pfizer (PFE), Exxon Mobil (XOM), Chevron (CVX), and Merck (MRK) pleased investors with their results. On the other hand, Caterpillar (CAT), Microsoft (MSFT), Visa (V), DowDuPont (DWDP), McDonald’s (MCD), and Verizon (VZ) underwhelmed.  In addition, widely-held shares of Facebook (FB) and General Electric (GE) surged following their reports, while Amazon (AMZN) fell on disappointing guidance.

U.S. Treasuries saw increased buying interest following Wednesday’s FOMC decision and Fed Chair Powell’s press conference. Treasuries pulled back on Friday, though, after a stronger-than-expected Employment Situation Report for January, which showed that nonfarm payrolls increased by 304,000 (Briefing.com consensus 160,000).  The 2-yr yield finished the week down 11 basis points to 2.50%, and the 10-yr yield fell nine basis points to 2.69%. The U.S. Dollar Index fell 0.2% to 95.66. WTI crude rose 3.0% to $55.28/bbl.

Market Recap - Market Takes a Breather

The S&P 500 took a breather this holiday‐shortened trading week, losing 0.2%, amid pestering concerns over global growth prospects. Despite the week's minor setback, the benchmark index is still up 6.3% this month and 13.3% from its Dec. 24 low.

It was a mixed week with the Dow Jones Industrial Average (+0.1%), the Nasdaq Composite (+0.1%), and the Russell 2000 (unch) also closing near their unchanged marks. The respective indices are up 6.0%, 8.0%, and 10.0% this month.

The S&P 500 sectors also finished mixed this week. The energy (‐1.5%), consumer staples (‐1.4%), and health care (‐1.3%) sectors underperformed, while the information technology (+1.0%) and real estate (+1.5%) sectors outperformed.

Contributing to lingering growth concerns were discouraging foreign data/outlooks; uncertainty surrounding a U.S‐China trade deal; and a tense government shutdown, which came to a head on Friday with news that there was an agreement on a continuing resolution to fund the government through Feb. 15.

While there was some selling interest during the week, the S&P 500's 50‐day moving average proved to be an important level of technical support. Whenever the S&P 500 fell below its 50‐day moving average, a wave of buyers would lift the index right back up, preventing selling from getting too out of hand.

Also, investors had some reason to remain assured with a round of better‐than‐feared corporate results.

Upbeat earnings reports and/or guidance from chip stocks helped lift the Philadelphia Semiconductor Index (+4.3%) this week, which featured one of its best sessions in nearly 10 years. Intel (INTC), however, was a trading exception as investors responded negatively to its disappointing first quarter revenue and EPS guidance. Intel's issues, though, had little effect on the semiconductor industry, reflecting a belief that they are more company‐specific than anything else.

Airlines, too, pleased investors with their earnings results, namely American Airlines (AAL), Southwest (LUV), and JetBlue (JBLU).

Dow components IBM (IBM), Procter & Gamble (PG), United Technologies (UTX) also provided strong reports and saw their stock prices respond accordingly. Conversely, Johnson & Johnson (JNJ) and Travelers (TRV) underwhelmed.

Separately, a Wall Street Journal report on Friday indicated that the Fed may be getting close to the end of its balance sheet normalization effort. The report provided some comfort for the market, which rode the belief that the Fed's de facto tightening, by way of balance sheet normalization, could soon be over.

U.S. Treasuries finished slightly higher, pushing yields lower. The 2‐yr yield decreased one basis point to 2.60%, and the 10‐yr yield decreased three basis points to 2.75%. The U.S. Dollar Index fell 0.6% to 95.75. WTI crude lost 0.3% to $53.62/bbl.

Market Recap - Stock Market Rally Continues on Bank Strength, Trade Optimism

The S&P 500 gained 2.9% this week, rising on the back of a strong financial sector (+6.1%) and growing optimism surrounding U.S.-China trade talks. The benchmark index has now posted its fourth straight weekly gain and is now up 6.5% in January.

The Dow Jones Industrial Average (+3.0%), the Nasdaq Composite (+2.7%), and the Russell 2000 (+2.4%) also had solid performances, increasing their monthly gains to 5.9%, 7.9%, and 9.9%, respectively.

10 of the 11 S&P 500 sectors finished the week higher with the heavily-weighted financial sector rallying on bank earnings. Conversely, the utilities sector (-0.2%) was the only group to finish in the red this week amid an increase in Treasury yields.

The banks kicked off the earnings season for the fourth quarter reporting period with a mixed slate of results. Strikingly, the financial space seemed undeterred by reports that missed expectations while a handful of positive results proved to be a rallying cry for the sector.

For instance, the overwhelmingly positive response to upbeat reports from Goldman Sachs (GS) and Bank of America (BAC) was a telling sign of how negative sentiment surrounding the stocks -- and sector -- had gotten last month. The sector has now climbed 16.5% from its Dec. 24 low.

The strength from the financials had the S&P 500 butting up against its 50-day moving average for the first time since early December.

Then, positive-sounding trade reports from The Wall Street Journal and Bloomberg boosted an already-improved investor sentiment and helped the benchmark index end the week above its 50-day moving average.

The Wall Street Journal indicated that Treasury Secretary Mnuchin proposed to lift tariffs on some, or all, Chinese imports during negotiations. Meanwhile, Bloomberg's report indicated that China made an offer during trade negotiations earlier this month to boost the amount of U.S. imports, resulting in balanced trade with the U.S. by 2024.

Though the Journal's report was refuted, market participants were encouraged by the tenor of the headlines, which fed hope that both sides are intent on avoiding a worst-case trade scenario that would be detrimental to both economies.

In other earnings news, Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), Morgan Stanley (MS), Delta Air Lines (DAL), and Netflix (NFLX) disappointed investors with fourth quarter results and/or lower guidance. Conversely, UnitedHealth (UNH), American Express (AXP), and United Continental (UAL) provided better-than-expected results.

U.S. Treasuries sold-off amid the extended gains in the stock market, driving yields higher. The 2-yr yield rose 14 basis points to 2.61%, and the 10-yr yield rose 12 basis points to 2.78%. The U.S. Dollar Index gained 0.7% to 96.37, and WTI crude rose 4.4% to $53.84/bbl.

Regarding the Brexit uncertainty, the British Parliament voted against PM Theresa May's Brexit deal this week, and Ms. May survived a subsequent no-confidence vote. Both outcomes were expected and produced little impact on U.S. markets.

Market Recap - Stocks Extend Rally into Earnings Season

The S&P 500 gained 2.5% this week, rising for the third straight week and extending its rally to 10.4% since its Christmas Eve low. The Dow Jones Industrial Average gained 2.4%, the Nasdaq Composite gained 3.5%, and the Russell 2000 gained 4.8%.

All 11 S&P 500 sectors finished higher with industrials (+4.1%), real estate (+4.0%), consumer discretionary (+3.7%), energy (+3.4%), and information technology (+3.4%) outperforming the broader market.

Many have characterized the market's rally to be a technical rally from a deeply oversold condition. The market, however, has benefited from improved investor sentiment that has been lifted by the stronger than expected December employment report, the assurance from Fed Chair Powell that the Fed will be patient with its policy approach, and reports U.S.-China trade talks among deputy officials went well.  Those developments have fostered a propensity to buy the intraday dips and have made the market resilient to selling efforts.

The buy-the-dip mentality lifted the market whenever it was down and allowed the S&P 500 to flirt with its 2600 level, which approximates the bottom end of the trading range that persisted for most of 2018.

Strikingly, this week's gains were forged in the face of earnings warnings from Macy's (M), American Airlines (AAL), Apple (AAPL) supplier Skyworks Solutions (SWKS), and Samsung Electronics.

It was this resilience to selling efforts amid bad news that presumably drew in sidelined participants fearful about missing out on further gains and pushed out weak-handed short sellers expecting a downturn after a 10% increase in the S&P 500 from its December 24 low.

Investors saw some room for trade optimism this week when a scheduled two-day trade meeting in Beijing extended into a third day. In addition, China's Vice Premier Liu He is reportedly expected to visit Washington for further trade talks at the end of the month.

Separately, the Federal Reserve released its minutes from its December policy meeting. The minutes revealed a view that the path of U.S. monetary policy is "less clear" than before, and a contention that the Fed can "afford to be patient" about future rate hikes.

In light of more recent remarks from many Fed officials discussing a more patient-minded approach, including Fed Chair Powell, the view communicated in the minutes wasn't altogether surprising. Still, it is this rhetoric from the Fed that is contributing to the fed funds futures market's belief that there won't be another rate hike in 2019.

U.S. Treasuries lost ground amid the gain in equities, pushing yields higher across the curve. The 2-yr yield increased seven basis points to 2.55%, and the 10-yr yield increased four basis points to 2.70%. The U.S. Dollar Index lost 0.5% to 95.68, and WTI crude rose 7.8% to $51.68/bbl.

The fourth quarter earnings reporting period will get its official start in the coming week and will be closely watched to see if the market got ahead of itself with concerns about an earnings slowdown in 2019.  Additionally, there will be a key Brexit vote in the UK Parliament and continued attention to the partial government shutdown in the U.S., which is about to become the longest on record.

Market Recap - Fed Chair Powell, Strong Jobs Data Help Lift Stocks from Growth Concern Angst

Wall Street kicked off the first week of 2019 on a higher note, as robust jobs data and soothing commentary from Fed Chair Jerome Powell helped press pause on global growth concerns.

The S&P 500 gained 1.9%, the Dow Jones Industrial Average gained 1.6%, the Nasdaq Composite gained 2.3%, and the Russell 2000 gained 3.2%.

Headline payroll growth in the Employment Situation Report for December was comfortably ahead of estimates while average hourly earnings (+0.4%) increased more than expected, lifting the year-over-year growth rate to 3.2%.

There were some concerns, though, about how the central bank would react to stronger-than-expected jobs data.

Fed Chair Powell eased those concerns when he said the Fed will remain patient given muted inflation readings. He added monetary policy will be nimble and shift if necessary, and he also softened his previous comments regarding the Fed's balance sheet reduction path being on autopilot.

The stock market liked what it heard from Mr. Powell, and his comments helped solidify an equity rebound from previous angst over economic growth.

A rare revenue cut from Apple (AAPL) and disappointing manufacturing data from the U.S. and China had exacerbated fears that economic growth might be slowing more quickly than anticipated, which would present a headwind to corporate earnings.

The market is not free and clear from economic growth concerns, but with strong U.S. jobs growth and a friendlier-sounding Fed, the market saw renewed buying interest.

U.S. Treasuries underwent wild swings this week amid the fragility in investor sentiment. At the end of the week, the 2-yr yield declined four basis points to 2.48%, and the 10-yr yield declined eight basis points to 2.66%. The U.S. Dollar Index lost 0.2% to 96.17. WTI crude rose 6.0% to $48.03/bbl.

Market Recap - Week in Review: S&P 500 Sets New Yearly Low Amid Continued Uncertainty

The S&P 500 dropped 7.1% this week, setting a new yearly low at 2408.12, amid ongoing concerns over economic growth, trade, politics, and fear the Federal Reserve could be on course for making a policy mistake. This week's losses brought the benchmark index's decline to 12.5% in December.

The Dow Jones Industrial Average (-6.9%), Nasdaq Composite (-8.4%), and Russell 2000 (-8.4%) also extended monthly losses to 12.1%, 13.6%, and 15.7%.

Losses were widespread with all 11 S&P 500 sectors posting weekly losses, ranging from 4.5% (utilities) to 9.0% (energy) as there was a broad-based de-risking effort.

The S&P 500 would test its February low (2532.69) three times this week: twice before the Fed's decision and once after the Fed's decision.

The first two re-tests invited some late buying interest that enabled stocks to close off their worst levels in their respective sessions.  The third test, however, failed on Wednesday due to a sense of disappointment that the Federal Open Market Committee, and Fed Chair Powell, didn't deliver on the market's wishes for a more dovish-sounding perspective regarding the interest rate outlook for 2019 and the Federal Reserve's balance sheet management.

In terms of the Fed decision, the target range for the fed funds rate was increased by 25 basis points to 2.25% to 2.50%, as expected, and the so-called dot-plot was revised to show a median projection for two rate hikes in 2019, versus three previously.

Fed Chair Powell irked the market during his press conference when he said (1) policy does not need to be accommodative now and that he doesn't believe the current policy is restrictive and (2) he does not see the Fed altering its approach to balance sheet normalization and sees the preferred policy method being use of the fed funds rate.

New York Fed President John Williams offered a seemingly more dovish-minded perspective on Friday when he said in a CNBC interview that the Fed is listening to the market and that a balance sheet runoff is not "inflexible." Those remarks triggered a rally effort, but true to recent form, there was selling into strength.

Some other nettlesome elements that weighed on investor sentiment this week included (1) the possibility of a partial government shutdown due to disagreements over a funding request for a border wall (2) a bothersome sense that the U.S. and China aren't going to be able to reach a trade agreement on structural issues in their prescribed 90-day window (3) the understanding that credit markets appear to be anticipating a growth slowdown due to tighter monetary policy and (4) falling oil ($45.59/bbl, -$5.50, -10.7%) and copper ($2.67/lb, -$0.09, -3.4%) prices that fed into growth concerns.

Uncertainty, and the inability to sustain any rebound effort from short-term oversold conditions, ultimately held back buying interest and led to a flight to safety in U.S. Treasuries. The Fed-sensitive 2-yr yield and benchmark 10-yr yield dropped 10 basis points each to 2.63% and 2.79%.

Market Recap - Stocks Extend Losses as Uncertainty Continues to Grip Investors

Wall Street suffered another down week, as continued uncertainty surrounding economic growth, trade, politics, and the path of interest rates kept many buyers on the sidelines.

Heightened trading volatility also proved effective in keeping buyers sidelined, too, as large intraday swings proved exhausting and off‐putting for many participants.

The S&P 500 lost 1.3%, the Dow Jones Industrial Average lost 1.2%, and the Nasdaq Composite lost 0.8%.

Tempering hope that last week's sell‐off created a "tradable" bottom was the continued weakness in the Dow Jones Transportation Average (‐4.4%), S&P 500 financial sector (‐3.5%), and small‐cap Russell 2000 (‐2.6%) ‐‐ all of which play a key role in driving sentiment on the domestic economic outlook. For the month, these groups are down 12.1%, %, and z%, respectively.

Additionally, some cautious‐sounding commentary on the economic outlook from European Central Bank President Draghi, weaker‐than‐expected industrial production and retail sales data from China, and weaker‐than‐expected preliminary manufacturing PMI readings out of the eurozone fueled the negative perspective on growth prospects and the specter of downward revisions to earnings estimates.

There were some conciliatory headline developments this week on the trade dispute between the U.S. and China. In particular, high‐ranking U.S. and Chinese officials resumed trade discussions over the phone; and China is reportedly looking to tweak its "Made in China 2025" policy to allow more access and fairer competition for foreign companies.

Separately, China confirmed it will temporarily reduce its U.S auto import tariffs by 25% (to 15% from 40%) between January 1 and March 31, as both sides continue to work on a deal, and President Trump told Reuters he would get involved in the Department of Justice case against Huawei CFO Meng Wanzhou, who was granted bail Tuesday, if it would serve national security interests and help advance trade negotiations with China.

These positive‐sounding trade headlines offered some hope of a deal being struck, but ultimately, the talk wasn't enough to overcome the fundamental concerns about a slowdown in economic growth.

The S&P 500 energy (‐3.3%), health care (‐1.9%), and real estate (‐1.8%) sectors were some of the hardest‐hit groups this week.

Johnson & Johnson (JNJ), meanwhile, was one of the hardest‐hit stocks. The Dow component plunged 10% on Friday after a Reuters report alleged that JNJ "knew for decades that asbestos lurked in its baby Powder." The company's litigation counsel rejected the Reuters report as "false and misleading," yet the stock nonetheless traded as if investors felt there was some veracity to it.

Energy stocks struggled as oil prices pulled back. WTI crude fell 2.5% this week to $51.27/bbl.

Not all was bad, though. The S&P 500 information technology (‐0.02%) ended the week roughly flat while the communication services (+0.5%) and utility (+0.6%) sectors were able to finish in the green this week.

Recent demand for Treasuries cooled off, giving yields a slight bump. The Fed‐sensitive 2‐yr yield rose three basis points to 2.73%, and the benchmark 10‐yr yield rose four basis points to 2.89%. Meanwhile, the U.S. Dollar Index rose 0.4% to 97.45.

Overseas, UK Prime Minister Theresa May survived a "no‐confidence" vote from her own Conservative Party with respect to her leadership. The vote came after she delayed a vote in the House of Commons on the UK‐EU Brexit plan. She subsequently attempted to renegotiate the plan in Brussels, yet EU officials said the plan was not open for change.

Market Recap - Global Growth Concerns Pull Stocks Lower

The S&P 500 fell 4.6% this week, as global growth concerns were exacerbated by negative developments regarding U.S-China trade negotiations and the continued flattening of the U.S. Treasury yield curve. The Dow Jones Industrial Average lost 4.5%, the Nasdaq Composite lost 4.9%, and the Russell 2000 lost 5.6%.

Investors breathed a fleeting sigh relief that trade relations between the U.S. and China did not worsen over the weekend after the two countries agreed to suspend further tariff actions for 90 days to allow more time for trade discussions. Despite President Trump's optimism, the market's optimism quickly waned on the supposition that a March 1 deadline to resolve major trading issues won't be sufficient time to work out major trade issues that have been in place for years. Furthermore, the specter of increasing the tariff rate to 25% (from 10%) on $200 billion of Chinese goods should an acceptable deal not be reached weighed on investors' minds.

In addition, the news of the arrest of Huawei Technologies' CFO Meng Wanzhou heightened these burgeoning trade concerns. Ms. Meng was arrested Dec. 1 in Canada amid allegations that the company violated U.S. trade sanctions on Iran. Her arrest invited worries about trade negotiations going awry in the 90-day window and potential retaliation against U.S. companies doing business in/with China.

Economic growth concerns were cast into the spotlight by a decisive curve-flattening trade in the Treasury market that featured some inversions on the short end. The 2-yr yield (2.70%) and 3-yr yield (2.71%) closed higher than the yield on the 5-yr Treasury note (2.69%) this week.

Also, the difference between the 2-yr and 10-yr yields narrowed to its slimmest margin since 2007. Specifically, the 2-yr yield lost 11 basis points to 2.70%, and the 10-yr yield lost 16 basis points to 2.85%. Those moves were exacerbated by a "pain trade," as short sellers expecting higher rates were compelled to cover their bearish bets.

In a broader context, concerns over future economic growth drove concerns about future earnings growth. That fueled some of this week's selling interest, which completely unwound the 4.9% gain for the S&P 500 from the prior week at Friday's low.

Notably, that was the case despite there being one less day of trading.  The market was closed Wednesday in recognition of the national day of mourning for President George H.W. Bush.

The worst-performing sectors this week were the financials (-7.1%), industrials (-6.3%), materials (-5.2%), information technology (-5.1%), and health care (-4.6%) sectors.  The only two sectors that escaped the week with a gain were the utilities (+1.3%) and real estate (+0.3%) sectors.

The rate-sensitive financial sector was undermined by the flattening yield curve, which raised concerns about a compression in net interest margins. Regional banks were notable laggards as worries about lower mortgage loan demand stemmed from home builder Toll Brothers (TOL) acknowledging that it saw a moderation in demand in its fiscal fourth quarter ended Oct. 31 and that it saw the market soften further in November. The SPDR S&P Regional Bank ETF (KRE) fell 7.2% this week.

Transport stocks, in particular, weighed on the trade-sensitive industrial sector. The Dow Jones Transportation Average dropped 8.0% this week. American Airlines (AAL) struggled with a steep 16.4% loss this week.

Apple (AAPL) conceded more losses this week, as it dragged on the tech space. Apple has retreated over 20.0% since releasing its quarterly report in October and has remained a signpost of the ongoing effort to liquidate/reduce exposure to this widely-owned sector, which is still the market's most heavily-weighted sector.

The energy sector (-3.1%) was down for the week, yet it outperformed the broader market, helped by a 3.1% bump in oil prices to $52.52 per barrel.

Energy stocks pared gains on Friday after OPEC+ producers agreed to a production cut of 1.2 million barrels per day to address weakening oil prices. Russia was a party to the proposed production cuts; meanwhile, Iran will reportedly be exempt from the production cut requirements.

On a related note, Qatar, in a surprise move, announced plans to withdraw from OPEC to focus on gas production. Qatar has been a member of OPEC since 1961.

Separately, Atlanta Fed President Bostic (FOMC voter) said he thinks the fed funds rate is within shouting distance of neutral, which followed previous remarks from Dallas Fed President Kaplan (non-FOMC voter) who also suggested the fed funds rate is a little bit below neutral. A Wall Street Journal report also suggested that the Federal Reserve might be more cautious-minded about raising interest rates following its December FOMC meeting.

The November Employment Situation Report on Friday seemingly helped substantiate that view. It showed nonfarm payrolls increasing a weaker than expected 155,000 and average hourly earnings increasing 0.2%, which left them up 3.1% year-over-year, unchanged from October.  In other words, the wage growth acceleration the Federal Reserve has been bracing for was missing.

Overseas, global markets finished the week with large losses as well. Germany's DAX (-4.2%) led the European retreat and Japan's Nikkei (-3.0%) led the decline in Asia.

Market Recap - Stock Market Rallies with Optimism Surrounding Fed and U.S. - China Trade Relations

The S&P 500 rallied 4.9% this week, helped by the Fed softening its policy stance and by hope that U.S-China trade tensions would be meaningfully eased at the G-20 Leaders Summit. For the month, the benchmark index rose 1.8%.

Meanwhile, the Dow Jones Industrial Average gained 5.2%, the Nasdaq Composite gained 5.6%, and the Russell 2000 gained 3.0%. For the month, the respective indices gained 1.7%, 0.3%, and 1.5%.

The stock market had one of its best days of the year on Wednesday when Federal Reserve Chair Jerome Powell said he sees current interest rates "just below" neutral. That proved to be a rally point because the language Mr. Powell used in early October indicated a view that the fed funds rate was "a long way from neutral."

Mr. Powell added that there is no preset policy path, and the Fed will be data-dependent in its decision making, which pleased investors. By highlighting risks, though, that included previous rate increases, trade disputes, and Brexit/EU political uncertainty, the market chose to read between the lines that the Fed chair isn't wedded to three rate hikes in 2019.

On a related note, the FOMC's minutes from its November 7-8 meeting, which were released on Thursday, did nothing to upset the notion that the Fed will be hiking rates next month; the CME FedWatch Tool puts the chances at 82.7%.

Regarding U.S.-China trade, President Trump and President Xi are to take the G-20's main stage when they discuss trade matters over dinner on Saturday. U.S. Trade Representative Lighthizer said that he would be surprised if the dinner meeting was not a success. Perhaps causing some jitters, though, is the fact that notable China trade hawk Larry Kudlow is reportedly expected to attend the dinner meeting, along with other staff on hand.

A Wall Street Journal report published Thursday is probably as good a preview of what an eventual best-case outcome would be from the G-20 meeting between the two Presidents. The Wall Street Journal noted that (unnamed) officials on both sides have been floating the idea of forestalling any further tariffs through the spring to set the stage for a new round of talks to address changes in China's economic policy.

In addition to the trade speculation and dovish rhetoric from the Fed, there was a positive bias in the market this week due to the belief that the prior week's sell-off resulted in short-term oversold conditions. Efforts to pick up oversold issues, and some chasing behavior, helped fuel this week's gains, which ultimately turned November from a negative month into a positive month for the major indices.

This week, all S&P sectors finished higher with the consumer discretionary (+6.4%), information technology (+6.1%), health care (+5.9%), and communication services (+5.5%) sectors outperforming.

The rally began with the consumer discretionary group rising on the back of continued strength from the U.S. consumer. Reports of record online Black Friday sales and encouraging forecasts for Cyber Monday sales helped lift investor sentiment. The SPDR Retail ETF (XRT) rose 3.3% this week, and Amazon (AMZN) climbed 12.5%.

Conversely, the defensive-oriented real estate (+2.7%), consumer staples (+2.9%), and utility (+2.7%) sectors underperformed the broader market, though still finished with respectable gains.

In corporate news, General Motors (GM) announced additional restructuring plans that will result in a 15% reduction of its salaried staff and the closure of five of its North American plants. President Trump tweeted his disappointment in GM and is looking to cut all of its government subsidies. Separately, United Tech (UTX) announced its intention to split into three independent companies after the Dow component acquired Rockwell Collins earlier this month.

On the earnings front, Salesforce (CRM), Burlington Stores (BURL), Dollar Tree (DLTR), VMware (VMW), HP (HPQ), and Workday (WDAY) released upbeat reports, while Tiffany & Co (TIF), GameStop (GME), and J.M. Smucker (SJM) disappointed investors.

Looking at other markets, the Treasury yield curve saw some flattening with the 2-yr yield losing one basis point to 2.81%, and the 10-yr yield losing four basis points to 3.01%. The U.S. Dollar Index increased by 0.3% to 97.20, and WTI crude added 0.1% to $50.67/bbl, though lost over 20.0% this month.

Overseas, equity indices in the Asia-Pacific region closed the week on a modestly positive note with Japan's Nikkei (+3.3%) showing relative strength. In Europe, the major indices closed the week slightly higher with Italy's MIB (+2.5%) showing relative strength.

Market Recap - Energy, Tech Stocks Crushed as S&P 500 Loses Yearly Gain

The S&P 500 fell 3.8% on this holiday-shortened trading week, erasing its gain for the year. The Dow Jones Industrial Average lost 4.4%, the Nasdaq Composite lost 4.3%, and the Russell 2000 lost 2.6%.

There was palpable sense of real angst about the market's prospects with market commentary beginning to emphasize the growing risk of a bear market. Factors contributing to that outlook have included rising recession risk; widening credit spreads; the message being sent by the sharp losses in cyclical sectors and former leadership stocks/sectors; lack of buy-the-dip success in November, calling into question the prospects of a seasonal rally; and burgeoning calls to bolster defensive positioning in investment portfolios.

Energy and tech stocks took the brunt of the damage with the energy (-5.1%) and information technology (-6.1%) sectors posting heavy losses this week. The consumer discretionary (-4.3%), communication services (-4.0%), materials (-3.5%), and industrial (-3.2%) sectors also had poor performances.

WTI crude, which has been pressured by ongoing supply concerns and decreasing demand, dropped 9.2% to $51.28/bbl this week and extended its decline to 33.3% from last month's four-year high. Oil prices were pressured on Tuesday after some speculation that Saudi Arabia might not force an oil production cut after U.S. President Donald Trump defended the United States' relationship with Saudi Arabia in the wake of the killing of Jamal Khashoggi. U.S. crude stockpiles also rose for the ninth consecutive week, according to the U.S. Energy Information Administration's weekly crude inventory report.

The tech sector, in particular, has been prone to liquidation efforts that have aimed to reduce exposure to a crowded sector running into concerns about a cyclical slowdown, valuations, and increased regulatory scrutiny. In addition, a lack of leadership and the continued inclination to sell into strength have translated into a lack of buying interest.

Apple (AAPL) shares took a hit after a Wall Street Journal report indicated the company cut its production orders for all three new iPhones it launched in September. Regarding the iPhone XR, Apple reportedly slashed its production plan by up to a third of the approximately 70 million units it had asked some suppliers to produce between September and February. Apple has fallen 21.3% since providing a disappointing outlook for the holiday quarter on November 1.

Facebook (FB) shares continued to struggle, losing 5.6% this week, amid ongoing negative publicity surrounding the social network. CEO Mark Zuckerberg was reportedly not happy with COO Sheryl Sandberg over the handling of the Cambridge Analytical scandal, according to a WSJ report. Also in the report, Mr. Zuckerberg's newly-adopted, aggressive leadership style has not fared well with key executives, some of whom have resigned.

Conversely, the real estate (-1.5%) and utility (-1.4%) sectors were the only groups to finish with weekly losses under 2.0%.

This week featured a list of earnings reports from notable retailers. Reports from Lowe's (LOW), Target (TGT), Kohl's (KSS), L Brands (LB), and Ross Stores (ROST) reflected ongoing concerns over gross margin pressures, elevated inventory levels, disappointing same-store sales, and included some cautious guidance. On the other hand, retailers Urban Outfitters (URBN), Best Buy (BBY), Foot Locker (FL), and Gap (GAP) released more positive reports. Separately, Deere (DE) missed top and bottom line estimates.

In other corporate news, a U.S. appeals court refused to stop generic versions of Johnson & Johnson's (JNJ) prostate-cancer drug Zytiga from entering the market, according to Bloomberg. Also, Chinese authorities approved United Tech's (UTX) acquisition of Rockwell Collins (COL) for $140/share in cash and stock.

U.S. Treasuries ended the week on a mixed note. The 2-yr yield added three basis points to 2.83%, and the 10-yr yield decreased two basis points to 3.05%. Meanwhile, the U.S. Dollar Index increased 0.4% to 96.94

Overseas, the Asia-Pacific Communications Summit concluded on Sunday without the release of a joint communique due to the ongoing trade disagreement between United States and China. On a related note, U.S. Trade Representative Robert Lighthizer released a report on China's intellectual property practices, alleging that China has not altered its "unfair, unreasonable, and market-distorting practices" that led to the imposition of tariffs. China's Shanghai Composite lost 3.7% this week.

Elsewhere, Chairman of Renault-Nissan-Mitsubishi Carlos Ghosn was arrested in Japan for alleged financial violations. Nissan voted to remove Mr. Ghosn from his Chairman post on Thursday.