Market Recap - Financials, Information Technology Lead Broader Market Higher

The S&P 500 increased 0.4% this week, extending its yearly gain to 11.8%, as shares of financial and technology companies outperformed. There was a lot of news for the market to digest, which included economic data, U.S-China trade updates, and geopolitics.

The Nasdaq Composite rose 0.9%. The Dow Jones Industrial Average and the Russell 2000, meanwhile, finished flat.

The S&P 500 financials (+0.8%), information technology (+1.0%), and energy (+1.1%) sectors outperformed the broader market. Conversely, the materials (-1.6%), real estate (-1.2%), and consumer staples (-0.4%) sectors underperformed.

Several key economic indicators helped tame buying interest this week, though.

December housing starts increased at the slowest pace (1.078 million) since September 2016; the advance estimate of Q4 GDP increased 2.6% (Briefing.com consensus 2.3%) but was still below the growth registered in the second and third quarters; and the ISM Manufacturing Index for February decreased to 54.2 (Briefing.com consensus 56.0) from January's reading of 56.6.

The positive news for investors, though, is that consumer confidence increased in February; moreover, the softer data could reinforce the Fed's "patient" stance on monetary policy.

Fed Chair Jerome Powell upheld that view in his semi-annual Congressional testimony on the economy this week. He also acknowledged the Fed is close to agreeing on a plan to end the balance sheet runoff.

In U.S-China trade news, President Trump officially delayed the March 1 deadline, as was anticipated, due to reported progress being made. Bloomberg reported Friday that the U.S. and China are in the process of preparing a document that lays out the provisions of a trade deal that could be signed perhaps as early as mid-March.

There were also some geopolitical developments that garnered some attention. President Trump abruptly ended a two-day summit with North Korean leader Kim Jong-un, unable to reach an agreement on the denuclearization effort. Separately, Pakistan shot down two Indian fighter jets over their contested border but returned a captured Indian pilot in goodwill.

In earnings news, retailers had a pretty good showing. Macy's (M), AutoZone (AZO), Lowe's (LOW), TJX (TJX), Best Buy (BBY), Gap (GPS), and Foot Locker (FL) all climbed on better-than-expected results. Home Depot (HD), too, had a solid fourth quarter but issued downside earnings guidance. The SPDR S&P Retail ETF (XRT) increased 2.3% this week.

U.S. Treasuries declined noticeably this week, sending yields higher across the curve. The 2-yr yield increased seven basis points to 2.55%, and the 10-yr yield increased 10 basis points to 2.76%. The U.S. Dollar Index lost 0.1% 96.46. WTI crude lost 2.5% to $55.81/bbl.

Market Recap - U.S. - China Trade Talks, Federal Reserve Keep Investors at Ease

The S&P 500 increased 0.6% this holiday‐shortened trading week. This week featured the seventh round of U.S.‐China trade talks and some reassurance from the Federal Reserve. The benchmark index increased its rally from the December 24 low to 18.8%.

The Dow Jones Industrial Average gained 0.6%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 1.3%.

The S&P 500 utilities (+2.4%), materials (+2.3%), and information technology (+1.4%) sectors outperformed the broader market. Conversely, the energy (‐0.5%), and consumer staples (‐0.3%) sectors were the lone groups that finished with losses this week.

Investors received several updates from U.S‐China trade talks in Washington: (1) The two sides made an agreement on currency, but no specifics were provided; (2) China reportedly committed to purchase $1.2 trillion in U.S. goods, but the two sides reportedly remained far apart on forced technology transfers; and (3) President Trump said he will work out the final points on trade with China's President Xi most likely in March.

The Federal Open Market Committee (FOMC) released its minutes from the January meeting on Wednesday, which came in mostly in‐line with expectations.

The main takeaway from the FOMC Minutes was that the Fed is going to be patient in raising rates and is likely to stop reducing the assets on its balance sheet later this year. The surprise ‐ or maybe the important revelation ‐ for the market to consider was the implication that the Fed could turn away from a "patient" mindset with raising interest rates if market uncertainty abates.

With the Fed maintaining its market‐friendly position and U.S.‐China trade talks seemingly progressing, or not getting worse, investors continued to not be too bothered by disappointing economic data.

Strong earnings results from Wal‐Mart (WMT) also helped temper concerns about a slowdown in consumer spending that were fueled by the lousy Retail Sales report for December in prior week.

Kraft Heinz (KHC) and CVS Health (CVS), however, provided investors with disappointing results and their stocks sank as a result.

U.S. Treasuries increased this week in a curve‐steepening trade. The 2‐yr yield decreased four basis points to 2.48%, and the 10‐yr yield decreased one basis point to 2.66%. The U.S. Dollar Index declined 0.4% to 96.55. WTI crude rose 3.0% to $57.25/bbl.

Market Recap - U.S. - China Trade Talks Advance While Government Avoids Another Shutdown

The S&P 500 gained 2.5% this week, as the market was enthused by progressing U.S‐China trade talks, Congress averting another government shutdown, and the Federal Reserve maintaining its dovish‐minded stance.

The Dow Jones Industrial Average gained 3.1%, the Nasdaq Composite gained 2.4%%, and the Russell 2000 gained 4.2%.

10 of the 11 S&P 500 sectors finished higher this week with energy (+4.8%), industrials (+3.5%), and materials (+3.4%) leading the advance. Conversely, the utilities sector (‐0.3%) was the lone group to finish with a loss this week.

The U.S. and China concluded a week‐long round of trade negotiations this week, although structural issues ‐‐ forced technology transfers, enforcement oversight, and China subsidizing domestic industries ‐‐ were unresolved. Mid‐level talks will continue next week in Washington while President Trump considers a possible 60‐day extension to the March 1 deadline.

Also, on Capitol Hill, President Trump signed a bipartisan funding resolution to avoid another government shutdown, although the $1.375 billion allotted for border security fell short of the $5.7 billion that was requested. As a result, President Trump declared a national emergency, setting up a likely legal battle, in order to secure funding from other departments to build a border wall.

The Fed, meanwhile, continued to assure investors that they need not fear tighter monetary policy at this juncture. Fed Governor Brainard (FOMC voter) said she thinks the balance sheet normalization effort should come to an end later this year.

These developments served to increase investor confidence in the face of slumping retail sales data and downside corporate guidance. Strikingly, the week's gains lifted the S&P 500 above its 200‐day moving average, which traders consider an important technical level, for the first time since December 4.

Retail sales for December declined 1.2% (Briefing.com consensus +0.2%) ‐‐ the market's biggest monthly decline in nearly 10 years. There was a belief, however, that the December retail sales numbers were aberrant and would give way to better retail sales data for January.

Separately, Coca‐Cola (KO), PepsiCo (PEP), NVIDIA (NVDA), Applied Materials (AMAT), Activision Blizzard (ATVI), and Mattel (MAT) were some of the companies this week that issued downside guidance. Cisco Systems (CSCO), however, provided investors with positive results.

U.S. Treasuries retreated this week, driving yields higher in a curve‐flattening trade. The 2‐yr yield increased eight basis points to 2.52%, and the 10‐yr yield increased four basis points to 2.67%. The U.S. Dollar Index gained 0.3% to 96.90. WTI crude rose 5.4% to $55.56/bbl.

Market Recap - Wall Street Ekes out Gains Despite Profit - Taking Efforts

The S&P 500 gained 0.1% this week despite recurring concerns about a slowdown in global growth and a U.S. China trade deal leading to some profit‐taking action.

The Dow Jones Industrial Average gained 0.2%, the Nasdaq Composite gained 0.5%, and the Russell 2000 gained 0.5%.

The utilities (+2.0%), information technology (+1.8%), industrials (+1.5%), and real estate (+1.4%) sectors were this week's leaders. Conversely, the S&P 500 energy (‐3.3%), materials (‐1.6%), and financial (‐1.5%) sectors were this week's laggards.

The stock market kicked off the week right where it left off: with gains. Shares of mega‐cap stocks helped prop the S&P 500 back to its 200‐day moving average ahead of President Trump's State of the Union Address on Tuesday.

From a trader's perspective, the 200‐day moving average was an important technical level to keep an eye on. For some, it seemed like a reasonable, and convenient, stopping point for the market to reassess its fundamental issues.

President Trump's speech didn't move the market, but the fundamental issues of a slowdown in global growth and a U.S.‐China trade deal did cause some broad‐based profit taking. Though these concerns were nothing new, they did provide an excuse for investors to de‐risk from a market that perhaps overextended its rally from the December low. The S&P 500 finished the week below its 200‐day moving average.

Some disappointing updates from Europe that stirred growth concerns included (1) the Bank of England leaving its key rate unchanged at 0.75% and lowering its 2019 GDP growth outlook to 1.2% from 1.7%, (2) the EU Commission cutting its 2019 euro area GDP growth forecast to 1.3% from 1.9%, and (3) Germany reporting a 0.4% month‐over‐month decline in industrial production and a 1.6% month‐over‐month decline in factory orders in December.

As for trade news, expectations for a trade deal before the March 1 deadline were lowered. NEC Director Larry Kudlow stated there remained a sizable distance to go with trade talks. In addition, President Trump confirmed that it is unlikely he will meet with China's President Xi before the trade deadline. Reports, however, indicated that the White House could extend the deadline if necessary.

Earnings reports this week were mixed and replete with disappointing guidance. Alphabet (GOOG) and Walt Disney (DIS) headlined the week's reports but both exceeded expectations.

Separately, there were some notable M&A news this week. BB&T (BBT) and SunTrust Banks (STI) announced an all‐stock merger of equals valued at approximately $66 billion, which would make it the sixth largest U.S. retail bank if approved. Ultimate Software (ULTI) received a cash buyout offer led by private equity firm Hellman & Friedman for $11 billion, or $331.50/share.

U.S. Treasuries saw some continued buying interest this week, pushing yields lower across the curve. The 2‐yr yield decreased four basis points to 2.46%, and the 10‐yr yield decreased six basis points to 2.63%. The U.S. Dollar Index increased 1.1% to 96.63 while WTI crude lost 4.5% to $52.76/bbl.

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%.