Market Recap - Tech Stocks and Small-Caps End Week as Winners

Each Of The Major Indices Set Fresh All-Time Highs This Week In A Continuation Of The Market's Positive Trend. The Nasdaq Composite (+3.1%) And Russell 2000 (+3.1%) Both Advanced 3.1%, While The S&P 500 (+1.3%) And Dow Jones Industrial Average (+0.4%) Finished With More Modest Gains.

As expected when the Nasdaq noticeably outperforms, the information technology sector (+3.2%) claimed the top spot in the S&P 500, followed by consumer discretionary (+2.3%) and materials (+1.9%). The energy (-4.3%) sector succumbed to profit-taking interest with a 4.3% decline, and the communication services sector (-0.5%) was the one other negative sector.

Positive factors throughout the week included news that a stimulus deal is close to being reached, the Fed affirming its "extraordinarily accommodative" policy stance, the Pfizer (PFE)-BioNTech (BNTX) coronavirus vaccine rolling out in the U.S., and news that Apple (AAPL) is planning to increase iPhone production by 30% yr/yr in the first half of 2021.

To be more specific, the size of a potential stimulus deal is looking to be around $900 billion, although negotiations extended into the weekend amid continued disagreements. The Fed committed to purchasing at least $120 billion of Treasury and mortgage-backed securities per month until substantial progress has been made with respect to employment and inflation targets.

The Fed's stance helped investors overlook relatively disappointing retail sales data for November and higher weekly initial claims, and it also put downwards pressure on the U.S. Dollar Index, which fell to its lowest level since April 2018.

The 10-yr yield increased six basis points to 0.95% amid increased selling interest in part due to the Fed's dovish policy and expectations for new supply of Treasuries needed to finance a potential stimulus deal.

Market Recap - November Bullish Momentum Carries into December

Each Of The Major Indices Set All-Time Highs This Week, Powered Higher By Growth Stocks And Value Stocks Alike. The Nasdaq Composite Claimed The Winning Spot With A 2.1% Gain And Was Followed By The Russell 2000 (+2.0%), S&P 500 (+1.7%), And Dow Jones Industrial Average (+1.0%).

Nine of the 11 S&P 500 sectors contributed to the advance. The energy sector rallied 4.5%, and the information technology sector rose 2.8%. The utilities sector (-2.2%) was the weakest link by a wide margin.

There was no one specific catalyst that propelled stocks higher. Rather, it was the positive cumulative effect that the week's developments had on an already bullish investor mindset that could best explain the gains. In simpler terms, the market rode a bullish momentum.

Stimulus talks were renewed. Moderna (MRNA) said its vaccine was 94.1% effective in preventing COVID-19 and 100% effective in protecting against serious outcomes. Pfizer (PFE) and BioNTech (BNTX) received emergency approval for their COVID-19 vaccine in the UK. Apple (AAPL) and Tesla (TSLA) were upgraded to Buy ratings by a couple of analysts.

Regarding stimulus talks, Democratic Congressional leadership and some Republicans supported a proposed $908 billion bipartisan stimulus bill as a starting point for negotiations. House Speaker Pelosi spoke with Senate Majority Leader McConnell about attaching a smaller stimulus deal to the year-end spending bill.

It's not for certain that the mixed November employment report, which highlighted slower jobs growth, pushed lawmakers over the edge on Friday, but the market reacted as if the report had some negotiating power.

In the Treasury market, the 2s10s spread widened by 14 bps to 83 bps, reaching its highest level since late 2017 in an affirmation of the market's upbeat economic outlook. The 10-yr yield finished the week 13 basis points higher at 0.97%. The U.S. Dollar weakened by 1.0% to 90.82 to reach its lowest level since April 2018.

Separately, Salesforce (CRM) confirmed it agreed to acquire Slack (WORK) in a cash-and-stock deal with an enterprise value of about $27.7 billion. CRM shares fell 9% this week given the hefty price tag.

Market Recap - DOW Hits 30K And Other Milestones

Each Of The Major Indices Rose More Than 2.0% This Shortened Week And Set New Record Highs, Including The Dow Jones Industrial Average (+2.2%), Which Crossed Above 30,000 For The First Time Ever. The Russell 2000 Rose 3.9%, The Nasdaq Composite Rose 3.0%, And The S&P 500 Rose 2.3%.

Value, cyclical, and small‐cap stocks retained their leadership roles in this part of the bull market. The S&P 500 energy sector rose 8.5%, and the financials sector rose 4.6%. Every other sector, except real estate (‐0.4%), ended the week with gains.

Positive catalysts included news that Joe Biden will nominate former Fed Chair Janet Yellen as Treasury Secretary, the General Services Administration saying it will release funds to help the Biden administration transition into office, and more upbeat vaccine/treatment updates for COVID‐19.

Regarding the latter, AstraZeneca (AZN) and the University of Oxford said their vaccine has an efficacy rate of up to 90%, and Regeneron Pharma (REGN) said it received emergency use authorization from the FDA for its antibody cocktail. Note, AstraZeneca acknowledged at the end of the week that it made a dosage mistake in its trials, likely prolonging federal approval in the U.S.

The bullish price action continued to feed on itself, contributing to a fear of missing out on further gains and parabolic moves in some parts of the market. Tesla (TSLA) surged 20% this week, and Palantir (PLTR) surged 52%. 

The 10‐yr yield Treasury note yield edged higher by two basis points to 0.85% ahead of the bond market close on Friday.

Market Recap - Another Winning Week for the Small-Caps

Cyclical Stocks Retained Their Monthly Leadership Roles This Week Following Several Positive Vaccine Developments, But The S&P 500 (-0.8%) And Dow Jones Industrial Average (-0.7%) Finished In Negative Territory. The Russell 2000 Climbed 2.4%, And The Nasdaq Composite Increased 0.2% Despite Relative Weakness In The Technology Stocks.

Briefly, Pfizer (PFE) and BioNTech (BNTX) filed for emergency use authorization for their COVID-19 vaccine after concluding their Phase 3 study, which indicated that their vaccine is 95% effective; Moderna (MRNA) said its vaccine is 94.5% effective; and AstraZeneca (AZN) and Oxford's vaccine showed encouraging immune responses in older patients in Phase 2 data. 

The S&P 500 energy sector set the performance pace with a 5.0% gain to extend its monthly gain to 23%. The industrials (+1.1%), materials (+1.1%), and financials (+0.5%) sectors followed suit, and the Philadelphia Semiconductor Index (+1.9%) and the SPDR S&P Retail ETF (XRT, +5.5%) were other pockets of strength this week.

The semiconductor space was fueled by news that Taiwan Semi (TSM) is expanding production capacity to meet high demand from chip companies. The retail space drew support from a host of better-than-expected earnings reports from retailers like Walmart (WMT) and Target (TGT). 

Conversely, the information technology sector (-0.9%) was an influential drag on index performance, and the counter-cyclical utilities (-3.9%), health care (-3.0%), and real estate (-1.7%) sectors declined noticeably.

Separately, Boeing (BA) shares gained 7% in part due to the FAA approving the 737 MAX safe to fly again, Tesla (TSLA) shares surged 20% on news it will be added to the S&P 500 on Dec. 21, and Walgreens Boots Alliance (WBA) shares fell 12% following the launch of Amazon's (AMZN) online pharmacy business.

The 10-yr yield fell six basis points to 0.86% amid increased demand despite the encouraging vaccine news. 

Market Recap - A Rally on Monday Leads to Four Days of Consolidation as Earnings Season Begins

The Large-Cap Indices Ended The Week Higher But Noticeably Lower Than Where They Were At Monday's Highs (Before Earnings Season Started). The Nasdaq Composite Advanced 0.8%, While The S&P 500 (+0.2%) And Dow Jones Industrial Average (+0.1%) Eked Out Smaller Gains. The Russell 2000 Decreased 0.2%. 

There was no clear sector leadership this week with five S&P 500 sectors finishing higher between 0.7% (consumer staples) and 1.1% (industrials). At the other end, the energy (-2.1%) and real estate (-2.3%) sectors declined more than 2.0%, followed by financials (-0.9%). 

Growth-oriented stocks, however, did secure the slight advantage, evident by the outperformance of the Nasdaq Composite. That might have been due to the negative-sounding developments throughout the week. 

Starting with earnings, the big banks and the top health care companies kicked off the Q3 earnings-reporting season, and the reactions to their reports were generally lackluster or disappointing. JPMorgan Chase (JPM), Citigroup (C), and Goldman Sachs (GS) for their part issued cautious-minded commentary about the economic outlook.

In addition, investors had to contend with Johnson & Johnson (JNJ) and Eli Lilly (LLY) pausing their vaccine/antibody trials, lawmakers reaching an impasse on fiscal stimulus, weekly jobless claims increasing by 53,000 to 898,000 (Briefing.com consensus 830,000), and Europe announcing renewed lockdown measures due to a second wave of the coronavirus. 

These events came in the midst of a three-day losing streak in the S&P 500, which was ultimately snapped on Friday after retail sales for September increased more than expected and it was reported that Pfizer (PFE) may file for emergency use authorization for its COVID-19 vaccine candidate by the end of November. 

It's worth pointing out, however, that the S&P 500 was up as much as 10.6% on Monday from its low on Sept. 24. The benchmark index ended that day with a 1.6% gain, and no progress was made after that. With all these events in mind, it's reasonable to posit that the market may have just needed some time to consolidate those gains. 

The 10-yr yield decreased four basis points to 0.74%. The U.S. Dollar Index advanced 0.7% to 93.71. WTI crude futures increased 0.5% to $40.85/bbl.

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.