Stocks kept testing a key resistance level last week amid signs of a potential economic slowdown.
The S&P 500 rose 0.4 percent between Friday, February 22, and Friday, March 1. That helped deliver a 3 percent gain for February. It was also the ninth positive week in the last 10.
The index is pushing against 2800, the same level where it slammed into a wall of selling in early December. Is there enough demand for stocks to trigger a breakout? Or, is it time for a pullback following a 19 percent rally since Christmas?
Investors need to parse some conflicting information to answer those questions. Pessimists might point to negative headlines like the Institute for Supply Management’s manufacturing report, which fell more than expected to the lowest level since November 2016. They might add that jobless claims keep rising and we’ve run out of corporate earnings as a bullish catalyst.
Optimists, on the other hand, could say that better-than-expected consumer confidence showed the U.S. is bouncing back from the recent government shutdown. They might also point to the Federal Reserve’s increasingly dovish stance, highlighted by Chairman Jerome Powell in the Senate last week.
On top of all that are hopes the U.S. and China will reach a trade deal soon.
Biotech’s Urge to Merge
Merger activity is another story in the background. Last week saw two more deals in the biotech space, with Germany’s Roche gobbling up Spark Therapeutics (ONCE) and Danaher (DHR) buying General Electric’s (GE) life-sciences division. That pushed biotech to the top of the industry performance rankings.
Retailers followed thanks to surprisingly positive news at the company level. Gap (GPS), for instance, surged 19 percent on news it would spin off its better-performing Old Navy division. That made GPS the top gainer in the S&P 500.
Best Buy (BBY) also rallied 12 percent after crushing estimates and pledging to return more capital to shareholders. There were also decent rallies in Foot Locker (FL), Nordstrom (JWN) and J.C. Penney (JCP).
Technology was the best performing major sector overall, up a little more than 1 percent. Interestingly, less prominent companies like Arista Networks (ANET) and PayPal (PYPL) led the charge while biggies like Nvidia (NVDA) and Facebook (FB) drifted.
HP, Booking Drop on Weak Results
Or, even worse they cratered like HP (HPQ) and Booking (BKNG). HPQ had the biggest drop in the S&P 500 last week, down 17 percent, after a poor earnings report showed an over-reliance on brick-and-mortar outlets. BKNG, formerly known as Priceline, dropped 10 percent on another disappointing report. That made it the third-biggest decliner in the index.
Sandwiched between the two was drugmaker Mylan (MYL), down 12 percent on a bleak profit outlook.
The worst-performing broad sectors last week were materials, home builders and airlines.
This coming week features important monthly jobs data and a handful of earnings.
Tonight’s big name is software maker Salesforce.com (CRM).
Tomorrow brings retailers Target (TGT) and Kohl’s (KSS), along with new-home sales and the Institute for Supply Management’s service-sector index.
ADP’s private-sector payrolls report leads the charge on Wednesday. Crude oil inventories and the Fed’s Beige Book economic survey are also due.
Initial jobless claims are due Thursday morning, and Chinese trade data in the evening could also grab attention.
The week concludes with the Labor Department’s non-farm payrolls report Friday morning.
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial.
Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them apprised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.
Money is flowing back into stocks as investors hope for a better inflation report this week. The S&P 500 rose 1.9 percent between Friday, May 3, and Friday, May 10. It was the third straight positive week. More than four-fifths of the index's members advanced,...
Oracle jumped to new highs almost two months ago. Now, after a pullback, the software giant may have found support. The first pattern on today’s chart is the gap higher on March 12 after earnings surprised to the upside. ORCL retraced the move and is starting to...
Last week's news wasn't great, but it was good enough to stop the bears. The S&P 500 rose 0.5 percent between Friday, April 26, and Friday, May 3. At one point the index was down as much as 2 percent, only to snap back in the last two sessions. Yields also fell...
Leaving TradeStation
You are leaving TradeStation.com for another company’s website. Click the button below to acknowledge that you understand that you are leaving TradeStation.com.
This event is hosted on YouCanTrade. The information for this event is being provided for informational and educational purposes only.
You are leaving TradeStation Securities and going to YouCanTrade. YouCanTrade is an online media publication service which provides investment educational content, ideas and demonstrations, and does not provide investment or trading advice, research or recommendations. YouCanTrade is not a licensed financial services company or investment adviser and does not offer brokerage services of any kind.
TradeStation Securities, Inc. provides support and training channels hosted on YouCanTrade, its affiliate. Other than these support and training channels, any services offered by YouCanTrade are not sponsored, endorsed, sold or promoted by TradeStation Securities and it makes no representation regarding any YouCanTrade goods or services.
To acknowledge you are leaving TradeStation Securities to go to YouCanTrade, please click
This website uses cookies to offer a better browsing experience and to collect usage information. By browsing this site with cookies enabled or by clicking on the "ACCEPT COOKIES" button you accept our Cookies Policy. To block, delete or manage cookies, please visit your browser settings. Restricting cookies will prevent you benefiting from some of the functionality of our website.ACCEPT COOKIES