The Week In Review


The major averages ended a down week on a lower note as the S&P 500 shed 0.4% to widen this week's loss to 1.1%. Shortly after opening in the red, the benchmark index briefly turned positive, but just like yesterday, it was unable to make a sustained move above the 1,700 level. The S&P notched its low as the European session ended before erasing about half of its losses over the course of the afternoon.

Nine of ten sectors ended in the red while materials outperformed with a gain of 0.6% after China's industrial production report surpassed estimates (9.7% actual, 9.0% forecast). Steelmakers and miners rallied broadly, but Molycorp (MCP 6.69, -0.72) headed in the opposite direction after missing on earnings and revenue. The materials sector was the only group that registered a gain this week, rising 0.8%.

Other commodity-linked sectors did not fare as well. Energy underperformed with a loss of 0.5% even as crude oil advanced 2.5% to $106.02 per barrel. Meanwhile, the industrial sector (-0.3%) ended slightly ahead of the S&P, but transportation companies underperformed as the Dow Jones Transportation Average shed 0.6%.

Meanwhile, the remaining cyclical groups ended in mixed fashion. Technology (-0.4%) underperformed while financials (-0.3%) and discretionary shares (-0.3%) settled ahead of the broader market. The discretionary sector received some support from (PCLN 969.89, +36.14) after the company beat on earnings and revenue.

With regard to countercyclical groups, health care (-0.4%) and consumer staples (-0.4%) did not deviate from the S&P while rate sensitive utilities (-0.7%) and telecom services (-1.0%) lagged.

Treasuries were very quiet today and the benchmark 10-yr yield slipped one basis point to 2.58% after spending the day in a three point range.

Light volume persisted throughout the week and today was no different as less than 650 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic data was limited to wholesale inventories, which fell 0.2% in June after declining a downwardly revised 0.6% (from -0.5%) in May. That was the third consecutive monthly decline and the fourth monthly drop so far in 2013. The consensus expected wholesale inventories to increase 0.4%.

The Bureau of Economic Analysis assumed that wholesale inventories were flat in June in the advance estimate for second quarter GDP growth. The downward surprise will add a minor negative contribution to the revisions in the second estimate.

On Monday, the July Treasury budget will be released at 14:00 ET.

Week in Review: S&P 500 Finds Resistance

On Monday, the S&P 500 shed 0.2% as eight of ten sectors settled in the red. Stocks slipped out of the gate after better-than-expected economic data from China and Great Britain was unable to spark an early bid. Equities climbed off their early lows before receiving an additional push following the release of the ISM Non-Manufacturing Index, which posted its best reading since February 2011. Although the data provided stocks with a boost, the S&P never made it into the green as comments from Dallas Fed President Richard Fisher knocked the key indices off their highs. Mr. Fisher said the Fed's bond buying program may lay the groundwork for misallocation of resources and fuel future inflation. In addition, he said the market could expect a slowdown in asset purchases later in the year if the economy continues to "improve along the lines envisioned by the Committee."

Tuesday's session saw the S&P settle lower by 0.6%. Stocks spent the first 90 minutes of the session in a steady decline as cyclical sectors pressured the index below the 1,700 level with financials, materials, and industrials leading to the downside. All top-weighted banks ended in the red with Citigroup (C 51.32 -0.46) posting the largest loss among the majors. Meanwhile, the broader sector slid 0.9%.

On Wednesday, the S&P shed 0.4% to register its third consecutive decline. The benchmark index fell to its lows during the first hour of action before spending the remainder of the session in a slow climb. Stocks sold off at the open after Asian indices endured a downbeat session with Japan's Nikkei falling 4.0% as dollar/yen continued its recent weakness. The pair fell below 97.00 into the Asian close and additional selling during the U.S. session pressured it into the 96.50 area. The relative strength of most countercyclical sectors helped the benchmark index erase about half of its losses during the afternoon. Health care and telecom services ended little changed while utilities registered a modest gain of 0.5%. For its part, the consumer staples sector (-0.5%) lagged.

Thursday's session began with modest gains after upbeat data from China helped ease some concerns regarding the pace of global growth. The Middle Kingdom reported an increase in exports (+5.1% actual, +3.0% expected) and imports (+10.9% actual, +2.1% forecast) while its trade surplus narrowed to $17.82 billion from $27.10 billion. Shortly after the start of the session, the S&P notched a high of 1,700.20 before aggressive selling pressured the benchmark index back to its flat line. The slide coincided with notable dollar/yen weakness that sent the pair below 96.00 for the first time since June 19. The slide in equities and dollar/yen was halted shortly after the first hour of action. Stocks then returned to their highs but the S&P was unable to reclaim the 1,700 level. The rebound took place as most cyclical sectors outperformed with materials in the lead. The sector advanced 1.5% as the Chinese data underpinned steelmakers and miners.