The Week In Review
4/4/14
The stock market finished the week on a lower note after equity indices spent the entire session in a steady decline from their opening highs. The Nasdaq led the retreat, falling 2.6%, while the Dow Jones Industrial Average (-1.0%) and S&P 500 (-1.3%) registered smaller losses.Even though the major averages endured a daylong retreat, only the Nasdaq ended down for the week (-0.7%) while the Dow and S&P 500 posted respective weekly gains of 0.6% and 0.4%.
Prior to the open, the Nonfarm Payrolls report pointed to the addition of 192,000 jobs in March, while the Briefing.com consensus expected an increase of 195,000. After the report crossed the wires, equity futures spiked, but so did gold (+1.5% to 1303.40/ozt) and Treasuries (10-yr yield -7 bps to 2.73%), which was inconsistent with the risk-on disposition observed in equity futures. Furthermore, the dollar/yen pair spiked initially (yen weakness), but gave it all back, and then some, in short order.
The dollar/yen pair hovered near 103.90 and spiked above 104.10 in reaction to the data, before spending the remainder of the session in a retreat that mirrored the price action in the S&P 500. The Japanese yen finished the session near its high with the dollar/yen pair sliding to 103.25 by the New York close.
With cautious action in most other markets, the upbeat sentiment in the stock market dissipated quickly. The Nasdaq led the retreat as heavy selling pressure weighed on biotechnology and other momentum names.
The iShares Nasdaq Biotechnology ETF (IBB 225.30, -9.41) lost 4.0% after being unable to retake its 100-day moving average at the open (238.35). The ETF surrendered its entire 2014 gain, while the broader health care sector (-1.5%) ended behind the broader market.
Most other heavily-weighted groups did not fare much better. Consumer discretionary (-1.7%) and technology (-2.2%) lagged throughout the session, while financials (-1.2%) outperformed.
Notably, the discretionary sector was pressured by continued weakness in names like Amazon.com (AMZN 323.00, -10.62), Netflix (NFLX 337.31, -17.38), and Priceline.com (PCLN 1178.08, -59.37). Homebuilders, meanwhile, fared relatively well with the iShares Dow Jones US Home Construction ETF (ITB 24.59, -0.12) shedding 0.5%.
Elsewhere, the largest S&P 500 sector, technology, proved to be a significant drag on the major averages amid weakness in large names. Apple (AAPL 531.82, -6.97), Google (GOOG 543.14, -26.60), Microsoft (MSFT 39.87, -1.14), and Visa (V 207.70, -7.31) lost between 1.3% and 4.7% with Google seeing the largest decline of the bunch. Smaller momentum names registered even larger losses with FireEye (FEYE 50.36, -4.50), Splunk (SPLK 62.68, -3.68), and Yelp (YELP 65.76, -4.85) down between 5.6% and 8.2%. The three names extended their weekly losses to 20.7%, 12.0%, and 14.1%, respectively.
On the upside, utilities (+0.6%) posted a solid gain with lower yields giving a boost to the rate-sensitive sector.
The selloff invited above average participation as 764 million shares changed hands at the NYSE floor.
Looking closer at today's jobs report:
Overall, the employment data was fairly solid, but nothing to really get excited about. The initial claims data over the past several weeks supported payroll growth in the neighborhood of 200,000. That was exactly what happened in March.
Total nonfarm private payrolls also increased by 192,000 jobs in March, up from 188,000 in February. The consensus expected these payrolls to increase by 205,000.
Winter weather, which was blamed for prior weaknesses, again did not show up in the payroll numbers. Construction employment increased by 19,000 in March, which was only a marginal improvement over the 18,000 added in February. Had winter weather conditions really impacted the economy, construction payrolls would have spiked in March as employment recovered from winter delays.
The one area that winter weather did impact was the number of hours worked. The average workweek fell to 34.3 in February as weather conditions prevented employees from working their normal hours. As temperatures and conditions returned to normal, the average workweek jumped to 34.5.
Average hourly earnings were essentially flat in March after increasing 0.4% in February.
The unemployment rate remained at 6.7% in March while the consensus expected the rate to tick down to 6.6%.
Monday's data will be limited to the February Consumer Credit report, which will be released at 15:00 ET.
S&P 500 +0.9% YTD
Russell 2000 -0.8% YTD
Dow Jones Industrial Average -1.0% YTD
Nasdaq Composite -1.2% YTD
Week in Review: Biotech Remains Volatile
On Monday, the stock market closed out a volatile month of March on an upbeat note with small caps leading the advance. The Russell 2000 gained 1.8% for the day while the S&P 500 settled higher by 0.8% with nine sectors ending in the green. The benchmark index was able to eke out a 0.7% gain for the month while the Nasdaq Composite and Russell 2000 could only trim their losses. The Nasdaq ended the month with a decline of 2.5% while the Russell 2000 lost 1.0% in March. Equity indices made the bulk of their advance during the opening hour before spending the remainder of the session inside narrow ranges. The upbeat start took place after a weekend phone call between President Obama and Vladimir Putin, discussing the situation in Ukraine, was viewed as a step that increased the chances for a diplomatic solution to the standoff between Russia and Ukraine. The early buying interest was also bolstered by comments from Fed Chair Janet Yellen, who spoke at a conference in Chicago, saying the Fed remains short of its employment and inflation goals and that the economy requires 'considerable support for some time.'
On Tuesday, the stock market kicked off April on an upbeat note with the Nasdaq Composite (+1.6%) leading the charge. The S&P 500 (+0.7%) settled at a fresh record high of 1885.52 with eight sectors registering gains while the Dow Jones Industrial Average (+0.5%) lagged. In the absence of notable pre-market data or earnings, the major averages began the day with a steady climb that was assisted by upbeat action in Europe, where markets in France, Germany, and Great Britain posted solid gains between 0.5% and 0.8%. For the second day in a row, the Nasdaq began the day in the lead, maintaining its outperformance throughout the session. The early strength of biotechnology (IBB +2.2%) propelled the initial advance while the index was kept near its session high into the afternoon by the daylong outperformance of the technology sector (+1.3%).
The stock market meandered inside a narrow range on Wednesday after posting solid gains to start the week. The S&P 500 added 0.3% and notched a fresh record closing high at 1890.90 while the Nasdaq (+0.2%) struggled to stay in the green throughout the session. Equity indices began the day near their flat lines and maintained narrow ranges into the afternoon before breaking out to fresh highs during the final 30 minutes of action. That thrust placed the Dow Jones Industrial Average above its 2013 closing high of 16576.66 for the first time this year, but the index returned below that level by the close. Meanwhile, the Nasdaq and S&P 500 extended their respective 2014 gains to 2.4% and 2.3%, but the Nasdaq had a tough time keeping pace with the benchmark index today as large cap tech names and biotechnology lagged.
Equities ended the Thursday session on a lower note with small caps leading the weakness. The Russell 2000 (-1.0%) and Nasdaq (-0.9%) posted comparable losses while the Dow Jones Industrial Average (unch) and S&P 500 (-0.1%) finished little changed after climbing off their lows during the last hour of action. Of the major averages, the Nasdaq faced the most aggressive selling due to the daylong weakness in biotechnology and an afternoon slump in the technology sector (-0.6%). Biotechnology spent the entire session in a steady retreat that pressured the iShares Nasdaq Biotechnology ETF back below its 100-day moving average (238.12). The biotech ETF lost 2.9% while the broader health care sector shed 0.3%.