The Week In Review


The stock market finished a choppy week on cautiously optimistic note. The S&P 500 added 0.2% despite spending the bulk of the session in the red. The benchmark index narrowed its week-to-date loss to 0.1%, while the Russell 2000 (+0.9%) trimmed its weekly decline to 1.8%. For its part, the Dow Jones Industrial Average (+0.2%) managed to eke out a slim gain of 0.4% for the week, finishing at a new closing record high at 16,583.34.
Generally speaking, small caps faced the brunt of the selling that took place this week, while some of the money rotated into blue chip listings, allowing indices like the Dow and S&P 500 to stay ahead of their counterparts. Today's session proved to be a bit of a departure from that trend as small caps rebounded, while blue chips struggled to keep pace with their high-beta counterparts.
The S&P 500 spent the first three hours of action stringing together a rebound from its early low. At first, the index was pressured by the four top-weighted sectors, but those groups later separated, leaving the financial sector (-0.1%) among the laggards, while consumer discretionary (+0.6%), health care (+0.6%), and technology (+0.2%) fueled the market-wide bounce.
In particular, the biotech industry was volatile as the iShares Nasdaq Biotechnology ETF (IBB 226.44, +3.09) bounced between its 20- (226.18) and 200-day moving averages (223.16), but ultimately settled closer to its 20-day average with a gain of 1.4%.
Elsewhere, gains in high-beta technology and discretionary components like Facebook (FB 57.24, +0.48), Netflix (NFLX 328.55, +6.89), LinkedIn (LNKD 148.69, +3.62), and (PCLN 1135.91, +27.91) gave a boost to the overall risk sentiment. However, there were still some soft spots among the recent high flyers as Rocket Fuel (FUEL 21.83, -5.98) rocketed lower by 21.5% after its cautious guidance and revenue miss overshadowed its earnings beat.
Unlike momentum names, heavily-weighted tech components were relatively weak. That underperformance was evidenced by the largest member of the tech sectorApple (AAPL 585.54, -2.45)which fell 0.4% amid reports the company will acquire Beats Electronics for about $3 billion. In addition, the stock was downgraded to 'Buy' from 'Strong Buy' at ISI Group.
On the downside, this year's leading sectorutilities (-1.4%)spent the session in a steady retreat that trimmed its year-to-date gain to 10.9%. Meanwhile, the second-best sector of the yearenergy (-0.2%)was the second-weakest performer today, narrowing its 2014 advance to 5.2%.
Treasuries surrendered their overnight gains ahead of the open and spent the remainder of the session anchored to their flat lines. The 10-yr yield ended at 2.62%.
Today's participation was below average as less than 640 million shares changed hands at the NYSE.
Economic data was limited to the Wholesale Inventories report for March and the March Jobs Openings and Labor Turnover Survey:
Wholesale inventories increased 1.1% in March after increasing an upwardly revised 0.7% (from 0.5%) in February, while the consensus expected an increase of 1.0%. The BEA assumed that wholesale inventories increased 1.1% in March in the advance estimate of first quarter GDP. The upward revision to February, however, was not built into its model and will result in a positive contribution toward growth in the second estimate.
The Job Openings and Labor Turnover Survey for March indicated job openings decreased to 4.014 million from 4.173 million.
On Monday, the Treasury Budget for April will be released at 14:00 ET. Also of note, Ukraine's regions of Donetsk and Lugansk remain scheduled for independence referendums on Sunday.

S&P 500 +1.6% YTD
Dow Jones Industrial Average +0.04% YTD
Nasdaq Composite -2.6% YTD
Russell 2000 -4.6% YTD

Week in Review: Small Caps Lag

The stock market kicked off the trading week on a sleepy note as the major averages spent the bulk of the Monday session near their flat lines. However, a final push during the last hour of action placed the key indices at new highs into the close. The S&P 500 added 0.2%, while the Russell 2000 (-0.1%) lagged throughout the day. Equities began the session on their lows as renewed global growth concerns, combined with continued worries about Ukraine, conspired to ensure a cautious start. In China, the HSBC Manufacturing PMI fell to 48.1 from 48.3 (expected 48.4), signifying a slowdown in manufacturing activities. Elsewhere, the European Commission warned about slower-than-expected growth by lowering its 2014 inflation forecast to 0.8%. The commission also trimmed next year's inflation forecast to 1.2%, while lowering its 2015 GDP forecast to 1.7% from 1.8%.

Equity indices finished the Tuesday session on their lows after spending the entire day in negative territory. The S&P 500 tumbled 0.9% with nine sectors registering losses, while the Russell 2000 fell 1.6%, settling below its 200-day moving average for the first time since November 2012. Stocks were pressured from the get-go as index futures slid to their pre-market lows ahead of the opening bell. While the early slide was not brought on by a particular news item, it served as a reflection of the defensive sentiment in the foreign exchange market where the yen rallied to its best level in three weeks. The dollar/yen pair notched a session low in the 101.50 area, before inching up to 101.65 into the close. Once the session got going, dip-buyers tried to force a turnaround, but were unable to do so as some of the top-weighted sectors kept the pressure on the broader market. Most notably, the financial sector (-1.4%) underperformed for the second consecutive day. Influential components like Bank of America, Citigroup, and JPMorgan Chase lost between 1.6% and 2.3%, while AIG plunged 4.1% after reporting a bottom-line beat on revenue that missed estimates.

Stock indices finished the Wednesday session on a mixed note as high-growth names weighed on the Russell 2000 (+0.1%) and the Nasdaq (-0.3%), while the Dow Jones Industrial Average (+0.7%) and S&P 500 (+0.6%) outperformed thanks to strength in blue chip listings. The stock market opened the trading day with modest gains amid headlines indicating Russia's President Vladimir Putin has reached out to OSCE chief and Swiss President Didier Burkhalter, attempting to de-escalate the Ukraine crisis through diplomatic avenues. Initially, the reports boosted overall risk appetite, sending Treasuries and the yen to lows, but those moves were retraced not long after. The yen returned into the middle of its trading range, while Treasuries reclaimed their losses and spent the afternoon near their flat lines. The benchmark 10-yr yield ended unchanged at 2.59%. Stock indices, meanwhile, surrendered their opening gains during the first hour of action, but only the Nasdaq Composite spent the remainder of the session in the red, while the Dow and S&P 500 rebounded swiftly.

The stock market ended the Thursday session on a defensive note despite showing early strength. The S&P 500 lost 0.1%, while the tech-heavy Nasdaq (-0.4%) fell nearly 60 points from its session high. Also of note, the Russell 2000 (-1.0%) settled below its 200-day moving average after failing to retake that level during the session. Today's affair proved to be a bit of a rollercoaster ride as equities grinded higher in the morning, but rolled to fresh lows during the afternoon before climbing off those lows into the close. Fittingly, the areas that fueled the early advance (biotechnology and high-growth names) were the same spots that paced the afternoon slide.