The Week In Review

5/11-5/15/15

The stock market ended the Friday session on a flat note and completed its second consecutive weekly round trip. The S&P 500 (+0.1%) settled just above its flat line, inching up to a new closing record high at 2,122.73 while the Nasdaq (-0.1%) lagged throughout the day. For the week, the S&P 500 added 0.3% after being down nearly 1.5% for the week on Wednesday.

Overall, the final session of the week was very quiet with the benchmark index trading inside a seven-point range. Stocks dipped in the early going after four disappointing economic reports weighed on sentiment, but that pessimism was essentially offset by increased expectations that the Federal Reserve will refrain from raising rates in the near term due to the recent string of uninspiring data. To that point, Treasuries rallied throughout the day, sending the 10-yr yield lower by ten basis points to 2.14% while strength in the long bond dropped its yield 12 basis points to 2.93%. Thanks to today's surge, the benchmark 10-yr note reclaimed the remainder of its loss from the early portion of the week.

Seven sectors registered gains with rate-sensitive utilities (+1.3%) holding the lead throughout the session. Meanwhile, influential groups like health care (+0.2%), consumer discretionary (+0.8%), and energy (+0.4%) also ended in the green, but their strength was offset by weakness in top-weighted technology (-0.3%) and financials (-0.4%) as well as the fifth largest group by weight—industrials (-0.1%).

The financial sector ended at the bottom of the leaderboard with regional banks leading the retreat that was fueled by the flattening at the long end of the yield curve.

For its part, technology underperformed after leading the market's rebound from Wednesday's low. Large cap components like Apple (AAPL 128.75, -0.20), Google (GOOGL 546.49, -2.71), IBM (IBM 173.26, -0.79), and Microsoft (MSFT 48.30, -0.42) lost between 0.2% and 0.9% with comparable weakness among their peers overshadowing a decent showing from the chipmaker group. Applied Materials (AMAT 20.20, +0.34) gained 1.7% after reporting a one-cent beat while the broader PHLX Semiconductor Index added 0.2%.

Similarly, the industrial sector was weighed down by some of its largest members like General Electric (GE 27.27, -0.14) and Boeing (BA 146.88, -1.08) while transport stocks rebounded after showing relative weakness earlier in the week. The Dow Jones Transportation Average gained 0.9% today, but still lost 1.1% for the week.

On the upside, the consumer discretionary sector enjoyed broad strength with retail stocks sending the SPDR S&P Retail ETF (XRT 98.64, +0.99) higher by 1.0%. Elsewhere, the energy sector (+0.4%) recovered from opening weakness as crude oil erased its overnight loss to end the week just below $60.00/bbl. The intraday recovery was assisted by a decline in the Dollar Index (-0.2%), which has surrendered 6.8% over the past five weeks.

Today's intraday participation was light, but that was masked by options expiration, which brought the final NYSE floor volume up to nearly 813 million shares by the close.

Economic data included Empire Manufacturing Index, Industrial Production/Capacity Utilization and Michigan Sentiment Index:

The Empire Manufacturing Survey for May improved to 3.1 from April's -1.2 while the Briefing.com consensus expected an increase to 4.5

Industrial production registered its fifth consecutive monthly decline, falling 0.3% in April after declining an upwardly revised 0.3% (from -0.6%) in March while the Briefing.com consensus expected an increase of 0.1% 

Manufacturing production was flat after increasing 0.3% in March, which was more-or-less in-line with the regional manufacturing surveys that showed minor contractions throughout the U.S.

Capacity utilization hit 78.2% while the Briefing.com consensus expected a reading of 78.4%

The University of Michigan Consumer Sentiment Index declined to 88.6 in the preliminary May reading from 95.9 in April while the Briefing.com consensus expected an increase to 96.0 

That was the lowest reading since October 2014 when the index hit 86.9

The Expectations Index fell to 81.5 in May from 88.8 in April while the Current Conditions Index declined to 99.8 from 107.0

The decline in sentiment was likely caused by increasing gasoline prices and some market volatility, which offset improvements in labor market conditions

Monday's data will be limited to the 10:00 ET release of the NAHB Housing Market Index for May (Briefing.com consensus 57).

Nasdaq Composite +6.2% YTD

Russell 2000 +3.2% YTD

S&P 500 +3.0% YTD

Dow Jones Industrial Average +2.5% YTD

Week in Review: Stocks Roundtrip...Again

The stock market followed up Friday's broad-based rally with an outing on Monday that never got on track due to a variety of reasons like technical resistance near record highs, rising long term rates (10-yr yield 2.27%, 30-yr 3.03%), weakness in the energy sector (-2.1%), and global concerns related to China and Greece. The Dow Jones Industrial Average (-0.5%), Nasdaq Composite (-0.2%), and S&P 500 (-0.5%) all ended the day in red figures. The Russell 2000 (+0.2%) finished off its highs for the day, but still managed to close the session higher.

The market ended the Tuesday session on a modestly lower note, which masked an opening drop that had the S&P 500 (-0.3%) down as much as 20 points. Equity indices endured a shaky open after the overnight session featured more selling in European and U.S. bond markets; however, that pressure abated shortly before the opening bell with the U.S. 10-yr note marking its low at 8:00 ET. At that time, the benchmark yield marked a session high at 2.36% and began its daylong retreat that ended at 2.26%. The ensuing rally in Treasuries fostered a rebound in equities with the S&P 500 returning above its 50-day moving average (2,089) after sliding beneath that level at the start. The S&P 500 ended the day not far below its flat line, but only two sectors finished the day with gains. The energy sector (+0.4%) followed Monday's weakness with some relative strength thanks to a 2.5% gain in crude oil ($60.59/bbl), which was underpinned by a 0.5% decline in the Dollar Index (94.55, -0.46).

The major averages ended the midweek session on a flat note after sliding from their opening highs. The S&P 500 settled just below its flat line to register its third consecutive decline while the Nasdaq Composite (+0.1%) outperformed throughout the day. Prior to the open, the Retail Sales report for April (0.0%; Briefing.com consensus 0.2%) missed expectations for the fifth consecutive month. The economic disappointment helped Treasuries extend their overnight gains with the benchmark 10-yr yield hitting a morning low at 2.19%; however, Treasuries reversed from their morning highs and spent the day in a steady retreat (10-yr yield +3 bps to 2.28%) while the stock market followed suit. Only four sectors registered gains, but the top-weighted technology sector (+0.5%) held the lead throughout the session and prevented the S&P 500 from registering a larger loss. In addition, the sector fueled the Nasdaq's outperformance with large cap names like Intel (INTC 32.64, +0.39), Microsoft (MSFT 47.62, +0.27), and Qualcomm (QCOM 69.73, +0.95) climbing between 0.6% and 1.4%.

Stocks soared on Thursday with the S&P 500 climbing 1.1%. The benchmark index settled at a fresh record high of 2121.10 while the Nasdaq Composite (+1.4%) outperformed once again. Equity indices spiked out of the gate and spent the rest of the day in a slow drift higher with all ten sectors taking part in the advance. The top-weighted technology sector (+1.7%) followed Wednesday's outperformance with another strong showing that kept the group in the lead throughout the session. Large cap names like Apple (AAPL 128.95 +2.94), Google (GOOGL 549.20, +9.71), Microsoft (MSFT 48.72, +1.09), and Facebook (FB 81.37, +2.93) gained between 1.8% and 3.7%, which helped overshadow a 1.0% decline in the shares of Cisco Systems (CSCO 29.05, -0.30) after the company reported a one-cent beat and issued in-line guidance. It is worth noting that Cisco's report triggered a Sterne Agee CRT downgrade to 'Neutral.'