The Week In Review

10/30/15

The stock market ended the week on a lower note, but that did not stop the S&P 500 from posting its largest monthly gain since October 2011. The benchmark index lost 0.5% on Friday, but surged 8.3% for the month while the Nasdaq Composite (-0.4%) outperformed, spiking 9.4% in October.

Broadly speaking, the Friday session was very quiet with the market showing a modest loss during morning action, which turned into a slim afternoon gain; however, a late slide from session highs ensured a lower finish for the S&P 500.

Despite the lower finish, only five of ten sectors posted losses, but relative weakness in heavily-weighted groups like financials (-1.3%), technology (-0.8%), and consumer staples (-1.1%) was enough to keep the market pressured.

The financial sector retreated throughout the day, narrowing its October gain to 6.1%. Meanwhile, the top-weighted technology space (-0.8%) also underperformed, but the influential sector surged 10.7% in October. Large cap names like Apple (AAPL 119.50, -1.03), Google (GOOGL 737.39, -7.46), and Microsoft (MSFT 52.64, -0.72) struggled on Friday, masking relative strength in the PHLX Semiconductor Index, which rose 0.9%. ON Semiconductor (ON 11.00, +0.72) was a notable standout, soaring 7.0%, in reaction to better than expected results.

Elsewhere, the consumer staples sector (-1.1%) retreated amid disappointing earnings and/or guidance from Colgate-Palmolive (CL 66.35, -2.88), CVS Health (CVS 98.78, -5.02), and Boston Beer (SAM 219.42, -25.52). The three names lost between 4.2% and 10.4% while the broader sector narrowed its October gain to 5.6%.

On the flip side, the energy sector (+0.7%) finished in the lead after struggling at the start. However, the sector climbed during the afternoon to extend its October gain to 11.3%. Crude oil contributed to the afternoon rally as WTI crude rose 1.2% to $46.60/bbl while earnings also played a part. To that point, Chevron (CVX 90.88, +0.99), ExxonMobil (XOM 82.74, +0.51), and Phillips 66 (PSX 89.10, +2.67) all delivered better than expected results.

Unlike stocks, Treasuries spent the bulk of the day in the green with the 10-yr yield slipping three basis points to 2.15%.

Today's participation was ahead of average with more than a billion shares changing hands at the NYSE floor with month-end flows contributing to the increased activity.

Economic data included Employment Cost Index, Personal Income/Spending data, Chicago PMI, and Michigan Sentiment:

Employment costs increased 0.6% in Q3 2015, up from a 0.2% increase in the second quarter while the Briefing.com consensus expected an increase of 0.5%

Despite the big quarterly gain, year-over-year trends were unchanged with total compensation increasing only 2.0% in the third quarter, which matched the rate of increase from the second quarter

Personal income increased 0.1% in September after increasing an upwardly revised 0.4% (from 0.3%) in August while the Briefing.com consensus expected an increase of 0.2%

Personal spending rose 0.1% in September after increasing 0.4% in August while the consensus expected an increase of 0.2%

The Chicago PMI increased to 56.2 in October from 48.7 in September while the Briefing.com consensus expected an increase to 49.0

That was the best reading in the Chicago PMI since reaching 59.4 in January

The Production Index increased to 63.4 in October from 43.6 in September, representing the largest one-month gain since August 2014

The University of Michigan Consumer Sentiment Index was revised down to 90.0 in the final October reading from 92.1 in the preliminary report while the Briefing.com consensus expected a revision up to 92.6

Despite the downward revision, sentiment remains stronger than the final September (87.2) level

The Current Conditions Index was revised down to 102.3 in the final October reading from 106.7 while the Expectations Index was revised down to 82.1 from 82.7

Monday's economic data will be limited to the 10:00 ET release of September Construction Spending and the October ISM Index.

Nasdaq Composite +6.7% YTD
S&P 500 +1.0% YTD
Dow Jones Industrial Average -0.9% YTD
Russell 2000 -3.5% YTD

Week in Review: Stocks Register Fifth Consecutive Weekly Gain

The stock market began the week on a quiet note with the S&P 500 (-0.2%) spending the session inside a nine-point range. The benchmark index settled right above the midpoint of that range while the Nasdaq Composite (+0.1%) outperformed throughout the session. Generally speaking, the Monday affair was very quiet and free of noteworthy earnings. Accordingly, the benchmark index opened with a two-point loss and traded in sideways fashion until the closing bell. Seven sectors registered losses between 0.2% (consumer staples and industrials) and 2.5% (energy) while consumer discretionary (+0.8%), health care (+0.5%), and telecom services (+0.1%) outperformed.

The market endured its second consecutive retreat on Tuesday, but the overall trading dynamic was very similar to the range-bound affair from Monday. The S&P 500 lost 0.3% while the Nasdaq Composite (-0.1%) outperformed throughout the session. In some ways, the cautious posture was not all that shocking considering investors were on hold ahead of Wednesday's release of the October FOMC policy directive from the FOMC. Nine sectors ended the Tuesday affair in negative territory with cyclical groups showing relative weakness across the board. The energy sector (-1.2%) spent its second consecutive day behind the remaining nine groups as lower oil prices weighed. To that point, WTI crude fell 1.8% to $43.22/bbl. Similar to energy, the industrial sector (-1.0%) surrendered close to 1.0% while the remaining cyclical sectors posted slimmer losses.

Equity indices snapped their two-day skid on Wednesday, but not before seeing some intraday volatility. The S&P 500 added 1.2% while the Russell 2000 (+2.9%) outperformed. The key indices rallied out of the gate in response to a batch of mostly better than expected earnings. That lengthy list was headlined by Apple (AAPL 119.28, +4.73) with the top-weighted stock spiking 4.1% in reaction to better than expected earnings and revenue. For its part, the broader technology sector (+1.5%) settled ahead of the broader market while most other cyclical sectors also showed relative strength. None more so than the energy space (+2.2%), which spent the day in the lead after struggling over the past two days. After rallying through the first two hours of the session, the market hovered near its high until the 14:00 ET release of the latest policy statement from the Federal Reserve, which called for no change to the current policy stance. That being said, the Federal Reserve took out a key line from its statement, which referred to global developments having the potential to restrain economic growth in the U.S. With that line being left out of the October statement, the Fed has opened the door to a potential rate hike in December.

The stock market spun its wheels through the bulk of the Thursday affair, but a final-hour charge helped the S&P 500 end little changed while the Nasdaq Composite (-0.4%) underperformed throughout the session. Equities followed Wednesday's roller-coaster ride with a range-bound Thursday session that saw weakness in heavily-weighted cyclical sectors while health care (+0.5%) surrendered the bulk of its gain into the close; however, the market maintained its range through the afternoon as technology (-0.3%) cut its opening loss in half while energy (+0.5%) and consumer discretionary (+0.3%) outperformed. Most notably, the technology sector struggled from the start and the bulk of its weakness could be found in the semiconductor group where NXP Semiconductor (NXPI 73.00, -17.92) plunged 19.7% after below-consensus revenue and concerns about the company's inventories overshadowed a bottom-line beat and an expanded share buyback. Also of note, STMicroelectronics (STM 6.79, -0.42) fell 5.8% after issuing disappointing guidance and denying interest in Fairchild Semiconductor (FCS 16.56, -0.99).