The Week In Review

11/13/15

The stock market ended a down week on a woeful note after the release of some disappointing economic data and uninspiring retail earnings. The S&P 500 lost 1.1%, widening this week's decline to 3.6% while the Nasdaq Composite (-1.5%) underperformed to end the week lower by 4.3%.

Equity indices spent the duration of the trading day in negative territory, pressured mostly by heavily-weighted consumer discretionary (-2.6%) and technology (-2.0%) sectors. Both cyclical groups traded well behind the broader market throughout the day and that underperformance prevented the market from staging a meaningful rebound. The S&P 500 briefly rallied above its 100-day moving average (2,034) in late morning action, but the move was retraced fully into the afternoon as the two influential sectors remained weak and the rest of the market gave in to the weakness.

The consumer discretionary space suffered from a one-two punch as October retail sales missed expectations (+0.1%; Briefing.com consensus 0.3%) while Nordstrom (JWN 53.96, -9.51) and Fossil (FOSL 32.39, -18.62) issued disappointing guidance. The two names plunged, posting respective losses of 15.0% and 36.5% while J.C. Penney (JCP 7.44, -1.35) also struggled, tumbling 15.4% despite reporting a smaller than expected loss.

Elsewhere among cyclical sectors, the technology space (-2.0%) was weighed down by Cisco Systems (CSCO 26.21, -1.62) as the heavyweight sank 5.8% after below-consensus guidance overshadowed a three-cent beat. Other influential tech names also struggled with Apple (AAPL 112.34, -3.38) falling 2.9% and Alphabet (GOOGL 740.07, -16.46) surrendering 2.2%. To be fair, there were a couple bright spots among semiconductor names as Applied Materials (AMAT 17.36, +0.83) spiked 5.0% in reaction to in-line earnings on below-consensus revenue.

The relative weakness in technology kept the Nasdaq behind the broader market, which masked a solid showing in the biotech space. The iShares Nasdaq Biotechnology ETF (IBB 323.64, +3.53) spiked 1.1%, but could not close above its 50-day moving average (324.77), while the health care sector settled ahead of the broader market, but still lost 0.2%.

Also of note, the energy sector shed 0.4% today, ending the week lower by 5.5%. Crude oil, meanwhile, continued its recent slide, falling 2.6% to $40.68/bbl. For the week, WTI crude lost 8.2%.

Unlike stocks, Treasuries advanced throughout the day, ending near their highs with the 10-yr yield falling four basis points to 2.28%.

Today's trading volume was relatively strong as roughly 925 million shares changed hands at the NYSE floor.

Economic data included Retail Sales, PPI, Michigan Sentiment, and Business Inventories:

Retail sales were up a weaker than expected 0.1% (Briefing.com consensus 0.3%), while sales, excluding autos, were up a weaker than expected 0.2% (Briefing.com consensus 0.4%)

Results for September were revised lower with total sales unchanged (from 0.1%) and sales excluding autos revised to -0.4% (from -0.3%)

The Producer Price Index for final demand declined 0.4% (Briefing.com consensus +0.1%) in October on top of an unrevised 0.5% decline in September

The index is down 1.6% year-over-year, which is a record 12-month decline for the final demand index

The downturn in October was led primarily by the index for final demand services, which declined 0.3% while the index for final demand goods declined 0.4%.

Excluding food and energy, PPI declined 0.3% (Briefing.com consensus +0.1%) versus an unrevised 0.3% decline in September

The preliminary reading for the University of Michigan Consumer Sentiment Index for November showed an uptick to 93.1 from the final reading of 90.0 for October and 88.8 in the same period a year ago

The Briefing.com consensus expected a reading of 92.0

The improvement in November was driven by higher readings for both the Current Economic Conditions Index (to 104.8 from 102.3) and the Index of Consumer Expectations (to 85.6 from 82.1)

Total business inventories increased 0.3% in September on top of an upwardly revised 0.1% increase for August (from 0.0%) while the Briefing.com consensus expected no change

The inventory-to-sales ratio edged up to 1.38 in September from 1.37 in August

In September 2014, the inventory-to-sales ratio stood at 1.31

Monday's economic data will be limited to the Empire Manufacturing Index for November, which will be released at 8:30 ET.

Nasdaq +4.1% YTD

S&P 500 -1.7% YTD

Dow Jones Industrial Average -3.2% YTD

Russell 2000 -4.6% YTD

Week in Review: Energy Sector Leads Stocks Lower

The stock market began the trading week on a cautious note as persistent global growth concerns weighed on investor sentiment. The S&P 500 surrendered 1.0% while the Dow and Nasdaq posted comparable losses. Equities retreated through the first half of the Monday session and remained near their lows into the afternoon, which kept dip-buyers on the sidelines. The cautious posture in the market took place after the weekend featured the release of China's trade data, which showed a 10-yr high in the trade surplus, but exports fell 6.9% in October, representing the fourth consecutive monthly drop. Nine sectors ended the day in negative territory with losses between 0.7% (consumer staples) and 1.5% (energy) while the utilities space climbed 0.3%.

Tuesday ended on a mixed note as the Nasdaq Composite (-0.2%) settled with a modest loss while the Dow Jones Industrial Average (+0.2%) and S&P 500 (+0.2%) overcame the weakness in the technology sector (-0.7%), eking out slim gains. Stocks stumbled at the start of the trading day with the opening move paced by the largest stock in terms of market cap. Specifically, Apple (AAPL 116.73, -3.84) fell 3.2% in reaction to a Credit Suisse report, which indicated the tech giant has cut its orders for iPhone 6s components by as much as 10.0%. Shares of Apple slid below their 100-day moving average (117.33) after struggling with the 200-day average (122.06) over the previous few days.

The market spent the Wednesday session inside a narrow range before ending with a modest loss. The S&P 500 shed 0.3% while the Nasdaq Composite settled in line with the benchmark index after showing relative strength intraday. Overall, the midweek affair was very quiet as the stock market bounced around its flat line while the bond market was closed for Veterans Day. The subdued activity was evidenced by below-average trading volume as fewer than 800 million shares changed hands at the NYSE floor. Four sectors ended the day above their flat lines, but their gains were overshadowed by a significant decline in the energy sector (-1.9%) while other influential groups like health care (-0.9%), consumer discretionary (-0.5%), and financials (-0.2%) also struggled.

The stock market could not avoid its second consecutive decline on Thursday with the S&P 500 (-1.4%) falling below its 200-day moving average (2,064). The benchmark index retreated throughout the session while the Nasdaq Composite (-1.2%) settled a step ahead. The key indices faced selling pressure from the get-go with the early weakness following a cautious session in Europe where markets in France, Germany, and Spain lost between 1.2% and 2.3%. Things did not improve by the start of the New York Session, which led to opening losses in nine of ten sectors. Most notably, the energy sector (-2.4%) struggled from the start and the significant underperformance in the growth-sensitive group set the tone for a down day.