The Weekly Wrap Up


Week in Review: Cyclical sectors lead S&P 500 back to record levels in earnings-driven advance

The S&P 500 advanced for the 3rd week running, rising 1.2% and nearly setting new record highs as investors remained pleased with earnings reports. 

The DJIA rose 0.7%, the NAS Comp rose 1.9%, and the Russell 2000 rose 1.5%. 

The value-oriented S&P 500 energy sector (+4.3%) was this week’s leader, with oil prices ($56.44, +2.68, +5.0%) climbing 5%. The information technology (+2.5%), industrials (+2.2%), and financials (+2.0%) sectors followed suit, while the real estate (-1.1%) and consumer discretionary (-0.8%) sectors were laggards.

12 of the 30 Dow components reported earnings this week. Positive reactions belonged to Procter & Gamble (PG), United Technologies (UTX), Caterpillar (CAT), Boeing (BA), Microsoft (MSFT), Dow Inc. (DOW), Visa (V), and Intel (INTC). Conversely, McDonald’s (MCD), 3M (MMM), Travelers (TRV), and Verizon (VZ) failed to stir much enthusiasm following their results. 

Investors seemingly looked for positive signs, if any, for a reason to overlook the negative. A better-than-feared outlook for the return of Boeing’s 737 MAX helped set aside its earnings miss and prior analyst downgrades. Similarly, positive results and upbeat guidance from Lam Research (LRCX) and Intel (INTC) outweighed negative ones from Texas Instruments (TXN).

Caterpillar didn’t even need a reason to rally soon after its disappointing results and guidance. Amazon (AMZN) missed profit estimates and provided a cautious outlook for the holiday quarter, but shares were able recover nicely. 

Friday, after all earnings reports were released for the week, the benchmark index was less than 1 pt from its intra-day high (3027.98). The mood was helped by the USTR office saying it was close to finalizing some sections of a “Phase One” trade deal with China. The news sent an unchanged 10-yr yield up 4 bpts basis to 1.80% to end the week. 

Apple (AAPL) quietly rose 4.3% as analysts continued to increase their price targets for the stock. Apple will report Quarterly results next week. 

Separately, Biogen (BIIB) surprised investors by saying it will seek FDA approval for its Alzheimer’s drug in 2020 after it had renounced the treatment in March. 

Tesla (TSLA) reported a surprise profit. Nike (NKE) and Under Armour (UAA) announced on the same day that their CEOs will be stepping down from the helm next year. 

IndexStarted WeekEnded WeekChange% ChangeYTD %
S&P 5002986.203022.5536.351.220.6
Russell 20001535.481558.7123.231.515.6

HeffX-LTN overall technical outlook for the major US stock indexes is Bullish across the board for the week ended 25 October 2019.

Have a terrific weekend