From Briefing.com: 4:22 pm Closing Market Summary: Stock Market Ends Week at Record High (:WRAPX) :
The stock market closed the week on a higher note, with the S&P 500 and the Nasdaq finishing Friday's session higher by 0.4% and 0.6%, respectively. The Dow (+0.3%) finished the day 34 points shy of the elusive 20k mark after coming within one point of the milestone early Friday afternoon.
Equity indices started the day flat after the December Employment Situation report was met with a muted reaction from investors. The stock market picked up the pace about an hour into the session, trending upwards to a record intraday high where it remained until the closing bell.
Friday's release of the December Employment Situation report alluded to the fact that the labor market is approaching full employment; job growth is slowing, while wages are ticking up. Time will tell if the Fed sticks to their proposed rate-hike schedule, which calls for three rate hikes in 2017, but the Employment Situation report certainly didn't reveal anything that would suggest a change of plans.
Today's rally was led by the technology sector (+1.0%), which was aided by chipmakers and large cap components. For instance, Apple (AAPL 117.91, +1.30), Microsoft (MSFT 62.84, +0.54), Facebook (FB 123.41, +2.74), Alphabet (GOOGL 825.21, +12.19), and Visa (V 82.21, +1.12) all added between 0.9% and 2.3%, while the PHLX Semiconductor Index finished higher by 0.8%.
Cyclical sectors did slightly better than their defensive counterparts, with three of the six growth-sensitive sectors beating the benchmark index. Utilities (+0.3%) and health care (+0.3%) were the only non-cyclical sectors to perform in line with the broader market. Health care capitalized on the biotech industry's solid showing, evidenced by the 0.9% increase in the iShares Nasdaq Biotechnology ETF (IBB 280.65, +2.54). Telecom services (-2.7%) and real estate (unch) were the only sectors to finish in the red.
Standings for the week look much the same as ten out of eleven sectors finished the week higher, with telecom services (-1.2%) bucking the trend. The week's top performer was health care (+2.9%), followed closely by real estate (+2.2%), technology (+2.4%), and consumer discretionary (+2.3%). The consumer discretionary sector's gain was particularly impressive as the sector had to overcome a poor week from retailers. The SPDR S&P 500 Retail ETF (XRT 43.76, -0.26) finished the first week of 2017 lower by 0.7% after some of its components reported disappointing holiday sales.
Conversely, small caps ended the week on a down note as the Russell 2000 fell 0.4% in Friday's session. On the week, the small-cap index added 0.7%, but underperformed relative to the S&P 500's and the Nasdaq's respective, 1.7% and 2.6% week-to-date gains. Given that the domestically-focused Russell 2000 set the pace for the post-election rally, investors may be concerned about the index's recent struggle.
The Treasury market saw stepped-up selling pressure after the 8:30 ET release of the Employment Situation report for December, but cooled off afterwards. The 10-yr yield closed the day seven basis points higher at 2.42%.
Reviewing today's economic data:
Employment Situation Report
December nonfarm payrolls came in at 156,000 while the Briefing.com consensus expected a reading of 175,000. The prior month's reading was revised to 204,000 from 178,000. Nonfarm private payrolls added 144,000 while the Briefing.com consensus expected an increase of 170,000. The unemployment rate held at 4.7% (Briefing.com consensus 4.7%).
Average hourly earnings increased 0.4% (Briefing.com consensus +0.3%). The average workweek was reported at 34.3 while the Briefing.com consensus expected a reading of 34.4.
The key takeaway from the December employment report is that job growth is slowing while wages are rising, which are offshoots of a labor market running near full employment.
November trade balance showed a deficit of $45.2 billion while the Briefing.com consensus expected the deficit to hit $42.2 billion. The previous month's deficit was revised to $42.4 billion from $42.6 billion.
The key takeaway from the report is that the widening deficit will be a drag on fourth quarter GDP, as the fourth quarter average of $61.9 billion for the real trade deficit is 9.4% higher than the third quarter average.
The Factory Orders Report for November showed a decrease of 2.4% while the Briefing.com consensus expected a decrease of 2.1%. The October reading was revised up to 2.8% from 2.7%.
The key takeaway from the report is that the drop in manufacturing orders was owed predominately to a large retreat in orders for the volatile nondefense aircraft and parts component. Excluding transportation, orders were up 0.1%.
Monday's economic data will be limited to the November Consumer Credit report, which will be released at 3:00 pm ET.
Nasdaq Composite +2.6% YTD
S&P 500 +1.7% YTD
Dow Jones Industrial Average +1.0% YTD
Russell 2000 +0.6% YTD
Weekly Recap - Week ending 06-Jan-17
The stock market enjoyed an upbeat start to 2017, as the S&P 500 gained 1.7% during the abbreviated first week of the year. The Nasdaq Composite (+2.6%) outperformed while the Dow Jones Industrial Average (+1.0%) lagged.
The first two sessions of the week featured a steady advance, which placed the S&P 500 just below its record high from December. The two days of gains were followed by an intraday pullback on Thursday, but the brief slip became a distant memory by day's end. However, it is worth noting that the weak spell was brought on by cautious guidance from Kohl's (KSS) and Macy's (M). The two names registered respective losses of 19.0% and 13.9%, while most other apparel names also struggled. Conversely, a daylong rally in Amazon (AMZN) returned the discretionary sector to little changed by Thursday's close.
On Friday, investors received the December Employment Situation Report. The report fit pretty well into the market's view of things, as the headline disappointment (156,000; Briefing.com consensus 175,000) was offset by a sizable revision to the November reading (to 204,000 from 178,000). Average hourly earnings rose 0.4% (Briefing.com consensus 0.3%) after declining 0.1% in November. November average workweek was revised down to 34.3 from 34.4 and the December reading remained at 34.3 (Briefing.com consensus 34.4).
Equity indices advanced to new record highs after the December jobs report while Treasuries retreated, erasing a large portion of their gains from earlier in the week. Despite the pullback, the benchmark 10-yr note eked out its third consecutive weekly gain, pressuring its yield to 2.42% from last week's 2.45%.
The December jobs report gave a boost to the greenback, but the U.S. Dollar Index could not avoid a lower close for the week, shedding 0.1%, despite setting a fresh 14-year high on Tuesday.
There was no significant shift in rate hike expectations during the past week. The fed funds futures market ended the week showing a 69.0% implied likelihood of a rate hike in June.
Index Started Week Ended Week Change % Change YTD %
DJIA 19762.60 19963.80 201.20 1.0 1.0
Nasdaq 5383.12 5521.06 137.94 2.6 2.6
S&P 500 2238.83 2276.98 38.15 1.7 1.7
Russell 2000 1357.13 1367.15 10.02 0.7 0.7
The first week of 2017 came to a close modestly off highs. Despite the modest sell-off into the close, the three major US indices all notched fresh all-time highs intraday. Most notably, the Dow peaked just shy of the 20,000 mark (at 19,999.63), the S&P cracked 2,280 (2282.10 at highs) and the Nasdaq Composite broke pas the previous high of 5512.37 (topping Friday at 5536.52). In all, the trio ended with solid gains, led by the Nasdaq Composite which closed up 33.12 points (+0.60%) to 5521.06. The S&P 500 was up 7.98 points (+0.35%) when the bell rang to 2276.98, and the Dow Jones Industrial Average came to a close up 64.51 points (+0.32%) to 19963.80.
Technology (XLK 49.40, +0.36 +0.73%) led all other S&P sectors to the upside today, posting a solid close to the first week of the year. Component eBay (EBAY 31.05, +1.04 +3.47%) was the best performer today on no specific catalyst. Other sectors as measured by the S&P closed the session XLI +0.57% XLY +0.47% XLF +0.34% XLU +0.31% XLV +0.28% XLB +0.10% XLE +0.09% XLP +0.08% XLRE +0.00% IYZ -1.27%.
In the S&P 500 Information Technology (827.60, +7.83 +0.96%) sector, trading to a new all-time high during the session, closing ultimately near highs. Component Hewlett Packard Enterprise (HPE 23.10, -0.46 -1.95%) saw some strong selling today, in spite of the strong broader market, breaking a three session winning streak. Other names in the space which held pace with the broader market today included ADSK +3.08%, FB +2.27%, ADBE +2.26%, XLNX +1.93%, MCHP +1.74%, TXN +1.69%, GOOG +1.53%, GOOGL +1.50%, SYMC +1.46%, TDC +1.45%, GPN +1.40%, CRM +1.39%.
Other notable news items among sector components:
AT&T (T 41.32, -0.84 -1.99%) disclosed an update to merger proxy materials - special meeting of stockholders of Time Warner (TWX 94.76, -0.33 -0.35%) shareholders is February 15 (record date was January 3).
Rogers Corp (ROG 77.62, +0.02 +0.03%) acquired Diversified Silicone Products for an undisclosed sum. The deal is expected to be accretive to 2017 EPS.
NXP Semi (NXPI 98.21, -0.19 -0.19%) announced a long term strategic partnership with Geely Automobile Group.
Canadian Solar (CSIQ 12.70, -0.02 -0.16%) announced that its wholly owned subsidiary Canadian Solar Solutions completed the sale of its 10 MW AC BeamLight and its 10 MW AC Alfred solar power plants to 9285806 Canada Inc. and Concord BeamLight GP2, affiliates of Concord Green Energy for over CAD152.5 million ($115 million).
In a regulatory filing the co-chairman of Adobe Systems (ADBE 108.30, +2.39 +2.26%) Charles Geschke disclosed the purchase of 48,100 shares of common stock at $104.0291 per share.
TerraForm Power's (TERP 13.26, +0.19 +1.45%) TerraForm Power Operating announced sale of 24 operating solar projects in the UK representing 365 MW to Vortex; expects to receive about $208 million in proceeds from the sale.
Analyst actions:
IT was upgraded to Outperform from Sector Perform at RBC Capital Mkts and to Outperform from Market Perform at BMO Capital,
LXFT, VRTU and CTSH were upgraded to Outperform from Neutral at Wedbush,
NUAN was upgraded to Overweight from Equal Weight at Barclays,
EXPE was upgraded to Buy from Hold at Stifel,
WIT was upgraded to Buy at CLSA;
GPRO was downgraded to Underperform from Neutral at Longbow,
IT was downgraded to Neutral from Outperform at Macquarie,
ANSS was downgraded to Underweight from Equal Weight at Barclays,
INFY was downgraded to Underperform from Outperform at CLSA;
GPN , FIS, PYPL and TSS were initiated with Outperform at BMO Capital,
FDC, FISV, VNTV and PAY were initiated with Market Perform at BMO Capital,
VNTV and CRCM were initiated with Buy at Craig Hallum
