From Briefing.com: Weekly Recap - Week ending 27-Jan-17
The stock market enjoyed a solid week, which saw the three major averages climb to fresh record highs. The S&P 500 gained 1.0% for the week while the Dow Jones Industrial Average (+1.3%) and Nasdaq Composite (+1.9%) outperformed. The Dow received added attention in the media during the second half of the week after making its first appearance above the 20000 level on Wednesday.
The past week was highlighted by a healthy dose of quarterly reports from influential market components like Alphabet (GOOGL), Boeing (BA), Microsoft (MSFT), McDonald's (MCD), Intel (INTC), Texas Instruments (TXN), and Qualcomm (QCOM) among others. In general, results from the tech sector were strong while earnings from other areas of the market were more mixed.
At the end of the week, roughly 34% of S&P 500 components had reported their results, showing a blended earnings growth rate of 4.0% versus market expectations for growth of 5.2%, according to FactSet.
The economic calendar also featured a fair share of reports, but the market did not appear particularly concerned with disappointing December Existing Home Sales (5.49 million; Briefing.com consensus 5.55 million), December New Home Sales (536,000; Briefing.com consensus 589,000), advance fourth quarter GDP (+1.9%; Briefing.com consensus 2.2%), nor December Durable Orders (-0.4%; Briefing.com consensus 3.0%).
Rate hike expectations held firm with the fed funds futures market pointing to a 71.9% implied likelihood of a rate hike in June.
Index Started Week Ended Week Change % Change YTD %
DJIA 19827.25 20093.78 266.53 1.3 1.7
Nasdaq 5555.33 5660.78 105.45 1.9 5.2
S&P 500 2271.31 2294.69 23.38 1.0 2.5
Russell 2000 1352.58 1370.15 17.57 1.3 1.0
Technology stocks finished a strong week with the Nasdaq 100(QQQ) closing up 0.2% at a new all-time high for the fourth day in a row.
Semiconductors (SMH +1.3%) were strong today, helped by abeat and raise report from Intel (INTC +1.1%). The stock hit a 16 year high andclosed at resistance near the $38 level. It trades at just under 14x 2017 earningsestimates.
Elsewhere in the space, Maxim (MXIM) rose 6% after beatingQ2 estimates while Synaptics (SNYA) fell 6.5% after beating Q2 estimates. Chip equipment company KLA-Tencor (KLAC) rose 3.5%to a seventeen year high following earnings.
Microsoft (MSFT +2.4%) closed at a new all-time high afterthe company beat Q2 estimates. CEO Satya Nadella has done a great job over thelast two years. The company has positioned itself as the clear #2 in the cloudbehind Amazon's AWS. Revenue from Azure,Microsoft's cloud platform launched almost seven years ago, surged 93.0% andusage more than doubled year-over-year. The tech behemoth has a $500 blnmarket cap and trades at ~22x earnings.
Google (GOOG, GOOGL) openedat an all-time but closed down 1.1% after missing earnings estimates. Theinternet search giant has a ~$580 billion market cap and trades at just over 20xearnings.
Cybersecurity stockProofpoint (PFPT) fell 6% despite a beating Q4 estimates and raising guidance.
Technology investorshave reason to be optimistic after Cisco (CSCO) acquired what was supposed tobe the first big tech IPO of the year AppDynamics at a lofty ~9x sales multiple this week.
Meanwhile,Snapchat is expected to IPO sometime in the first half of the year at avaluation near $20 billion despite having less than $1 billion in revenue lastyear. Applewill report Q1 results on Tuesday afternoon.
4:25 pm Closing Market Summary: Averages Finish Friday Relatively Unchanged (:WRAPX) :
It appears that investors ran out of ink after rewriting the record book during Wednesday's session as the major averages closed the week relatively unchanged from those record levels. The S&P 500 (-0.1%) finished Friday's session just below its flat line, while the Nasdaq (+0.1%) performed just slightly better.
To illustrate the minimal change numerically, the five heaviest weighted sectors--technology, financials, health care, consumer discretionary, and industrials-- changed only marginally since Wednesday's close, seeing gains/losses of no more than 0.1%. Sectors like consumer staples and energy saw more substantial movement due to a number of factors, but generally, the stock market appears to be in wait-and-see mode, eyeing President Trump and his ability to implement the pro-growth agenda he ran his presidential campaign on.
However, despite minimal movement in the key indices, earnings season remained alive and well on Friday with technology names headlining the action. The results were mixed with Alphabet (GOOGL 845.03, -11.95) ticking down 1.4% in reaction to below-consensus earnings, while Intel (INTC 37.98, +0.42) and Microsoft (MSFT 65.78, +1.51) climbed 1.1% and 2.4%, respectively, after beating top and bottom line estimates.
The positives outweighed the negatives in the technology sector (+0.3%), which left the sector as one of the few spaces to close the day higher. Health care and telecom services were fortunate enough to do the same, adding 0.8% and 0.7%, respectively.
On the flip side, real estate (-0.9%) and energy (-0.9%) finished at the bottom of the day's leaderboard, with the latter fighting a battle on multiple fronts. The first attack against the energy space's came from Chevron (CVX 113.79, -2.76) after the company disappointed investors with its quarterly earnings report. Crude oil also weighed, slipping 1.1% to $53.18/bbl, as increased U.S. production overshadowed supply cut efforts by OPEC and non-OPEC members.
Consumer staples (-0.6%) also finished near the bottom of the leaderboard following a negative reaction to Colgate-Palmolive's (CL 64.68, -3.56) quarterly report. The company slipped 5.2% after missing revenue estimates and forecasting a low-single digit net sales increase for 2017.
For the week, cyclical sectors had the upper hand as materials (+3.4%) led five of the six spaces higher. Conversely, each countercyclical sector closed the week lower, with telecom services (-1.7%) falling the farthest.
U.S. Treasuries also closed Friday's session with a week-to-date loss. However, the Treasury market did end the week on an upbeat note, closing in positive territory around its highest levels of the day. The 10-yr yield settled two basis points lower at 2.48%.
Friday's economic data included advance fourth quarter GDP, December Durable Orders, and the final reading of the University of Michigan Sentiment Index for January:
Advance fourth quarter GDP pointed to an expansion of 1.9%, while the Briefing.com consensus expected a reading of 2.2%. The fourth quarter GDP Deflator came in at 2.1%, which is what the Briefing.com consensus expected.
The key takeaway from this report is that fourth quarter activity revealed the strong third quarter growth was as an aberration, yet that point aside, the salient takeaway for many is that this is a backward-looking report and the markets have their sights set on a brighter economic outlook for 2017, which is expected to feature deregulation, tax reform, and infrastructure spending among other items.
December durable goods orders declined 0.4%, while the Briefing.com consensus expected a 3.0% increase. The prior month's reading was revised to -4.8% (from -4.6%). Excluding transportation, durable orders rose 0.5% (Briefing.com consensus +0.5%) to follow the prior month's revised gain of 1.0% (from 0.5%).
The key takeaway from this report is that business investment remained on a positive trajectory.
The final reading of the University of Michigan Consumer Sentiment Index for January rose to 98.5 (Briefing.com consensus 98.0) from 98.1 in the preliminary reading.
The key takeaway from the report is that consumer confidence is rising on the back of an improved outlook for economic growth, job growth, and personal finances in the year ahead
Monday's economic data will include December Personal Income at 8:30 am ET and December Pending Home Sales at 10:00 am ET.
Nasdaq Composite 5.2% YTD
S&P 500 2.5% YTD
Dow Jones Industrial Average +1.7% YTD
Russell 2000 +1.0% YTD
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