From Briefing.com: Weekly Recap - Week ending 20-Jan-17
The stock market endured another range-bound week, which ended with the market remaining just below its record high from January 6. The S&P 500 shed 0.2% for the week while small caps underperformed, sending the Russell 2000 lower by 1.4%.
Bond and equity markets were closed on Monday for Martin Luther King Jr Day while the remainder of the week featured a sideways drift ahead of Friday's inauguration of Donald Trump as the 45th President of the United States. The stock market enjoyed a big post-election rally on hopes that deregulation and policies introduced by the new administration would boost economic growth. However, with the S&P 500 soaring nearly 7.0% in the month that followed Election Day, the past five weeks featured range-bound trade.
Only three sectors ended the week in negative territory with two registering weekly losses larger than 1.0%. The financial sector lost 1.6% for the week, but the decline took place after the sector soared nearly 20.0% in the five weeks after the election. The health care sector also underperformed, but the countercyclical group remained in the green for the month (+1.3%) despite surrendering 1.5% last week.
On the upside, consumer staples (+1.9%) and telecom services (+0.8%) recorded solid weekly gains. In the staples sector, Procter & Gamble (PG) jumped 3.3% on Friday after beating earnings expectations and raising its organic sales growth guidance.
Rate hike expectations solidified a bit with the fed funds futures market projecting a 70.3% implied likelihood of a rate hike in June, up from 69.0% at the end of last week.
Index Started Week Ended Week Change % Change YTD %
DJIA 19885.73 19827.25 -58.48 -0.3 0.3
Nasdaq 5574.12 5555.33 -18.79 -0.3 3.2
S&P 500 2274.64 2271.31 -3.33 -0.1 1.5
Russell 2000 1372.04 1352.58 -19.46 -1.4 -0.3
On Inauguration Day, the 45th President of the Unites States of America, Donald Trump, was sworn in at noon, eastern time. Subsequently, the markets fell to lows and spent a brief period consolidating near those levels before jogging higher into the close. Action ultimately ended with the Dow Jones Industrial Average adding 94.85 points (+0.48%) today to 19827.25. The S&P 500 was up 7.62 points (+0.34%) when the bell rang to 2271.31, and the Nasdaq Composite rounded out the trio higher by 15.25 points (+0.28%) to 5555.33. In all, this week's action takes the three major averages +0.3%, +1.4% and +3.2% YTD, respectively.
Much like the rest of the week, today's session was underpinned by a wait-and-see mentality as investors appeared to have already priced in Mr. Trump's pro-growth promises. The equity market opened the day immediately higher, but cut its gain in half during President Trump's inaugural address.
During the address, Mr. Trump struck a populist tone, reiterating his protectionist trade policy and promising to put American workers at the heart of every decision he makes. There wasn't really any new information in the President's address, just a fresh reminder of Mr. Trump's commitment to bring jobs back to America--a commitment that could hit manufacturers' bottom lines. The major averages responded by sliding from their highs, eventually ticking up in the final stretch of action.
Action in the Technology (XLK 49.80, +0.27 +0.55%) returned to its winning ways on Friday, ending just shy of highs. Component Skyworks (SWKS 88.67, +10.21 +13.01%) was far and away the best performing name today on the heels of last night's quarterly print; SWKS reported both better than expected Q1 EPS and revenues. Other sectors as measured by the S&P closed the session ended mostly higher XLB +0.89%, XLP +0.65%, XLRE +0.62%, XLF +0.48%, XLE +0.38%, XLY +0.29%, XLU +0.19%, IYZ +0.09%, XLI +0.02%, XLV -0.26% as only the healthcare space posted losses.
In the S&P 500 Information Technology (835.97, +4.31 +0.52%) space, trading made further distance from the 800 level, ending just shy of highs . Component Qualcomm (QCOM 62.88, -1.56 -2.42%) was the worst performer today after a late-breaking piece out of the Wall Street Journal suggested Apple (AAPL 120.00, +0.22 +0.18%) may sue QCOM in dispute of patent royalties. Other names in the space which finished up with the sector included QRVO +4.65%, AVGO +2.97%, IBM +2.24%, ADSK +2.11%, MCHP +1.89%, ORCL +1.68%, GLW +1.52%, NTAP +1.51%, LRCX +1.36%, WDC +1.34%, MA +1.32%, TXN +1.18%, MU +1.15%, PYPL +1.02%.
Other notable news items among sector components:
Qualcomm (QCOM) was lower today in response to a WSJ piece which suggested Apple (AAPL) may sue QCOM in dispute of patent royalties.
Wix.com (WIX 53.45, -0.60 -1.11%) acquired flok. Financial details of the deal were not disclosed.
AT&T (T 41.45, +0.45 +1.10%) expects to record a non-cash, pre-tax loss of about $1 billion in Q4 related to the annual re-measurement of pension and postemployment benefit plans; discloses prelim subscriber net adds. For Q4, sees more than 900,000 branded net adds of domestic wireless subscribers (about 500,000 postpaid and 400,000 prepaid), with branded phone net adds of more than 330,000. Noted Q4 results include about 700,000 of 2G deactivations, about 50,000 of which were postpaid.
Rightside Group (NAME 9.21, +1.07 +13.14%) to sell its domain name registrar eNom to Tucows (TCX 43.15, +6.80 +18.71%) for $83.5 million. TCX expects earnings accretion from the deal.
In reaction to quarterly results:
IBM (IBM 170.55, +3.74 +2.24%) reported better than expected Q4 EPS of $5.01 on revenues which fell about 1.3% compared to last year to $21.77 billion. For FY17, the company now sees EPS of at least $13.80 on revenues of
Atlassian (TEAM 28.03, +0.61 +2.22%) reported better than expected Q2 EPS and revenues of $0.09 and $148.9 million, respectively. For Q3 and FY17, the company gave mixed guidance to the tune of: for Q3 - EPS of $0.06 on revenues of $155-157 million; for FY17 - EPS of $0.32-0.33 and revenues of $611-615 million.
Skyworks (SWKS) reported better than expected Q1 EPS and revenues of $1.61 and $914.3 million. For Q2, the company sees EPS of $1.40 on revenues of $840 million.
Analyst actions:
CHKP was upgraded to Overweight from Equal Weight at First Analysis Sec,
MA and V were upgraded to Outperform from Neutral ratings at Wedbush,
SMCI was upgraded to Buy from Neutral at Roth Capital;
WU was downgraded to Sell from Neutral at Compass Point,
MTCH was downgraded to Neutral from Buy at Guggenheim,
SIMO was downgraded to Neutral from Buy at Nomura,
PLXS was downgraded to Sell from Hold at Cross Research,
TNAV was downgraded to Neutral from Buy at Sidoti;
AMZN was initiated with a Buy at Aegis Capital,
EXPE and PCLN were initiated with Buy ratings at MKM Partners
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