Sector Investing

[ReturntoSender]

Down Week Ends on Lower Note
15-Jan-21 16:10 ET
Dow -177.26 at 30814.26, Nasdaq -114.14 at 12998.50, S&P -27.29 at 3768.25

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The stock market ended a shaky week on a lower note. The S&P 500 fell 0.7%, giving up 1.5% for the week while the Russell 2000 (-1.5%) underperformed, but it still gained 1.5% for the week.

The market had a lot of news to digest on Friday, starting with last evening's announcement of President-elect Biden's plan for $1.90 trln in spending. The plan includes direct payments of $1,400, increased unemployment benefits, and aid for state and local governments, but some elements of the legislation will require 60 votes in the Senate so it is unclear if the current version will be approved.

Participants received a big batch of economic data that was mixed, on balance. Industrial Production beat expectations in December and inflation at the producer level remained muted. There was a slight dip in the preliminary Michigan Consumer Sentiment survey for January, but most notably, Retail Sales fell 0.7% in December (Briefing.com consensus -0.2%) while the November decrease was revised down.

The SPDR S&P Retail ETF (XRT 71.98, -1.74, -2.4%) felt the pressure of weak retail sales, though the ETF rallied to a fresh record the day before. There were a few pockets of strength within the consumer discretionary sector (-0.8%) as Home Depot (HD 275.59, +7.25, +2.7%) rallied back above its 50-day moving average (271.15) while TJX Companies (TJX 68.46, +0.44, +0.7%) reclaimed its opening loss. Homebuilders also outperformed with the iShares Dow Jones US Home Construction ETF (ITB 56.95, +0.34, +0.6%) bouncing off its 50-day moving average (56.00).

Financials (-1.8%) ended among the laggards even though JPMorgan Chase (JPM 138.64, -2.53, -1.8%) and PNC (PNC 154.78, -5.57, -3.5%) kicked off the earnings season with better than expected results. Citigroup (C 64.23, -4.78, -6.9%) and Wells Fargo (WFC 32.04, -2.71, -7.8%) also beat earnings expectations but they were a bit short of revenue estimates.

The top-weighted technology sector (-1.0%) also contributed to today's slide, widening this week's loss to 2.6%. Chipmakers pulled back after a strong start to the month, but the PHLX Semiconductor Index (-2.1%) still gained 1.9% for the week.

The energy sector (-4.0%) was today's worst performer, but it still ended the week with a 3.1% gain, which kept the group well ahead of the remaining ten sectors. Crude oil fell $1.21, or 2.3%, to $52.38/bbl, narrowing this week's gain to $0.13 or 0.3%.

Treasuries rebounded from yesterday's drop with the 10-yr note erasing its entire decline from Thursday. The benchmark yield fell three basis points to 1.10%, surrendering one basis point for the week. This left the 2s10s spread at 98 bps, unchanged for the week.

Reviewing today's economic data:

December retail sales declined 0.7% mln (Briefing.com consensus -0.2%) and November retail sales were revised down to -1.4% from -1.1%. Excluding autos, December retail sales declined 1.4% m/m (Briefing.com consensus -0.2%) and were revised down to -1.3% from -0.9% for November.
The key takeaway from the report is that it is clear consumer spending decelerated at the end of the fourth quarter, partly because of expiring benefits, weakening confidence in the short-term outlook, and restrictions on certain activities due to worsening coronavirus trends.
The Producer Price Index for final demand was up 0.3% m/m in December (Briefing.com consensus 0.4%) while the index for final demand, excluding food and energy, was up 0.1%, as expected. That left the yr/yr readings at just 0.8% and 1.2%, respectively.
The key takeaway from the report is that inflation at the producer level remains in check.
Industrial production increased 1.6% m/m in December (Briefing.com consensus 0.4%) following an upwardly revised 0.5% increase (from 0.4%) in November. The capacity utilization rate jumped to 74.5% (Briefing.com consensus 73.5%) from an upwardly revised 73.4% (from 73.3%) in November.
The key takeaway from the report is the continued strength in manufacturing output, which occurred despite a 1.6% decline in the index for motor vehicles and parts.
The preliminary January reading for the University of Michigan Index of Consumer Sentiment checked in at 79.2 (Briefing.com consensus 80.0) versus the final reading of 80.7 for December.
While there was a slight drop in consumer sentiment, the key takeaway is that it was only slight given the contentious issues related to rising coronavirus cases/deaths, the insurrection, and the impeachment of President Trump.
The Empire State Manufacturing Survey decreased to 3.5 in January (Briefing.com consensus 6.0) from 4.9 in December.
Business Inventories increased 0.5% in November (Briefing.com consensus 0.5%) after increasing a revised 0.8% (from 0.7%) in October.

The stock market will be closed on Monday in observance of Martin Luther King Jr. Day.

Russell 2000 +7.5% YTD
Nasdaq Composite +0.9% YTD
Dow Jones Industrial Average +0.7% YTD
S&P 500 +0.3% YTD

Market Snapshot
Dow 30814.26 -177.26 (-0.57%)
Nasdaq 12998.50 -114.14 (-0.87%)
SP 500 3768.25 -27.29 (-0.72%)
10-yr Note +11/32 1.097
NYSE Adv 1016 Dec 2137 Vol 1.23 bln
Nasdaq Adv 1185 Dec 2594 Vol 6.28 bln

Industry Watch
Strong: Communication Services, Real Estate, Health Care, Utilities
Weak: Energy, Industrials, Financials, Materials, Consumer Discretionary, Technology

Moving the Market

President-elect Biden announces $1.9 trln spending plan

December Retail Sales miss expectations

JPMorgan Chase (JPM) reports better than expected results to start Q4 reporting season

Crude Oil Narrows Week's Gain
15-Jan-21 15:25 ET
Dow -96.75 at 30894.71, Nasdaq -82.97 at 13029.68, S&P -17.97 at 3777.57

[BRIEFING.COM] The S&P 500 trades lower by 0.5% with 30 minutes remaining in the session. The Dow (-0.3%) hovers a bit closer to its flat line while the Nasdaq (-0.6%) underperforms.

The energy sector (-3.7%) is today's weakest performer but even with today's sharp slide, the sector remains on track to finish with a 3.5% gain for the week while the next best performer (real estate) has gained 2.0% since last Friday.

Crude oil finished today's pit session with a $1.21, or 2.3%, loss at $52.38/bbl. The energy component added $0.13, or 0.3%, for the week.