Month: August 2017

The Dow Jones Industrial Average led index performance over the past week. It was a choppy week for stocks as the technology sector suffered another short downdraft. PowerShares QQQ (QQQ) will likely remain in a consolidation phase until it breaks its current trend.

SPDR Technology (XLK) is trading very close to its all-time high.

Global X Social Media (SOCL) is on the verge of new 52-week high.

SPDR Consumer Discretionary (XLY), however, has continued to trade lower.

Amazon (AMZN), XLY’s top holding, has weighed on the sector, along with other top-10 holdings Starbucks (SBUX), Home Depot (HD), Disney (DIS) and Priceline (PCLN).

The utility sector is currently the strongest S&P 500 sector. The sector has rallied as long-term interest rates have eased.

Defense and industrial metals have climbed in the face of increased government spending. A renewed effort in Afghanistan and continued tension with North Korea have significantly boosted demand.

Copper trading at a 2.5 year high and Global X Copper Miners (COPX) is near its 2017 high. Economists, however, have speculated China’s massive credit growth in the past 18 months was responsible for the rise.

The energy sector and its subsectors made new 52-week lows over the past week. Barring a surprise jump in gasoline consumption, inventories will be at a multi-year high. Crude will likely head back into the lower $40s over the next month.

The U.S. Dollar Index rallied in August, but gave back some gains over the past few as bond and currency traders anticipate the Jackson Hole Symposium.

Healthcare led most of the market higher on the day. Gains were heavily concentrated in the healthcare provider and medical device subsectors. Crude oil prices faded on Monday as SPDR Energy (XLE) fell to a new 52-week low.

This week will be light on economic data. The flash PMIs for August and July new home sales will be out on Wednesday, followed by July existing home sales on Thursday, and durable and capital goods orders on Friday.

The Jackson Hole Symposium in Wyoming will feature Federal Reserve Chair Janet Yellen’s Friday morning talk on financial stability. European Central Bank President Mario Draghi will also be in attendance. Global investors will be on the lookout for signs of tightening at the ECB.

Currency and bond markets were calm on Monday in anticipation of the symposium. The 10-year Treasury traded in a tight range slightly below 2.2 percent. The U.S. Dollar Index weakened as both the euro and yen strengthened. Commodity currencies such as the Australian and Canadian dollars were also modestly stronger.

Medtronic (MDT), a major component in medical device funds, will reports earnings on Tuesday. Analysts expect $1.08 in earnings per share, up from $1.03 a year ago. Salesforce.com (CRM) is expected to report $0.09, up a penny from last year. Forecasts have homebuilder Toll Brothers (TOL) at $0.68 per share versus $0.62 a year ago.

The Royal Bank of Canada (RY), Lowe’s (LOW) and HP (HPQ) will report on Wednesday. A strong housing market has pushed analysts’ predictions to $1.62 at Lowe’s, an 18-percent increase from last year.

On Thursday, tech companies Broadcom (AVGO), Vmware (VMW) and Autodesk (ADSK) will report with retailers such as Tiffany (TIF), Dollar Tree (DLTR) and Ulta Beauty (ULTA).

Equities slipped this week on weakness in consumer discretionary shares and global geopolitical concerns. The Nasdaq slipped 0.64 percent, though technology hit a new all-time high on Wednesday and SPDR Technology (XLK) gained 0.05 percent for the week. Utilities led S&P 500 sector performance following a small decline in interest rates. SPDR Utilities (XLU) gained 1.41 percent on the week.

Retail sales rose 0.6 percent in July, sales ex-autos climbed 0.5 percent. Economists had forecast 0.4 percent growth for both. Amazon’s (AMZN) Prime Day sales lifted online retail to the fastest monthly growth since the holiday season. Retail sales are up 4.2 percent from July 2016.

Homebuilder and consumer confidence data were also strong. The homebuilder index hit 68, one of the highest readings over the past decade. The University of Michigan consumer sentiment survey jumped to 97.6 in August, up from 93.4 in June and above estimates of 94.8. The Empire state index of manufacturing activity hit 25.2 in August, well above July’s reading of 9.8. Weekly unemployment claims fell to 232,000, the lowest number since February.

GDP forecasts for the current quarter rose this week. The blue-chip economist consensus calls for 2.7 percent growth. The Atlanta Federal Reserve’s GDP Now model raised its estimate to 3.8 percent.

Major retailers Target (TGT), Home Depot (HD) and Wal-Mart (WMT) all reported strong earnings this week, though the threat of Amazon’s ever-increasing market share and declining brick-and-mortar sales subdued the sector. SPDR Consumer Discretionary (XLY) fell 1.79 percent on the week, while SPDR S&P Retail (XRT) declined 3.68 percent.

Energy funds fell to fresh 52-week lows this week. SPDR Energy (XLE) fell 2.53 percent, down 6.44 percent in August. SPDR Oil & Gas Equipment & Services (XES) declined to a new 18-month low. XLE and SPDR S&P Oil & Gas Exploration & Production (XOP), however, are still well above 2016 lows.

The U.S. Dollar Index advanced this week. The 10-year Treasury yield rose slightly and spent most of the week at 2.2 percent. Shorter maturities, such as at the 2-year Treasury yield, also rose. The odds of a December rate hike rose to 41 percent this week, up from 37 percent at the end of last week. Strong economic data lifted expectations.

Chinese economic data was weaker than expected last month. Credit growth and fixed-asset investment remains enviably high compared to developed markets, but growth slowed more than expected.