Month: January 2018

Stocks opened to mixed trading on Monday before moving on to new all-time highs. Technology pulled the market higher, while healthcare weighed. Semiconductors rebounded from last week’s flawed CPU news. iShares PHLX Semiconductor (SOXX) approached its all-time high. The Dow Transports also pushed into record territory.

The National Federation of Independent Business will publish its small-business index tomorrow. November’s reading of 107.5 was the highest since 1983. The Job Openings and Labor Turnover Survey (JOLTS) is also due. Economists expect 6.0 million November job openings.

Economists forecast a 0.2-percent increase in December producer prices. CPI is expected to rise by 0.1 percent, core CPI 0.2 percent. Analysts predict December retail sales rose 0.5 percent, with sales ex-autos up 0.3 percent.

Chinese inflation data, Eurozone industrial production, unemployment rates, and the minutes of the December meeting of the European Central Bank are due midweek.

German Chancellor Angela Merkel started talks with the largest opposition party on Sunday to avoid a minority government or new elections. iShares MSCI Germany (EWG) opened the year strong, but slipped on Monday. Elsewhere in Europe, U.K. Prime Minister Theresa May might appoint a new cabinet official to prepare for an EU exit without a deal in place.

The 10-year Treasury yield approached 2.5 percent in Monday trading before easing back. The yield bottomed at 2.0 percent in September. The U.S. Dollar Index opened the week with a gain. It bounced off critical support late last week and is trading close to 3-year lows.

West Texas Intermediate crude traded at $61 and change on Monday. WTI’s first rebound following the 2014 sell-off was in early 2015. It spent two months, in May and June, trying to rally past $62 and failing. Bulls are looking for a run to $70, but bears may give them a fight at $62 this week.

Earnings season will officially kick off on Friday with J.P. Morgan (JPM), Wells Fargo (WFC), BlackRock (BLK) and PNC Financial Services (PNC). Analysts forecast earnings increases at three firms, but JPM 2 cents below year-ago levels. Investors may focus on guidance as banks should benefit greatly from tax reform. Homebuilders Lennar (LEN) and KB Home (KBH), and Delta Air Lines (DAL) will also report this week.

The Nasdaq led the week’s performance with an increase of 3.38 percent. The S&P 500 advanced 2.60 and the Dow Jones Industrial Average 2.33 percent. Technology SPDR (XLK) and Materials SPDR (XLB) returned 3.67 and 3.78 percent this week.

The Markit and ISM purchasing managers’ indexes for December showed a robust manufacturing sector. The Markit and ISM manufacturing surveys increased to 55.1 and 59.7, respectively. The ISM survey showed raw material and customer inventories falling, along with rising prices. Some survey respondents said construction demand was rising in areas affected by the 2017 hurricanes. The ISM services declined to 55.9 after new orders slowed.

The U.S. economy created 148,000 new jobs last month, leaving the unemployment rate unchanged at 4.1 percent. Economists expected 195,000 new hires, but financial markets took the miss in stride. Rate hike odds for March and June were effectively unchanged. Average hourly earnings increased 0.3 percent, in-line with expectations.

Construction and manufacturing hiring was strong, which is consistent with strong home sales data in recent months and the jump in the PMI. The miss largely came from retail. Hiring is usually strong into December as stores add holiday help, but the category saw a decline of 20,000.

Weekly jobless claims hit 250,000 in the last week of December. Motor vehicle sales hit an annualized pace of 17.9 million in December. A 7-year streak of rising auto sales ended in 2017, with a small dip of 1.8 percent. Construction spending increased 0.8 percent in November, beating economists’ median forecast of 0.5 percent.

Technology performed well this week despite the discovery of a huge CPU design flaw. Intel (INTC) bore the blame initially and shares fell more than 6 percent this week before recovering. Shares of AMD still finished the week up double-digits. The net effect on the sector was positive. iShares PHLX Semiconductor (SOXX) gained in every day of trading this week, returning 5.70 percent.