Month: November 2018

Small-caps and the Dow Transports have outperformed over the past week. Technology dragged the major indexes lower.

Technology weighed on consumer discretionary and communications services this week. Even though crude oil tumbled to a new low this week, energy and material stocks outperformed.

The S&P 500 Index and the Russell 2000 Index made double-bottoms on Tuesday. The Dow Industrials shows a similar pattern.

Natural gas rose above $5 before settling back. Low inventory and cold weather drove prices higher.

The spike in natural gas highlights the risk in leveraged ETFs. A triple-inverse natural gas fund lost 75 percent of its value and was at risk of going to zero had natural gas spiked even higher last Wednesday.

iShares 20+ Year Treasury (TLT) rallied as stocks dipped. Nevertheless, Treasury bonds remain weak.

An uptick in credit risk negatively impacted corporate bonds. PowerShares Senior Loan (BKLN) declined as investors start reevaluating rate hike expectations for 2019. They had been pricing in two hikes, but the Fed may decide to be less aggressive over the coming months.

Equities closed lower to start the week as the Nasdaq declined 3.03 percent. Facebook (FB), Nvidia (NVDA) and Apple (AAPL) dragged on the index. The Dow Jones Industrial Average slipped 1.56 percent.

SPDR Utilities (XLU) and Real Estate (XLRE) gained 0.46 and 0.34 percent, respectively. Energy (XLE), Financials (XLF) and Consumer Staples (XLP) were also relatively strong, losing only 0.04, 0.07 and 0.18 percent. SPDR Technology (XLK) declined 3.78 percent.

Apple dragged the technology sector lower after reports of production cuts and supplier confusion. The firm declined 3.97 percent on the day. Facebook’s (FB) woes grew after it alienated its media supporters, stoking tensions within the company. Shares slipped 5.71 percent. Nvidia slumped 12 percent after Bitcoin fell below $5,000 and pulled the cryptocurrency sector with it. Nvidia’s sales surged as cryptocurrencies peaked in December 2017. During the run-up, cryptocurrency miners were buying supplies of video cards, boosting Nvidia. The sales boom is seemingly over as the cost of cryptocurrency mining now exceeds the value of the popular currencies.

The homebuilder confidence index slipped to 60 in November. Nevertheless, any reading above 50 is positive. Tomorrow, the government will release housing starts and building permits for October. Analysts expect increases from September. Existing home sales are out on Wednesday.

Durable goods orders, consumer sentiment and the flash PMIs are also out this week.

Crude oil rebounded to $57 on Monday. Natural gas also rallied to $4.70 per mmBTU after weather forecasters predicted cold weather would last longer than expected for many parts of the country.

Intuit (INTU), Agilent Technologies (A), L Brans (LB), Urban Outfitters (URBN), Jack in the Box (JACK), Medtronic (MDT), TJX Companies (TJX), Target (TGT), Kohl’s (KSS), Lowe’s (LOW), Ross Stores (ROST), Best Buy (BBY), Autodesk (ADSK), Foot Locker (FL), The Gap (GPS), Deere & Co (DE), Rockwell Collins (ROK) and SodaStream (SODA) all report earnings this week.

Markets consolidated rally gains this week. The S&P 500 saw the smallest decline of 1.61 percent on the week.

SPDR Consumer Discretionary (XLY) declined 3.32 percent. SPDR Technology (XLK) dipped 2.33 percent following weaker guidance from Nvidia (NVDA) that sent shares of the chipmaker down 20 percent after hours on Thursday.

The National Federation of Independent Business small business confidence index for October slipped from its all-time high in September, but business owners are at their most confident in decades amid low inflation and strong economic growth. The consumer price index (CPI) for October climbed 0.3 percent. The core CPI that strips out food and energy grew 0.2 percent. Both numbers met economist forecasts.

Initial claims for unemployment were 216,000 last week, in the historically low range we’ve seen all year. October retail sales beat expectations with 0.8 percent growth. Sales ex-autos advanced 0.7 percent, also beating forecasts. Higher gasoline prices boosted retail sales with the CPI last month. Autos and department stores also saw strong sales, while restaurants lagged.

That boost in gasoline should evaporate from the CPI in November if the decline in crude oil holds. Crude extended its record losing streak to 12 days this week before bouncing at $54 a barrel. The decline that began in early October wiped out all of crude oil’s gains over the past year. Gasoline tumbled with oil at the wholesale level and that price drop will continue filtering down to the pump in coming days and weeks.

Natural gas gained as much as 30 percent this week, to near $5 per mmBTU before falling back towards $4. The cold snap hitting much of the country coincided with low inventory, driving prices skyward. Investors don’t expect the price increase to hold, however. While natural gas gained about 15 percent on the week, shares of First Trust ISE-Revere Natural Gas (FCG) fell 5 percent.

Shares of PG&E (PCG) rallied nearly 40 percent on Friday, but still finished the week down nearly 40 percent. The stock lost as much as 55 percent midweek as it faces liability for the ongoing wildfire in California.

Emerging markets rebounded strongly with currencies. The U.S. dollar was slightly lower on the week despite Brexit mayhem weighing on the pound and the euro. Prime Minister Theresa May faced a possible vote of no confidence after several cabinet members resigned in protest of her Brexit deal with the EU.