Year: 2018

The S&P 500 Index slipped 1.97 percent on Monday after Apple (AAPL) supplier Lumentum (LITE) reported a major customer had cut back on a recent order. Shares of LITE fell more than 30 percent, while Apple slid nearly 5 percent on speculated involvement before rebounding. Malaysia demanded Goldman Sachs (GS) return all fees associated with the country’s state-owned 1MDB fund. Embezzlement, corruption and fraud charges are swirling around the fund. Wildfires in California hit two utility companies. Shares of PG&E fell nearly 40 percent at the open before rebounding.

The United Kingdom is poised for a hard Brexit after fruitless talks with the European Union. Both sides would like a deal by Wednesday to ensure British parliament approval ahead of the March 2019 deadline. European Union members also want a review period. The euro and pound both slid versus the U.S. dollar. iShares MSCI Eurozone (EZU) fell 2.24 percent on the day.

Tomorrow, the National Federation of Independent Business will release its small business confidence reading for October. The prior month it reached an all-time high. The consumer price index for October will be out. Analysts are looking for 0.3 percent headline and 0.2 percent core. Last week’s producer price index came in at 0.6 percent and well ahead of expectations. October retail sales, weekly jobless claims and industrial production will round out the week.

China will release its lending, money supply, fixed-asset investment and home price data this week. Over the weekend, the People’s Bank of China deleted a sentence about letting the market determine the yuan exchange rate in its quarterly report, a sign that the country is stepping up its defense of the currency. It is the first time the sentence hasn’t appeared since 2013.

Crude oil fell for the 11th straight day on Monday, the longest losing streak on record. It also lost the $60 level for the first time since March. Natural gas extended its rally as colder-than-expected temperatures are anticipated for many parts of the country.

Advance Auto Parts (AAP), Home Depot (HD), Tyson Foods (TSN), Tidewater (TDW), Cisco (CSCO), Netease (NTES), Macy’s (M), Wal-Mart (WMT), Nvidia (NVDA), Applied Materials (AMAT), Nordstrom (JWN) and 58.com (WUBA) are among the larger firms reporting earnings this week. Solid earnings and guidance from Nvidia would go a long way for the struggling semiconductor sector.

The Dow Jones Industrial Average led the stock market rally this week with a 3.02-percent gain. SPDR Healthcare (XLV) rose 4.13 percent. SPDR Utilities (XLU) and SPDR Consumer Staples (XLP) increased 3.22 and 3.12 percent, respectively.

Economic expansion continued in October. Services PMIs reflected a consistently high growth rate. Weekly jobless claims were 214,000, down 1,000 from the prior week and still close to four-decade lows.

Job openings came down slightly in September, from 7.3 million to 7.0 million. This still exceeds the number of unemployed Americans by more than 1 million.

Consumer sentiment eased in early November, but it beat expectations and income expectations increased.

Odds of a December rate hike ended the week at 76 percent. Libor and 3-month Libor both rose this week as investors start pricing in the hike. The 2-year treasury yield climbed towards 3 percent.

Crude oil sold off sharply this week and lost the $60 level on Friday before recovering it. Crude has lost 22 percent from its early October peak of $77 per barrel. Natural gas spiked nearly 15 percent this week as traders anticipate a stretch of cold weather.

The U.S. Dollar Index rallied 0.4 percent this week. It gained against emerging-market currencies as well. iShares MSCI Emerging Markets (EEM) hit resistance with a 2.52-percent decline on the week and lost 5 percent from Wednesday high to Friday low. iShares MSCI EAFE (EFA) gained 0.11 percent. SPDR S&P 500 (SPY) advanced 2.18 percent.

Disney (DIS) delivered strong earnings this week and announced its new streaming service, Disney+. The service, a combination of its Hulu assets along with its large category of film and television, will expand and launch overseas next year. The news sent Netflix (NFLX) down 1.82 percent on the week.

Strong economic data drove bargain buying on Monday. Healthcare, financials, consumer staples and energy led the market higher. The S&P 500 Index gained 0.56 percent. SPDR Financials (XLF) climbed 1.52 percent, SPDR Energy (XLE) 1.73 percent, SPDR Consumer Staples (XLP) 1.25 percent and SPDR Healthcare (XLV) 0.89 percent.

Historically, stocks have rallied strongly in the wake of an election. Given the decline in October, odds favor another strong recovery this year.

Both services PMIs beat expectations in October. The ISM survey declined slightly from September, but that month’s reading was at a 21-year high. The Job Openings and Labor Turnover Survey (JOLTS), consumer credit and wholesale inventories for September, the producer price index (PPI) for October and the University of Michigan’s flash consumer sentiment reading for November will all be available this week.

Overseas, Europe will report its services PMI on Tuesday. Canada will report housing starts for October on Thursday. Australia will report home loans for September this week as well. Both countries’ housing markets will be in focus as Chinese real estate demand dwindles. China will report trade figures on Thursday, as well as consumer and producer inflation, new loans and money supply growth.

The 10-year Treasury yield held at 3.2 percent on Monday. It saw early selling but staged a rally late in the day as stocks advanced. Rising yields weighed on utilities and real estate.

The Federal Reserve will meet on Wednesday. No rate hike is expected until the December meeting.

The U.S. Dollar Index started the week with a small loss as it consolidates a one-month rally. Some currencies such as the Australian dollar have rallied strongly, signaling a potentially larger pullback. The U.S. Dollar Index has gained 8 percent since April without a meaningful correction. SPDR S&P 500 (SPY) gained 0.58 percent on Monday, besting both its developed-market and emerging-market competition.

Crude oil finished with a small loss on Monday as it fell to $62.79 per barrel. Natural gas, however, jumped 8 percent after forecasters predicted freezing temperatures for the Northeast.

Qualcomm (QCOM), Twenty-First Century Fox (FOXA), Southern Company (SO), Humana (HUM), Prudential (PRU), Keurig Dr. Pepper (KDP), Square (SQ), Walt Disney (DIS), Johnson Controls (JCI), Nutrien (NTR), Eli Lilly (LLY), CVS Health (CVS), Emerson Electric (EMR), Becton Dickinson (BDX), Devon Energy (DVN), CA Inc (CA), DISH Network (DISH), Cars.com (CARS), Activision Blizzard (ATVI), CenturyLink (CTL), AstraZeneca (AZN), Cardinal Health (CA), Dropbox (DBX), CRISPR Therapeutics (CRSP) Crocs (CROX), athenahealth (ATHN), and Starwood Property (STWD) are set to report earnings this week.