Despite a lot of news, last week was the quietest of the year.
The S&P 500 moved less than 30 points between its low and high, the narrowest range since Christmas. The index still managed to close slightly positive, its fourth straight weekly gain. The big question now is whether resistance from mid-March will prevent further upside.
Some headlines seemed negative on the surface, like the Federal Reserve raising interest rates or more tariffs squabbles between the U.S. and China. But at a deeper level, economic data continued to improve and trends within the market suggested confidence is building.
Consumer sentiment rose more than expected as Americans felt comfortable about their finances. Joblessness fell more than expected to its lowest level since 1973, while small-business confidence hit its highest level since 1983. Retail sales blew past estimates to their biggest gain in six months. Goldman Sachs even raised its projection for second-quarter growth.
Several positive trends also appeared in the market. Economically sensitive consumer discretionary stocks, for instance, were the best major sector with a 2 percent weekly gain. Media companies led the charge after a judge’s ruling on the AT&T (T)-Time Warner (TWX) merger spurred hopes of other deals in the space.
Smaller technology companies also shot higher with investors on the prowl for growth stories. That was especially true for recent initial public offerings (IPOs), some of which have already doubled since entering the market. Is that a sign of risk appetite returning? Video-game makers rallied out of their E3 exposition. Transports, another economically sensitive sector, rose more than 1 percent as well.
Even the weak spots didn’t necessarily give investors reason to get bearish. Commodities took a beating as traders braced for increased oil supply from Russia and tariff worries hammered grains. But combine that with modest core inflation numbers last week, and it looks like “Goldilocks” conditions remain in effect: steady growth without scary price increases. Maybe that’s why bond yields fell.
Media companies Discovery Communications (DISCA) and Twenty-First Century Fox (FOXA) were the biggest gainers in the S&P 500 last week, up 18 percent and 16 percent respectively. Royal Caribbean Cruises (RCL) followed with an 11 percent gain after taking control of a luxury-cruise operator. H&R Block (HRB) led to the downside, cratering 19 percent on weak profit guidance.
This week’s agenda has a variety of items, with energy and housing as prominent themes.
NAHB’s homebuilder sentiment index gets the ball rolling today, followed by housing starts and building permits tomorrow. Oracle (FDX) issues quarterly results on Tuesday afternoon.
Wednesday features existing home sales, crude-oil inventories, plus earnings from Micron Technology (MU) and FedEx (FDX). Thursday brings results from the Fed’s bank stress tests and initial jobless claims. Friday kicks off OPEC’s meeting, which may open the door to increased oil drilling.