Santa Comes Early for Investors as FANG Stages Late Year Comeback

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Santa Comes Early for Investors as FANG Stages Late Year Comeback

Santa came early this year, giving stock investors their tenth positive week in the last 11. High-profile technology stocks led the charge.

The S&P 500 rose 1.7 percent between Friday, December 13, and Friday, December 20. The index continued its breakout into new record territory, with more than three-quarters of its members registering gains.

But the real story was in tech and the Nasdaq. The NYSE FANG+ Index ($NYFANG) rallied more than 6 percent as prominent growth companies like Netflix (NFLX), Facebook (FB) and Nvidia (NVDA) rose to their highest levels since at least the summer.

The Philadelphia Semiconductor Index ($SOX) blasted into new record territory after bellwether Micron Technology (MU) cited better demand. Don’t forget that in 2020 everyone’s likely to be buzzing about 5G networks as the next big catalyst. Retailers, solar-energy stocks and Chinese Internet firms like Alibaba (BABA) outperformed as well.

S&P 500 daily chart showing breakout to new highs and select moving averages.
S&P 500 daily chart showing breakout to new highs and select moving averages.

Phase One Done?

Speaking of China, Premier Xi Jinping told state media he’ll sign a trade deal with President Trump as “as soon as possible.” The “phase one” agreement marks a first step in deescalating a tariff war that rattled financial markets and squeezed business investment in the world’s two largest economies.

U.S. farms stand to benefit because China will increase grain purchases. Fertilizer companies like Mosaic (MOS) and CF Industries (CF) rallied on the news. Tractor maker Deere (DE) also tried to claw back from a weak earnings report in November.

Other headlines last week were mostly positive. NAHB’s homebuilder sentiment index shot to its highest level since 1999 and Fannie Mae predicted housing starts will surge 10 percent next year. The combination of lean inventories, low mortgage rates and rising incomes may finally spur more construction.

There was also some interesting news for a few members of the Dow Jones Industrial Average:

  • Boeing (BA) began and ended the week in the red. First came reports of more 737 MAX delays. Then its Starliner test capsule failed for NASA.
  • Goldman Sachs (GS) received an upgrade from Citi and a price-target increase from Wells Fargo as analysts focused on newly appointed CEO David Solomon.
  • Merck (MRK) ripped to a new record high after the Food and Drug Administration approved its Ebola vaccine.

ConAgra’s Turnaround Story

ConAgra (CAG) had the biggest gain in the S&P 500 last week, up 24 percent. The food company beat estimates as it revived demand for brands like Chef Boyardee and integrated a recent acquisition. TradeStation data showed it was also CAG’s best weekly return in at least a decade.

MOS and NFLX followed with gains of 17 percent and 13 percent, respectively.

Netflix (NFLX) chart with 30- and 200-day moving averages.
Netflix (NFLX) chart with 30- and 200-day moving averages.

But then you had FedEx (FDX), down 11 percent after missing estimates once again. The transportation giant tried to blame the economy and calendar. But analysts fingered cost overruns and poor market position as e-commerce brings new players into the industry.

This week is super-quiet because of Christmas on Wednesday.

Durable-goods orders and new home sales come out this morning. Markets close at 1 p.m. ET on Tuesday and remain shut for the holiday.

Initial jobless claims follow on Thursday. Oil inventories are due Friday morning. Next week will also be quiet because of New Year’s Day.

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