Market Insights / Commentary

Suddenly the bears are in retreat

By David Russell

Stocks recovered from early losses last week as interest rates stabilized and money streamed into tech.

A Friday-afternoon surge landed the S&P 500 back above its 50-day moving average, resulting in a 0.55 percent gain for the holiday-shortened span. The Nasdaq-100 did three times better, continuing its long-term outperformance against the broader market.

Sentiment pivoted around minutes from the Federal Reserve’s last policy meeting. Traders initially trembled at the idea of tighter monetary policy, but then calmed as another statement saw few signs of inflation. Lower crude inventories eased fears of an oil glut and jobless claims remained near long-term lows. Takeovers were active as well, focusing on names like NXPI Semiconductors (NXPI), Nordstrom (JWN) and Rite-Aid (RAD).

Despite technology being the best major sector overall, four of the S&P 500’s biggest gainers were energy drillers or fertilizer makers: Chesapeake Energy (CHK), Noble Energy (NBL), Mosaic (MOS) and CF Industries (CF). IT-provider Hewlett Packard Enterprise (HPE) also made the list.

Looking at the global picture, Chinese Internet companies roared back to life and Latin America continued its stealth rally. Europe lagged.

Metals, banks and health care were the worst major groups. Medical-waste firm Stericycle (SRCL) led to the downside with a 21 percent drop on the heels of weak results. Retail giant Wal-Mart (WMT) was second worst, hammered 11 percent by an e-commerce slowdown.

This week brings some important economics news. Earnings focus on retail and tech.

Today’s items include new home sales, plus results from Palo Alto Networks (PANW) and Tenet Health Care (THC).

Tomorrow features durable-goods orders and consumer confidence. Macy’s (M), Autozone (AZO) and Hertz (HTZ) issue results. Newly seated Fed chair Jerome Powell also begins testimony on Capitol Hill.

Wednesday’s big items are revised fourth-quarter gross domestic product, pending home sales and the Energy Department’s oil-inventory report. Analog Devices (ADI), TJX (TJX) and Valeant Pharma release their numbers in the pre-market. (CRM), Mylan (MYL) and L Brands (LB) follow in the afternoon.

Jobless claims and the Institute for Supply Management’s manufacturing index are due on Thursday, along with results from Anheuser Busch (BUD), Kohl’s (KSS) and JWN.

Friday’s lineup includes consumer sentiment. Foot Locker (FL), JC Penney (JCP) and (JD) issue results.

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