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The S&P 500 pulled back during the shortened trading week due to a Friday sell-off caused by renewed COVID fears. The Nasdaq was the main underperformer this week due to a rotation out of high flying tech and the fact that the market was closed on Friday.
It is too early to make a call on the action we saw on Friday, with shutdown plays like Zoom Video and Peloton catching almost automatic bids, and the energy and financials names being thrown aside. There is not enough broad market participation to gauge sentiment on a half day when volume is lower than normal.
We decided to stay on the sidelines on Friday and preserve cash until we have more actionable information from the scientific community.
Consumer discretionary, communication services and technology lead the index to the downside this week with most sectors in the red. Despite Friday's large losses, energy gained for the week despite the pop earlier in the week.
The dollar index held around the 96 level. Around the $1,800 level, gold pulled back. The price of crude fell to around $70 per barrel on Friday. The 10-year Treasury is hovering around the 1.5% level.
We heard from American Eagle. Here is the breakdown of the results.
We received a number of macroeconomic readings this week.
On Monday, the National Association of Realtors reported that existing home sales increased in October, better than the Street was expecting. Sales are down 5.8% from a year ago. At the end of October, the inventory of existing homes stood at 2.4 months, down from September's 2.5 months and well below the 6-month level many view as balanced between supply and demand. The median existing home price in October was $353,900, which is more than the cost of living. Freddie Mac said the average 30-year, conventional fixed mortgage rate was 3.07% in October, up from 2.9% in September.
The line chart has 1385 data points.
The chart has a time axis. The range is from 2021-11-22 09:30:00 to 2021-11-26 13:10:00.
The chart has a Y axis. The range is 25 to 30.
Created with Highcharts 9.0.112:00 pmNov 23Nov 24Nov 26252627
The interactive chart is over.
The flash U.S. Composite PMI Output Index for November was 56.5, down from 58.6 in October and marking a low for the index. The manufacturing sector expansion and contraction are similar to the ISM PMI numbers. ISM data is collected from a different panel of companies than the data collected by the IHS Markit. The data used in this report was collected between November 12 and November 22.
The headline number was driven by the flash U.S. services business activity index pulling back to 57.0 from 58.7 in October, missing expectations of 59.0. The manufacturing output index went up to 53.9 in November from 52.1 in October.
The markets were closed on Thursday and Friday so releases came on Wednesday.
New orders for manufactured durable goods fell in October. Expectations were for a small advance. Excluding transportation equipment, which can increase monthly volatility because of the higher price tag for airplanes and automobiles, new orders increased in October. New orders were up in October.
New orders for core capital goods, which are goods used in the manufacturing process and therefore used as a proxy for business confidence and investments, decreased in October, missing expectations.
The Bureau of Economic Analysis (BEA) reported that real GDP increased 2.1% in the third-quarter of 2021, missing expectations for a 2.2% advance. The second-quarter increase was 6.7%. The core PCE price index, which is the Fed's favorite proxy for inflation, increased 4.5% quarter over quarter, a deceleration from the 6.1% quarter over quarter. The core PCE price index was up 3.6% on an annual basis, which was an improvement over the 3.4% advance seen in the second-quarter.
The BEA reported that personal income increased in October, better than expected. The disposable income and personal consumption expenditures both increased on the month, ahead of expectations. The real PCE price index increased 0.6% in October, when adjusted for inflation. The core PCE price index advanced 4.1% on an annual basis, in line with expectations and a notable acceleration from the 3.7% annual rate seen in September.
The Census Bureau reported on Wednesday that new home sales increased 0.4% MoM in October to a SAAR of 745,000, below expectations. Sales were down by 23.1% compared to the year ago period. The average sales price for new homes in October was $477,800, which is up from $405,700 and $457,200 in September.
The Department of Labor reported that initial jobless claims were 199,000, a decline of 71,000 from the previous week and well below estimates for 260,000. This was the lowest level of initial claims since November 15, 1969. The previous week's reading was revised higher to 270,000.
The four-week moving average came in at 252,250, a decline of 21,000 from the previous week's revised average. This is the lowest moving average since March 14, 2020 when it was 225,500.
Next week, we will hear from two companies, one after the closing bell and the other after the closing bell.
We will be watching the earnings in the week ahead.
On Mon 11/29
The open was Frontline and Li Auto.
On Tuesday 11/30
Hello Group, Jinko Solar, and Baozun are open.
The close was: Box, Hewlett Packard Enterprise, NetApp, and Zscaler.
On Wednesday 12/1.
The Royal Bank of Canada is open.
C3.ai, CrowdStrike, Descartes, Elastic, Five Below, Okta, and Splunk are close.
On 12/2 there will be a ceremony.
Dollar General, GMS, Kroger, and Signet Jewelers are open.
Close: Domo, Asana, Cooper, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo, Domo,
Fri 12/3
Big Lots, Dole, Genesco, and Hibbett are open.
Close:
We will be keeping an eye on the macroeconomics, as well as keeping an eye on the geopolitics.
Monday is the day.
There are pending home sales.
The Dallas Fed Index is published by the Dallas Fed.
Tuesday.
The FHFA Home Price Index is released at 9:00.
The Case-Shiller home prices are published by S&P.
The Chicago PMI is at 9:45.
10:00 Consumer confidence.
Wednesday.
The employment survey is done by the ADP.
The Markit PMI Manufacturing SA is over.
Spending on construction.
10:00 ISM Manufacturing.
The Fed Beige Book is published.
Thursday is Thursday.
There are jobless claims.
Friday is Friday.
The jobs report is released at 08:30.
Markit provides PMI services.
10:00 Durable orders.
10:00 Factory orders.
The ISM Non Manufacturing AEO is at 10:00.
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