Market Perspective for January 22, 2018

The government shutdown ended on Monday after lawmakers agreed to a three-week spending bill. Stocks and the U.S. dollar rallied on the news. All major indexes finished higher on the day.

Shares of iShares Nasdaq Biotechnology (IBB) hit a new 52-week high, while SPDR S&P Biotech (XBI) hit a new all-time high. Merger activity drove the gains as Sanofi (SNY) purchased Bioverativ (BIVV) and Celgene (CELG) purchased Juno Therapeutics (JUNO).

Consumer discretionary shares rallied as Netflix (NFLX) hit a new all-time high ahead of earnings and reported subscription rates that far exceeded estimates. Consumer staples extended their weeklong streak of outperformance. Proctor & Gamble (PG) will report earnings this week. The stock is 12 percent of SPDR Consumer Staples (XLP). Wal-Mart (WMT), a top-10 holding in the fund, hit a new all-time high on Monday. CVS Health (CVS) and Pepsi (PEP) also rose strongly on the day.

The 10-year treasury yield extended its gains on Monday. It hit 2.66 percent, the highest level since September 2014. High-yield bonds held steady, but broad corporate and investment-grade bond funds followed government bonds lower.

West Texas Intermediate crude oil held steady at $63 a barrel on Monday. SPDR Energy (XLE) pushed to a new 52-wek high. Sub-sectors were strong across the board.

Fourth-quarter GDP growth will headline this week’s economic releases. The median forecast is 3 percent, the average 2.7 percent. The Atlanta Federal Reserve forecast 3.4 percent growth as of January 18. December existing home sales are forecast to hit an annualized pace of 5.73 million. New home sales are expected to hit an annualized pace of 680,000, down from last month’s spike to 733,000.  The flash PMIs for January will also be out this week with durable goods orders for December.

Earnings season is in full swing. Sectors and indexes with significant reporting this week will include biotechnology, consumer discretionary, healthcare, steel, and industrials. Halliburton (HAL), Netflix (NFLX), Petmed Express (PETS), Fifth Third Bancorp (FITB), Johnson & Johnson (JNJ), NVR Corp (NVR), Proctor & Gamble (PG), Travelers (TRV), Texas Instruments (TXN), Abbott Labs (ABT), Comcast (CMCSA), Ford (F), General Dynamics (GD), 3M (MMM), General Electric (GE), Caterpillar (CAT), Biogen (BIIB), Celgene (CELG), Freeport-McMoRan (FCX), Intel (INTC), Intuitive Surgical (ISRG), Northrop Grumman (NOC), Stabucks (SBUX), Colgate-Palmolive (CL), AbbVie (ABBV) and Honeywell (HON) are all on tap.

0
    0
    Your Cart
    Your cart is emptyReturn to Shop