The Stock Market This Week: January 11-15

By: Stacey Nickens

• Economic News
  • Job openings declined slightly in November, falling to 6.527 million.
  • The Small Business Optimism Index also fell, declining to 95.9 in December.
  • Total CPI rose 0.4% m/m in December, showing that inflationary concerns largely remain a nonissue.
  • Initial claims for the week ending in January 9 hit 965,000, their highest level since August.
  • Retail sales for December fell more than expected. Sales declined by 0.7% m/m, compared to the expected increase in 0.1% m/m. Weaker restaurant and internet sales drove down overall sales.
• Major Corporate News
  • Intel announced that their CEO would be replaced by VMWare’s current CEO.

On Monday, major indexes declined due to profit-taking interest in the technology sector. The S&P 500 fell 0.7%. The Nasdaq declined 1.3%, and the Dow Jones lost 0.3%. Investors pulled funds from technology stocks due to rising interest rates and continued regulatory concerns. Over the weekend, both Facebook and Twitter restricted President Trump’s accounts. As a result, the communication services, consumer discretionary, and information technology sectors declined. Rising interest rates also hurt the performance of the rate-sensitive utilities and real estate sectors. However, continued hope for economic recovery bolstered the cyclical energy, financial, and materials sectors. As a result, the Dow Jones finished close to flatline. The health care sector also performed strongly after Eli Lilly announced strong Phase 2 trial results for treating Alzheimer’s disease.

On Tuesday, major indexes finished close to flatline as recovery securities outperformed growth and healthcare names. With hopes of a vaccine on the horizon, the small-cap and cyclical spaces performed strongly. Accordingly, the energy, financial, material, consumer discretionary, and industrials sectors posted gains of 1% or more. Comparatively, the growth sectors struggled to perform against rising long-term interest rates. The information technology, communication services, and healthcare sectors all declined. As a result, the S&P 500 finished almost at flatline, while the Dow Jones gained 0.2%. The Nasdaq climbed 0.3%. In economic news, job openings declined slightly in November, falling to 6.527 million. The Small Business Optimism Index also fell, declining to 95.9 in December.

On Wednesday, major indexes posted modest gains. The S&P 500 rose 0.2%, and the Dow Jones finished close to flatline. The Nasdaq climbed 0.4%. The market performed strongly in the morning but pared its gains over the course of the day. Influential sectors such as technology, healthcare, and consumer discretionary gained enough to outpace losses in the financial and industrials sectors. In the technology space, Intel posted gains after announcing that their CEO would be replaced by VMWare’s current CEO. The consumer discretionary sector got a boost from Amazon, who reentered their 50-day moving average. In economic news, total CPI rose 0.4% m/m in December, showing that inflationary concerns largely remain a nonissue.

On Thursday, major indexes declined after posting gains during morning trading. The S&P 500 fell 0.4%. The Dow Jones declined 0.2%, and the Nasdaq lost 0.1%. Overall, the market was dragged down by the technology, consumer discretionary, and communication services sectors. Microsoft, Visa, Amazon, and Alphabet all struggled in daily trading. However, small caps performed well, allowing the Russell 2000 to rise 2.1%. The afternoon pressure seemed to come after Fed Chairman Powell said that there would not be a rate hike for a long while. Following his speech, the energy and industrials sectors were still able to post gains, as these two sectors would benefit from commodity inflation. In economic news, initial claims for the week ending in January 9 hit 965,000, their highest level since August.

On Friday, major indexes declined as cyclical securities struggled during trading. The S&P 500 fell 0.7%. The Nasdaq declined 0.9%, and the Dow Jones lost 0.6%. Despite performing strongly throughout the week, cyclical securities struggle during Friday’s session. Energy, financials, industrials, and materials were the day’s worst performers. Financials struggled after the market responded negatively to the banks’ fourth quarter earnings reports. Physical stimulus and vaccine optimism was not enough to bolster the other cyclical sectors, despite being the driving forces behind cyclical gains earlier in the week. In economic news, retail sales for December fell more than expected. Sales declined by 0.7% m/m, compared to the expected increase in 0.1% m/m. Weaker restaurant and internet sales drove down overall sales.