Closing Market Summary: Stocks Rally to Snap Five-Day Losing Streak
The major averages snapped their five-day losing streak with a broad-based advance on Friday. The S&P 500 (+1.3%) reclaimed its 100-day moving average (2,007) and narrowed its weekly decline to 1.3%.
The stock market was on shaky footing in the early going, but the overall risk tolerance was improved by a rebound in crude oil, which continued climbing throughout the session to end higher by 4.6% at $48.50/bbl. That advance bolstered the energy sector (+3.2%), which spent the day in the lead.
Meanwhile, the remaining cyclical groups ended a bit closer to their flat lines. The materials sector (+1.7%) outperformed with help from steelmakers and miners while the discretionary sector (+1.3%) settled in line with the broader market. As for the remaining three growth-sensitive groups, financials (+1.2%), industrials (+0.7%), and technology (+0.9%) spent the day behind the broader market.
The financial sector could not catch up to the S&P 500 as Goldman Sachs (GS 177.23, -1.26) weighed. The stock fell 0.7% despite better than expected results from the investment bank. Also of note, foreign exchange broker FXCM (FXCM 12.63, 0.00) agreed to terms on a $300 million lifeline provided by Leucadia National (LUK 21.84, +0.20) after yesterday's surge in the Swiss franc caused about $225 million in negative client balances at FXCM. Shares of FXCM were halted throughout the session after surrendering almost 90.0% in pre-market action.
Elsewhere, the technology sector struggled to keep pace with the market as Apple (AAPL 105.94, -0.88) weighed. The largest sector component lost 0.8% while most other heavily-weighted tech names settled with gains. On the earnings front, Intel (INTC 36.45, +0.26) gained 0.7% after beating bottom-line estimates. For its part, the PHLX Semiconductor Index (+1.1%) ended just behind the S&P 500.
Over on the countercyclical side, consumer staples (+0.8%) and utilities (+0.9%) underperformed throughout the day while telecom services (+1.7%) and health care (+1.9%) spent the day among the leaders. The health care sector was bolstered by high-beta biotechnology names, evidenced by a 3.3% gain in the iShares Nasdaq Biotechnology ETF (IBB 317.82, +10.12). The ETF was able to add 1.4% for the week versus a slim uptick of 0.2% for the health care sector.
Treasuries notched their highs in the early morning before spending the session in a steady retreat that sent the benchmark 10-yr yield higher by 11 basis points to 1.82%.
Friday's participation was ahead of average with 950 million shares changing hands at the NYSE floor.
Economic data included CPI, Industrial Production, and Michigan Sentiment:Bond and equity markets will be closed on Monday for Martin Luther King Day.
- The CPI declined 0.4% in December after declining 0.3% in November while the Consensus expected a decline of 0.4%
- Prices are up only 0.8% year-over-year, which is the smallest increase since October 2009
- The energy index, which has fallen for the past six consecutive months, declined 4.7% in December
- Food prices increased 0.3% in December, up from a 0.2% increase in November
- Excluding food and energy, core CPI was flat in December (consensus +0.1%) after increasing 0.1% in November
- Industrial production declined 0.1% in December after increasing an unrevised 1.3% in November (consensus -0.1%)
- The decline in industrial production can be blamed on warmer-than-normal temperatures that reduced the demand for heating. According to the National Climatic Data Center, December 2014 was the second warmest December on record. That was a large reversal from November, which was the coldest November since 2000. The shift in temperatures resulted in a 7.3% decline in utilities production
- Capacity utilization hit 79.7% while the consensus expected a reading of 79.9%
- The University of Michigan Consumer Sentiment Index jumped to 98.2 in the preliminary January reading from 93.6 in December while the consensus expected an increase to 94.1
- That was the highest reading since the index reached 103.8 in January 2004
On Tuesday, the NAHB Housing Market Index will be released at 10:00 ET.
- Dow Jones Industrial Average -1.8% YTD
- S&P 500 -1.9% YTD
- Nasdaq Composite -2.2% YTD
- Russell 2000 -2.5%