Flirting with highs (again)

The weekly scorecard for the 2024 stock market: bears 1, bulls 1.

Stocks rebounded in the second week of the year, as the S&P 500 mounted another challenge to its all-time highs amid mixed inflation data and the first earnings results from Q4 reporting season.

The SPX kicked off last week with a strong rally but lost some momentum on Thursday and Friday—despite trading to within 0.35% of its 2022 record intraday high:

The headline: S&P 500 comes close.

The fine print: Once again, economic data that wouldn’t appear to push the Fed into rate cuts ran into a market that seems to believe cuts are around the corner. The SPX closed lower last Thursday—but just barely—after the Consumer Price Index (CPI) showed hotter-than-forecasted inflation and weekly jobless claims came in low. On Friday, after a cooler-than-expected Producer Price Index (PPI), the index pushed to its highest high since January 2, 2022 (the day it hit its all-time high) before closing lower.

The number: 3 (out of 4), the number of big banks that fell on Friday after releasing earnings. Also, Delta Air Lines (DAL) sold off sharply after topping its headline numbers but issuing bearish forward guidance, dragging down other airlines in the process.

The scorecard: A strong showing by tech helped the Nasdaq 100 (NDX) lead the market last week:

Sector returns: The strongest S&P 500 sectors last week were tech (4.8%), communication services (3.5%), and consumer discretionary (1.5%). The weakest sectors were energy (-2.5%), utilities (-2%), and materials (-1.1%)

Stock movers: Harpoon Therapeutics (HARP) +112% to $22.36 on Monday, Ambrx Biopharma (AMAM) +102% to $27.47 on Monday. On the downside, iRobot (IRBT) -20% to $29.75 on Wednesday, Richardson Electronics (RELL) -19% to $10.12 on Thursday.

Futures: An unexpected Saudi price cut sent February WTI crude oil (CLG4) tumbling last Monday, and the market ended a choppy week with a loss at $72.77. A strong Friday rally rescued February gold (GCG4), which closed the week slightly higher at $2,051.80. Week’s biggest rallies: January Micro ether (METF4) +13.7%, March oats (ZOH4) +4.5%. Week’s biggest declines: April platinum (PLJ4) -5.8%, March palladium (PAH4) -5.8%.

Retail sales and housing numbers highlight this week’s economic calendar:

●Tuesday: Empire State Manufacturing Index 
●Wednesday: Retail Sales, Industrial Production and Capacity Utilization, Import Price Index, NAHB Housing Market Index, Fed Beige Book
●Thursday: Housing Starts and Building Permits
●Friday: Michigan Consumer Sentiment (prelim), Existing Home Sales

This week’s earnings lineup is still heavy on financials, but includes a wide range of tech, industrial, and energy names. Here’s a sample:

●Tuesday: Goldman Sachs (GS), Morgan Stanley (MS), PNC Financial Services (PNC), Progress Software (PRGS)
●Wednesday: US Bancorp (USB), Alcoa (AA), Discover (DFS), Kinder Morgan (KMI), Wintrust (WTFC)
●Thursday: Fastenal (FAST), Keycorp (KEY), Taiwan Semiconductor (TSM)
●Friday: Fifth Third Bancorp (FITB), Schlumberger (SLB)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

At this point, many people would likely give the SPX credit for, more or less, completing its trek back to all-time highs.

For those sticklers who insist on official records: Last Thursday the SPX rallied to within 0.42% of its January 2022 all-time intraday high of 4,818.62. There have been six other times since 2000 that the SPX came within a half-percent of a previous record high after trading below it for at least five months.¹ In three of those instances (July 2007, July 2016, and August 2020), the SPX hit a new record the next day, but in the other three (April 2013, August 2018, and April 2019), it took the index eight, 10, and four trading days, respectively.

Of course, what the SPX does if and when it hits a new high is another story.

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¹ Reflects S&P 500 (SPX) daily prices, 12/30/99–1/12/24. Supporting document available upon request.