Stocks sizzled as fears of the omicron virus variant shutting down the economy faded. Congress progressed towards avoiding a U. S. debt default. Investors maintained their composure in the face of the inflation rate measuring 6.8% in the past 12 months, a 39-year high.

Fears of the omicron coronavirus variant shutting down the economy eased in the early part of last week, fueling a broad rally in stocks.

Comments from President Biden’s Chief Medical Advisor on the omicron variant causing less severe illness than the delta variant helped assuage concerns. Further, Pfizer and BioNTech announced that a preliminary study found three doses of their vaccine provided a high level of protection against the variant.

The threat of the U. S. defaulting on its debt receded. The Senate cleared the path toward raising the debt ceiling.

The Labor Department reported that the consumer price index (CPI) rose 6.8% for the 12 months ending in November. The tally marginally exceeded the 6.7% forecasted by economists. It also marked the highest annual inflation rate since 1982.

Investors took this inflation data in stride as they fell short of worst-case scenarios feared by economists. Additionally, CPI components like used car prices, lodging rates, and airfares, which have risen sharply in recent months, rose less than expected.

For the week ending December 10, the S&P 500 (SPY) rose 3.8%. All of the 11 sectors gained.

Leaders and laggards for the week ending December 10, 2021.

Market breadth was overwhelmingly positive. The number of advancing stocks in the S&P 500 lagged the number of decliners by over an 11-to-1 ratio.

Information technology (XLK) was the only sector to lead the S&P 500, gaining 5.9%. Energy (XLE) matched the benchmark’s gain.

Utilities (XLU), consumer discretionary (XLY), and communication services (XLC) lagged the benchmark gaining 2.7% or less.

The S&P 500’s top 10 winners included communication services, consumer discretionary, financials, health care, and information technology companies.

1. Consumer discretionary

Cruise operators were among the biggest winners last week as fears of the omicron coronavirus variant eased on comments from Dr. Fauci and Pfizer.

Gaining 18%, Norwegian Cruise Line (NCLH) was the top performer in the S&P 500 for the week. Royal Caribbean Cruises (RCL) and Carnival Corp. (CCL) ended the week 13% and 12% higher, respectively. Ticketmaster owner Live Nation Entertainment (LYV), a communications services sector member, joined this rally to gain 11%.

Automaker Ford Motor (F) gained 11%. The automaker expects to triple the output of its all-electric Mustang Mach-E SUV to over 200,000 units per year by 2023 after seeing high demand for its all-electric F-150 Lightning pickup truck.

2. Information Technology

Oracle (ORCL) +16% – The business software company added $10 billion to its share repurchase program topping analysts’ quarterly revenue and EPS estimates. Oracle expects cloud ERP to be a $20 billion business within five years.

Broadcom (AVGO) +13% – The semiconductor chipmaker reported fiscal fourth-quarter revenue and EPS above analysts’ forecasts. Broadcom issued an upbeat forecast expecting continued high demand from cloud computing customers.

Apple (AAPL) +11% – The iPhone and Apple Watch maker rallied from the buzz of next-generation Augmented Reality/Virtual Reality products and positive comments from Morgan Stanley.

3. Health care

Edwards Lifesciences (EW) +12% – The medical devices maker forecasted double-digit sales and EPS growth in 2022.

4. Financials

MarketAxess Holdings (MKTX) +11% – After falling over 40% since November 2020, the electronic trading platform provider rebounded after announcing November 2021 trading volume.

Top ETFs for the week

The following ETFs themes worked well: oil services and production, China Internet, carbon credits, healthcare providers. The top ETFs for the week include:

• VanEck Oil Services ETF (OIH) +9.5%
• KraneShares CSI China Internet ETF (KWEB) +8.5%
• KraneShares Global Carbon ETF (KRBN) +7.7%
• SPDR S&P Oil & Gas Exploration & Production ETF (XOP) +6.8%
• iShares U.S. Healthcare Providers ETF (IHF) +6.3%

Top Fidelity Fund for the week

• Fidelity Select Health Care Services Portfolio (FSHCX) +7.2%

Looking ahead to the week of December 13

The Federal Reserve is back in focus this week. Investors expect the FOMC to speed up the end of its bond-buying program after its December 14-15 meeting. Investors will be closely scrutinizing the Fed’s new interest rate forecast.

* The Federal Open Market Committee meets on Tuesday & Wednesday to discuss interest rate policy. In light of the continued rise in inflation, investors expect the Fed to taper faster than the $15 billion a month rate planned on November 3. The central bank also provides quarterly projections on the economy, inflation, and interest rates. The Fed’s outlook for the federal funds rate, i.e., dot-plot, may now show two interest rate hikes in 2022.

* The economic calendar includes data on inflation. The Labor Department reports the producer price index (PPI) on Tuesday. Briefing.com shows economists expect the PPI to increase 0.5% month-over-month in November, down from 0.6% in October. Retail sales come out on Wednesday.

* The Senate paved the way for Congress to increase the debt limit last week. The House and Senate now need to approve the higher debt limit by December 15, ensuring the United States does not default on its debt.

* The earnings calendar includes reports from a few widely followed companies, including software maker Adobe, IT service provider Accenture, and freight heavyweight FedEx.
 

Stay on top of the stock market with ‘Looking Back, Looking Forward’

Sign up free to receive Looking Back, Looking Forward in your Inbox.
 

Learn more:

How AlphaProfit's investment strategy minimizes your risk
How AlphaProfit keeps your fees and expenses low
Performance of model portfolios & recommendations in AlphaProfit's Premium Service investment newsletter
AlphaProfit's free and premium investment newsletters

Investors feared the Federal Reserve would remove economic stimulus quicker than previously communicated. U. S. economic data and comments from Fed Chairman Powell caused these fears to escalate. Five states reported the omicron coronavirus variant. Congress once again averted a government shutdown with a short-term measure.

The Labor Department reported the unemployment rate dropped to a new pandemic low of 4.2% in November. Average hourly earnings increased 0.3%, implying an annual wage increase of 4.8%, the highest since March 2021. The Institute for Supply Management reported its service activity index rose to an all-time high of 69.1 in November.

Federal Reserve Chairman Powell’s remarks on potentially speeding up the central bank’s tapering process amid high inflation surprised investors. In his testimony to Congress on November 30, Powell said the central bank will consider reducing monthly bond purchases faster than the $15 billion-a-month schedule announced on November 3 when it meets on December 14-15.

Investors believed the Federal Reserve would cut bond purchases faster than previously expected, considering the above economic data and Powell’s comments. The yield on the 10-year Treasury bond tumbled 0.14% in response, flattening the yield curve. The 10-year Treasury bond yielded 1.34% at the end of the week.

Within a week of South Africa reporting the omicron coronavirus variant, the Centers for Disease Control and Prevention confirmed the first U. S. case in Northern California. The tally of states reporting the omicron variant grew to five by the end of the week.

Congress averted a partial government shutdown, funding the government with another short-term extension through February 18.

For the week ending December 3, the S&P 500 (SPY) fell 1.2%. Just two of the 11 sectors held above the flatline.

Leaders and laggards for the week ending December 03, 2021.

Market breadth was negative. The number of advancing stocks in the S&P 500 lagged the number of decliners by a 1-to-2 ratio.

Utilities (XLU), real estate (XLRE), and information technology (XLK) held up better than the S&P 500, losing 0.5% or less.

Communication services (XLC), consumer discretionary (XLY), and financials (XLF) lagged the benchmark.

The S&P 500’s top 10 winners included consumer discretionary, financial, health care, information technology, and materials companies.

1. Health care

Vertex Pharmaceuticals (VRTX) +11% – The biotech store was the top performer in the S&P 500 for the week after its experimental drug for treating focal segmental glomerulosclerosis, a kidney disease, showed positive Phase 2 trial data.

2. Information Technology

Semiconductor and technology hardware companies performed well. Deloitte Global forecasted semiconductor chips to be in short supply through 2022. Chipmaker Marvell Technology, a non-S&P 500 company, topped analysts’ EPS forecast and raised current quarter guidance. The low valuation and dividends of technology hardware companies also attracted buying interest. The top 10 winners included:

HP Inc. (HPQ) +9% – JP Morgan raised the price target on the PC and printer maker shares to $38 from $32.

Microchip Technology (MCHP) +6% – The semiconductor chipmaker announced the expansion of its Gallium Nitride Radio Frequency power device portfolio. Jefferies raised the target price for Microchip shares to $109 from $98.

Hewlett Packard Enterprise (HPE) + 5% – The communication equipment maker earned $0.52 a share compared to analysts’ $0.48 a share forecast as gross margin widened by 2.3% to 33.0%.

3. Consumer Discretionary

Lennar Corp. (LEN) +5% – Falling bond yields and positive comments from Goldman Sachs lifted shares of the homebuilder. Goldman upgraded Lennar from Neutral to Buy and raised the price target to imply a 27% upside.

Other Top 10 Winners
The S&P 500’s top 10 winners for the week included:

• Application software provider PTC Inc. (PTC) +7%
• Disk drive manufacturer Seagate Technology (STX) +7%
• Money transfer company Western Union (WU) +5%
• Paint maker Sherwin-Williams (SHW) +6%
• Semiconductor chipmaker NXP Semiconductors (NXPI) +7%

Top ETFs for the week

The following ETFs themes worked well: volatility, Mexico, Russia, South Korea, long-term treasuries. The top ETFs for the week include:

• iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) +6.9%
• iShares MSCI Mexico ETF (EWW) +5.6%
• VanEck Russia ETF (RSX) +4.2%
• iShares MSCI South Korea ETF (EWY) +3.9%
• Vanguard Extended Duration Treasury Index Fund ETF Shares (EDV) +3.4%

Top Fidelity Fund for the week

• Fidelity Long-Term Treasury Bond Index Fund (FNBGX) +2.4%

Looking ahead to the week of December 06

Investors are watching if the S&P 500 can find support at its 50-day moving average. Stocks are likely to remain volatile as investors focus on omicron variant-related news and inflation data. Earnings from the information technology sector and the outcome of Treasury auctions can move stocks.

* The S&P 500 closed last Friday at 4,538, just below its 50-day moving average (DMA) of 4,545. The chart patterns of several large-cap technology stocks that worked well during prior sell-offs in 2021 do not provide much confidence. Adobe and Facebook are already below their 50-DMAs, while AMZN, Alphabet, Amazon, and Microsoft threaten to fall below. The failure of the S&P 500 to hold its 50-DMA can attract more selling and further downside.

* Investors will remain alert to the latest information on whether the omicron variant is more transmissible and capable of causing severe illness compared to other variants. Investors also eagerly await data on the degree to which current vaccines offer protection against the variant.

* The week brings new data on inflation. Economists surveyed by Dow Jones expect the consumer price index to show a month-over-month increase of 0.6% in November, down from 0.9% in October. The forecast the CPI to increase 6.7% on a year-over-year basis in November, up from 6.2% in October.

* Information technology heavyweights Broadcom and Oracle and discount store Costco are among the S&P 500 reporting earnings this week.

* The Treasury auctions nearly $120 billion in 3-year, 10-year, and 30-year Treasury securities combined.
 

Stay on top of the stock market with ‘Looking Back, Looking Forward’

Sign up free to receive Looking Back, Looking Forward in your Inbox.
 

Learn more:

How AlphaProfit's investment strategy minimizes your risk
How AlphaProfit keeps your fees and expenses low
Performance of model portfolios & recommendations in AlphaProfit's Premium Service investment newsletter
AlphaProfit's free and premium investment newsletters

Gains in information technology and retailing stocks helped the S&P 500 close fractionally above the flat line last week. Persistent inflation worries, however, limited the advance. COVID concerns returned towards the end of the week, pressuring value, and small-cap stocks.

Information technology stocks rose after semiconductor chipmakers Nvidia and Qualcomm provided optimistic assessments of their future. Falling bond yields also provided a supportive backdrop.

Robust earnings reports from home improvement retailers Home Depot & Lowe’s and department stores like Kohl’s & Macy’s drove retailer shares higher. Retail sales rose by a better-than-expected 1.7% in October, helping investor sentiment.

Inflation worries persisted in the wake of consumer and producer price index data from the previous week. Adding to these worries, New York Federal Reserve Bank President Williams said inflation is becoming more broad-based and that expectations for future price increases are rising.

Concerns of COVID impacting economic growth returned after Austria announced a 20-day nationwide lockdown, and Germany imposed new restrictions on the unvaccinated. Meanwhile, the U. S. daily new case count inched towards 100,000 after bottoming around 71,000 in early November. COVID concerns impacted energy and travel-related stocks significantly.

After months of starts & stops, the House passed President Biden’s $1.7 trillion social safety net and climate bill on Friday. The bill now moves to the Senate, where Democrats await an uphill battle.

For the week ending November 19, the S&P 500 (SPY) rose 0.4%. Four of the 11 sectors gained.

Leaders and laggards for the week ending November 19, 2021.

Market breadth was, however, significantly negative. The number of advancing stocks in the S&P 500 lagged the number of decliners by a 1-to-2 ratio.

Consumer discretionary (XLY), information technology (XLK), and utilities (XLU) outperformed the S&P 500, gaining 1.0% or more.

Energy (XLE), financials (XLF), and materials (XLB) lagged the benchmark.

The S&P 500’s top 10 winners included consumer discretionary, health care, and information technology companies.

1. Consumer Discretionary

Dollar Tree (DLTR) +19% – The discount store was the top performer in the S&P 500 for the week after activist investor Mantle Ridge disclosed a $1.8 billion stake. Investors expect Mantle Ride to mend Dollar Tree’s Family Dollar acquisition.

Tesla (TSLA) +10% – Cathie Wood of ARK Investment Management predicted the electric vehicle maker could increase its share to 20-25% of the U. S. auto market in five years.

Retailers Home Depot (HD) and Etsy Inc. (ETSY), and apparel maker Under Armor (UAA) gained 8-10% each.

2. Health Care

Moderna (MRNA) +14% – The U. S. Food and Drug Administration authorized Moderna’s COVID booster shots for people aged 18 and older. The FDA had previously approved boosters for people 65 and older.

3. Information Technology

Qualcomm (QCOM) +12% – Holding its Investor Day, the chipmaker outlined plans to grow revenue to over $46 billion by 2024. The company is expanding its addressable market from $100 billion to over $700 billion in the next decade by expanding into high-end Android handsets, automobiles, and the Internet of Things.

Intuit (INTU) +10% – The financial software firm topped analysts’ quarterly sales and EPS forecasts.

Nvidia (NVDA) +9% – The chipmaker provided an upbeat outlook along with bullish comments on ‘metaverse’ opportunities after topping analysts’ quarterly EPS forecast.

Micron Technology (MU) +7% – The memory chipmaker rose on positive comments from Evercore ISI and Citigroup.

Top ETFs for the week

The following ETFs themes worked well: carbon credit, consumer discretionary sector, semiconductors, volatility, large-cap growth. The top ETFs for the week include:

• KraneShares Global Carbon ETF (KRBN) +6.4%
• Consumer Discretionary Select Sector SPDR Fund (XLY) +3.7%
• VanEck Semiconductor ETF (SMH) +3.7%
• iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) +2.9%
• iShares Russell Top 200 Growth ETF (IWY) +2.5%

Top Fidelity Fund for the week

• Fidelity Select Semiconductors (FSELX) +4.2%

Looking ahead to the week of November 22

The trading week is shortened by the Thanksgiving holiday on Thursday and a half-day session on Friday. Earnings reports and economic data crowd ahead of the holiday. President Biden’s choice of the new Federal Reserve chairperson may well be the significant market mover this week.

* Markets are waiting for President Biden to nominate the next head of the Federal Reserve after Powell’s term ends in February. Markets expect Biden to either renominate Powell or choose Fed Governor Brainard. Investors are more comfortable with Powell than with Brainard, whom Progressive Democrats support. They fear Brainard may not be as aggressive as Powell in fighting inflation if needed.

* Market-moving economic data crowd into Wednesday due to the Thanksgiving holiday. Economists expect the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure, to rise 0.6% in November, twice as much as it did in October. Minutes of the November 2-3 Federal Open Market Committee interest rate policy meeting are due on Wednesday too. The Bureau of Economic Analysis updates its estimate for GDP growth in the third quarter.

* Analog Devices, Autodesk, Deere & Co., and Medtronic are among the dozen or so S&P 500 companies reporting earnings this week.

* Investors will keep an eye on the percent of COVID tests proving positive in the U. S. to assess how this situation is likely to evolve.
 

Stay on top of the stock market with ‘Looking Back, Looking Forward’

Sign up free to receive Looking Back, Looking Forward in your Inbox.
 

Learn more:

How AlphaProfit's investment strategy minimizes your risk
How AlphaProfit keeps your fees and expenses low
Performance of model portfolios & recommendations in AlphaProfit's Premium Service investment newsletter
AlphaProfit's free and premium investment newsletters

U. S. stocks snapped a six-week rally. The passage of the $1.2 trillion infrastructure bill in the House gave stocks an early boost. The rally, however, faded as inflation worries took hold. Falling consumer sentiment added to the concerns.

U. S. started the week on a positive note, lifted by enthusiasm over the House of Representatives passing the $1.2 trillion infrastructure bill. Industrials and materials stocks led the rally.

Increasing worries of inflation, however, took a bite out of stocks. The Labor Department reported the consumer price index surged 6.2% during the 12 months ending in October. Economists attributed the 31-year high inflation to supply-chain bottlenecks, labor shortages, and high product demand. The producer price index also showed an annual increase of 8.6% in October, the highest in 11 years.

The expectation of continued higher inflation eroded consumer sentiment. The University of Michigan’s gauge of consumer sentiment slipped 4.9 points to 66.8 in November, marking the lowest reading since 2011. Consumers’ expectations for one-year inflation increased by 0.1% to 4.9% in November.

For the week ending November 12, the S&P 500 (SPY) fell 0.3%. Five of the 11 sectors gained.

Leaders and laggards for the week ending November 12, 2021.

Materials (XLB), health care (XLV), and industrials (XLI) outperformed the S&P 500, gaining 0.5% or more.

Consumer discretionary (XLY), energy (XLE), and utilities (XLU) lagged the benchmark.

Market breadth was fractionally positive. The number of advancing stocks in the S&P 500 led the number of decliners by a slim 11-to-10 ratio.

The S&P 500’s top 10 winners included consumer discretionary, health care, information technology, and materials companies.

1. Information Technology

Seagate Technology (STX) +12% – The maker of hard disk drives used to store data was the top performer in the S&P 500 for the week. Seagate unveiled innovative technology that integrates hard disk drives with a communication protocol previously compatible only with solid-state drives. This technology can increase the usage and life of hard disk drives.

Semiconductor chipmaker Advanced Micro Devices (AMD) rose 8% after Facebook’s parent Meta Platforms (FB) chose AMD’s processors for its datacenters. Seagate’s competitor Western Digital (WDC) and semiconductor chipmaker Xilinx (XLNX) gained 8% each.

2. Materials

Freeport-McMoRan (FCX) +11% – The largest U. S.-based copper producer rose after the House approved the $1.7 trillion infrastructure bill. Investors expect investments in electric vehicle charging infrastructure and clean energy transmission to drive copper demand higher.

Agricultural chemicals producer CF Industries (CF) gained 9% after Scotiabank raised the share price target.

3. Consumer Discretionary

Pool Corp. (POOL) +10% – The leading swimming pool distributor gained after agreeing to buy Porpoise Pool & Patio, including its operating subsidiaries, Pinch A Penny and Sun Wholesale Supply.

Other Top 10 Winners
The S&P 500’s top 10 winners for the week included:

• Auto manufacturer General Motor (GM) +8%
• Medical diagnosis company Laboratory Corp. of America (LH) +8%
• Medical equipment maker PerkinElmer (PKI) +9%

Top ETFs for the week

The following ETFs themes worked well: cannabis, China Internet, gold & silver miners, video gaming. The top ETFs for the week include:

• AdvisorShares Pure US Cannabis ETF (MSOS) +14.0%
• KraneShares CSI China Internet ETF (KWEB) +10.8%
• VanEck Junior Gold Miners ETF (GDXJ) +7.2%
• VanEck Video Gaming and eSports ETF (ESPO) +7.2%
• ETFMG Prime Junior Silver Miners ETF (SILJ) +7.0%

Top Fidelity Fund for the week

• Fidelity Select Gold (FSAGX) +7.0%

Looking ahead to the week of November 15

Financial markets get more data on the consumer this week. Retailer earnings and retail sales data are in store. The earnings calendar also includes reports from Nvidia and Cisco Systems. The virtual summit between President Biden and Chinese leader Xi will attract investors’ attention.

* The spotlight is on consumers this week after last week’s poor reading on consumer sentiment. Major retailers, including Walmart, Home Depot, Lowe’s, and Target, report quarterly earnings. Investors are keen to hear retailers’ comments on the supply chain & profit margin pressures and outlook for holiday sales.

* The U. S. Census Bureau adds more to the state of the consumer when it reports October retail sales data on Tuesday. Briefing.com shows economists forecast retail sales to rise 1.2% month-over-month in October. Retail sales rose 0.7% and 0.9% in September and August, respectively, in comparison.

* The earnings calendar includes reports from widely-followed names in the information technology sector, including Nvidia, Cisco Systems, and Applied Materials.

* President Biden and Chinese leader Xi hold a virtual summit on Monday evening. Investors are watching for signs of improvement in trade relations between the two nations.
 

Stay on top of the stock market with ‘Looking Back, Looking Forward’

Sign up free to receive Looking Back, Looking Forward in your Inbox.
 

Learn more:

How AlphaProfit's investment strategy minimizes your risk
How AlphaProfit keeps your fees and expenses low
Performance of model portfolios & recommendations in AlphaProfit's Premium Service investment newsletter
AlphaProfit's free and premium investment newsletters

U. S. stocks closed the week at a record high. The better-than-expected October jobs report lifted sentiment. Reopening plays surged after Pfizer unveiled game-changing trial data for its antiviral pill in treating COVID. The Federal Reserve’s plan to taper its pandemic aid was just what investors expected.

The Labor Department said the U.S. economy created 531,000 jobs in October, exceeding economists 450,000 forecast. The unemployment rate fell by 0.2% from September to 4.6%. The report, however, stoked inflation concerns with wages rising 4.9% year over year. The Labor Department also raised its job creation estimates for September and August to lift investor sentiment on the economy.

Pfizer said data from trials to evaluate its antiviral drug for COVID show an 89% reduction in the risk of hospitalizations or death. The promising data shown by this oral pill fueled hope of further economic reopening. Shares in the travel and entertainment group soared on the news.

The Federal Reserve finally made its long-anticipated announcement to slow the $120 billion monthly bond purchases implemented during the pandemic. The Fed said it will begin tapering bond purchases by $15 billion a month to end them by the middle of 2022. This pace and timeline for reducing bond purchases were in line with investors’ expectations.

For the week ending November 5, the S&P 500 (SPY) rose 2.0%. Nine of the 11 sectors gained.

Leaders and laggards for the week ending November 05, 2021.

Consumer discretionary (XLY), information technology (XLK), and materials (XLB) outperformed the S&P 500, gaining 3.2% or more.

Health care (XLV), financials (XLF), and utilities (XLU) lagged the benchmark.

Market breadth was positive. The number of advancing stocks in the S&P 500 led the number of decliners by a 7-to-3 ratio.

The S&P 500’s top 10 winners included communication service, consumer discretionary, information technology, materials and real estate companies.

1. Information Technology

Arista Networks (ANET) +31% – The cloud data center networker was the top performer in the S&P 500 for the week. Arista Networks posted better-than-expected third-quarter results. It also announced a 4-for-1 stock split and a new $1 billion share buyback program.

Three semiconductor chipmakers featured among the top 10 winners. Qualcomm (QCOM) and Microchip Technology (MCHP) rose 23% and 16%, respectively, after reporting quarterly results. Nvidia (NVDA) gained 16% from excitement over the chipmaker’s metaverse strategy expected this week.

2. Communication Service

Live Nation Entertainment (LYV) +22% – The concert promoter forecasted a record 2022 expecting COVID vaccines and treatments to spur fans to return to live events. The positive trial data reported by Pfizer and broad strength in the leisure & entertainment group also gave Live Nation shares an added boost.

Telecom service provider Lumen Technologies (LUMN) rose 19% after the company showed signs of turning around. It reported cash flow robust enough to maintain its dividend and buyback $1 billion in shares.

3. Materials

FMC Corp. (FMC) +17% – The agricultural chemicals producer topped analysts’ third-quarter sales and EPS forecasts by 2% and 8%, respectively.

Specialty chemicals & materials maker DuPont de Nemours (DD) rallied 16%. DuPont is buying engineered materials manufacturer Rogers Corp. (ROG) for $5 billion. The deal gives DuPont entry into high growth markets such as electric vehicles, 5G technology, and clean energy.

Other Top 10 Winners
The S&P 500’s top 10 winners for the week included:

• Cruise operator Royal Caribbean (RCL) +15%
• Shopping mall REIT Simon Property Group (SPG) +16%

Top ETFs for the week

The following ETFs themes worked well: airlines, small-cap value, uranium, semiconductors, and transportation. The top ETFs for the week include:

• U.S. Global Jets ETF (JETS) +10.8%
• Pacer US Small Cap Cash Cows 100 ETF (CALF) +9.3%
• North Shore Global Uranium Mining ETF (URNM) +9.2%
• iShares Semiconductor ETF (SOXX) +8.8%
• SPDR S&P Transportation ETF (XTN) +8.0%

Top Fidelity Fund for the week

• Fidelity Select Semiconductors (FSELX) +11.4%

Looking ahead to the week of November 08

Financial markets will focus on inflation this week. Investors get wholesale- and retail-level inflation readings along with comments from Federal Reserve officials. Investors also get their first opportunity to react to the passage of the infrastructure bill. A few high-profile earnings reports are in store.

* Last week, the October jobs report kindled inflation worries after wages showed a 4.9% increase in the past year. Investors will get reads on wholesale and retail inflation this week. According to Briefing.com, economists expect the producer price index and the consumer price index to rise 0.6% each. Some economists believe consumer inflation could show the highest year-over-year jump in 30 years.

* Investors are likely to hear the views of individual Federal Reserve officials on inflation. Chairman Powell, Vice Chairman Clarida, and the New York & San Francisco Federal Reserve Presidents speak this week.

* The financial markets get their first opportunity to react to the passage of the infrastructure bill. After months of delay, the House passed this $1.2 trillion bill over the weekend. President Biden should sign the infrastructure bill already approved by the Senate. Investors will also monitor progress on Biden’s social spending bill that lacks the Senate’s support.

* The third-quarter earnings reporting season is winding down. Disney and PayPal are the mega-cap S&P 500 companies reporting this week. Investors will also get to hear from homebuilder D. R. Horton and food distributor Sysco.
 

Stay on top of the stock market with ‘Looking Back, Looking Forward’

Sign up free to receive Looking Back, Looking Forward in your Inbox.
 

Learn more:

How AlphaProfit's investment strategy minimizes your risk
How AlphaProfit keeps your fees and expenses low
Performance of model portfolios & recommendations in AlphaProfit's Premium Service investment newsletter
AlphaProfit's free and premium investment newsletters

The S&P 500 member companies continued to post robust third-quarter earnings reports. Investors were unfazed by discomforting economic data. President Biden reached a deal on the $1.75 trillion economic & climate change spending bill.

Over 150 S&P 500 members reported their earnings last week. Over 80% of reporting companies, including Alphabet, Coca-Cola, Merck, Microsoft, and United Parcel Service, topped analysts’ forecasts.

The damage from companies that fell short, e.g., Amazon and Apple, was limited and confined. Investors perceived earnings shortfalls resulting from supply chain and labor constraints as ‘business deferred’ rather than ‘business lost’.

Blending actual EPS for those reporting with estimates for those to follow, third-quarter profits are on track to grow 36.6% year-over-year, higher than the 27.5% analysts forecasted on September 30.

Investors took discomforting economic data in stride. The Commerce Department preliminarily estimated the U. S. economy grew at a 2.0% annualized rate in the third quarter, below 2.7% economists, 2.7% forecast. Inflation stayed at a 30-year high. The Federal Reserve’s preferred inflation measure, i.e., the core personal consumption expenditures index, rose 3.6% during the 12 months ending in September.

President Biden announced a deal on a $1.75 trillion economic & climate change spending framework with the backing of all major constituencies on Capitol Hill. This framework should make the passage of the stalled infrastructure spending bill easier.

For the week ending October 29, the S&P 500 (SPY) rose 1.4%. Five of the 11 sectors gained.

Leaders and laggards for the week ending October 29, 2021.

Consumer discretionary (XLY), information technology (XLK), and health care (XLV) outperformed the S&P 500, gaining 1.6% or more.

Financial (XLF), energy (XLE), and utilities (XLU) lagged the benchmark.

Market breadth was slightly negative. The number of advancing stocks in the S&P 500 lagged the number of decliners by a 9-to-11 ratio.

The S&P 500’s top 10 winners included consumer discretionary, health care, industrials, information technology and materials companies.

1. Information Technology

Enphase Energy (ENPH) +31% – The maker of microinverters and backup energy storage for solar systems was the top performer in the S&P 500 for the week. Enphase’s third-quarter sales rose 11% from the previous quarter, topping analysts’ forecast by 2%. The company also raised its fourth-quarter revenue forecast to imply growth of at least 11% from the third quarter.

The shortage of semiconductors chips boosted share prices in this group. Semiconductor capital equipment makers Teradyne (TER) and KLA Corp. (KLAC) gained 19% and 11%, respectively, while semiconductor chipmaker NVIDIA Corp. (NVDA) gained 13%.

2. Consumer Discretionary

Tesla (TSLA) +22% – The electric-vehicle maker added 22% to its gains from the prior week. An order for 100,000 Tesla vehicles from Hertz, upgrades from analysts, and continued momentum from Tesla’s stellar third-quarter earnings reported a week ago drove the gains.

3. Health Care

Regeneron Pharmaceuticals (REGN) +12% – The coronavirus delta variant spurred strong demand for the biotech company’s monoclonal antibody-based COVID. Regeneron also reported positive Phase III trial results for Dupixent in treating eosinophilic esophagitis.

DexCom (DXCM), the maker of continuous glucose monitoring systems, and drugmaker Merck (MRK) rose 10% and 9%, respectively, after reporting better-than-expected quarterly earnings.
Other Top 10 Winners
The S&P 500’s top 10 winners for the week included:

• Water heater and water treatment equipment maker A. O. Smith (AOS) +9%
• Steelmaker Nucor (NUE) +9%

Top ETFs for the week

The following ETFs themes worked well: solar & clean energy, blockchain, semiconductors, and lithium battery technologies. The top ETFs for the week include:

• Invesco Solar ETF (TAN) +12.1%
• First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) +12.0%
• Amplify Transformational Data Sharing ETF (BLOK) +8.5%
• SPDR S&P Semiconductor ETF (XSD) +6.5%
• Global X Lithium & Battery Tech ETF (LIT) +4.6%

Top Fidelity Fund for the week

• Fidelity Environment & Alternative Energy Fund (FSLEX) +4.9%

Looking ahead to the week of November 01

The Federal Reserve returns to the focal point. Investors expect the central bank to announce its first step in removing extraordinary stimulus measures put in place to fight the pandemic. The third-quarter earnings reporting season enters its final lap. In economic data, the spotlight is on the October jobs report.

* The November 2-3 Federal Reserve meeting on interest rate policy is a big event for financial markets this week. Investors expect the central bank to announce its plan to taper $120 billion in monthly bond purchases. In the past, such announcements have at times sparked a market correction. The Fed’s decision to taper bond purchases should not surprise investors this time. The stock market’s reaction to the announcement will depend on what the central bank says about inflation and the rate at which it plans to reduce bond purchases since they have a bearing on the timing and pace of interest rate increases down the road.

* Another busy week is in store on the earnings front. Nearly 150 S&P 500 members report this week. The reporting companies include large healthcare companies like Amgen, CVS Health, Moderna, and Pfizer. Outside of healthcare, T-Mobile US, Booking Holdings, Estee Lauder, and Qualcomm are on the earnings reporting calendar.

* The October jobs report is due on Friday. According to Briefing.com, economists expect 400,000 in non-farm payroll additions compared to 194,000 in September. They expect the unemployment rate to decline by 0.1% month-over-month to 4.7%.
 

Stay on top of the stock market with ‘Looking Back, Looking Forward’

Sign up free to receive Looking Back, Looking Forward in your Inbox.
 

Learn more:

How AlphaProfit's investment strategy minimizes your risk
How AlphaProfit keeps your fees and expenses low
Performance of model portfolios & recommendations in AlphaProfit's Premium Service investment newsletter
AlphaProfit's free and premium investment newsletters