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Market Edges Up with Strong Retail Results and Consumer Discretionary Gains

Weekly Update – November 19, 2021

  • The S&P 500 index edged up 0.3% last week, resuming its upward trajectory to trade near record highs again as retailers including Macy’s (M) reported quarterly earnings above analysts’ expectations.
  • The market benchmark ended the week at 4,697.96, up from last Friday’s closing level of 4,682.85. The gain erases last week’s 0.3% decline, which had been the S&P 500’s first weekly drop since September. The index, which on Thursday set a new record closing high at 4,704.54, is now up 2% for November to date and is up 25% for the year to date.
  • Last week’s increase came as a number of US retailers including Macy’s (M), Kohl’s (KSS) and TJX (TJX) released better-than-expected quarterly results. Investors and analysts have been concerned about the impacts of rising consumer prices as well as the ongoing COVID-19 pandemic but the retailers’ reports pointed to strong demand despite the inflation and pandemic concerns.
  • As such, the consumer discretionary sector had the largest percentage increase of the week, up 3.8%, followed by a 2.4% rise in technology. There was just one other sector in the black last week — utilities — which rose 0.9%.
  • However, the week’s overall advance was limited as the energy sector tumbled 5.2%, followed by a 2.8% decline in financials and a 2% slide in materials. Other sectors in the red included industrials, communication services, consumer staples, health care and real estate.
  • The consumer discretionary sector’s gainers included shares of Home Depot (HD), which jumped 9.7% on the week. The home improvement retailer’s fiscal third-quarter results beat Wall Street estimates amid strong demand for large home improvement projects, which helped push the retailer’s comparable sales growth above market expectations.
  • In technology, shares of Qualcomm (QCOM) climbed 12% as investors were encouraged by guidance and growth targets the company released at its investor day. Analysts at firms including Deutsche Bank, Goldman Sachs and JPMorgan Chase boosted their price targets on the stock following the update.
  • The energy sector’s drop came as crude oil futures fell. Among the decliners, APA Corp. (APA) shed 12% on the week and EOG Resources (EOG) lost 9.7%.
  • In financials, shares of U.S. Bancorp (USB), the parent company of U.S. Bank, fell 4.8% as the company said it agreed to acquire TravelBank, a San Francisco-based financial technology company that helps businesses control and track expenses and automate processes, among other things. Financial terms of the deal, which is expected to close in Q4, weren’t disclosed.
  • Next week, economic data will be consolidated into the first three days of the week as the US stock market will be closed Thursday for the Thanksgiving Day holiday and it will be shortened Friday.
  • The data being released earlier in the week will include the Chicago Fed National Activity Index and existing home sales for October on Monday and Markit’s November readings on the manufacturing and services sectors on Tuesday. Wednesday will have a slew of reports including weekly jobless claims, Q3 gross domestic product, and October consumer spending as well as core inflation and new home sales.

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