Next week will be a short week with markets closed on Thursday for Thanksgiving Day, and markets will close at 1 p.m. ET on Friday.
Stocks had a volatile week. The S&P 500 (^GSPC) broke a five-day losing streak on Thursday and closed 0.22%, or 6.07 points higher as of market close on Friday. The Dow (^DJI) jumped 0.49%, or 123.95 points, while the Nasdaq (^IXIC) fell 0.15%, or 11.16 points.
Crude oil (CL=F) was put to the test, but the commodity ultimately snapped its longest losing streak in history on Wednesday and closed higher for the third straight day on Friday. Nevertheless, oil was still down 6% at the end of the week. The commodity’s recent roller coaster ride could pose a real threat, according to Barclays. “A rise in oil prices could both cut into real household income and hurt corporate earnings through a reduction in profitability,” the firm said in a note on Friday.
After a busy week of retail earnings, the last group of retail stocks will report earnings on Tuesday before the holiday. Lest we forget, Friday is retail’s “Black Friday.”
Monday: JD.com (JD) before market open; L Brands (LB) and Jack in the Box (JACK) after market close
Tuesday: Hormel Foods (HRL), Campbell Soup (CPB), Lowe’s (LOW), Target (TGT), Best Buy (BBY), Kohl’s (KSS), Ross Stores (ROST), T.J. Maxx (TJX) before market open; Foot Locker (FL) and Gap (GPS) after market close
Wednesday: Deere (DE) before market open
Thursday: Thanksgiving Day – markets will be closed
Friday: Half market day – close at 1 p.m. ET
The bulk of economic data next week will be released on Tuesday and Wednesday.
Tuesday, housing starts for the month of October as well as building permits for October are expected to increase from the prior month. Wells Fargo does not expect there to have been a meaningful increase to starts. “Higher mortgage rates and steadily rising home prices have significantly reduced affordability. Rising input costs have made it more difficult to build homes at lower price points, where demand is strongest, and labor costs continue to rise amid a shortage of skilled construction workers,” the firm said in a note to clients on Friday.
Nomura echoed the negative outlook for housing starts. “Considering structural challenges, it remains unclear if housing starts will recover materially in Q4 after slowing in previous two quarters.”
Furthermore, existing home sales data will be released on Wednesday. Wells Fargo remains pessimistic about the housing market. “We suspect the housing market will continue to cool in coming months, as virtually every leading indicator of housing has continued to weaken. While we expect to see less typical seasonal weakness over the winter months, we expect the overall sales to remain anemic.”
Monday: NAHB housing market index, November (68 expected; 68 prior)
Tuesday: Housing starts, October (1.230 million expected; 1.201 prior); housing starts month-on-month, October (+2.4% expected; -5.35 prior); building permits, October (1.26 million expected; 1.27 million prior revised); building permits month-on-month, October (-0.8% expected; +1.7% prior revised)
Wednesday: MBA mortgage applications, week ending in November 16 (-3.2% prior); durable goods orders, October (-2.2% expected; +0.7% prior); initial jobless claims, week ending November 17 (215,000 expected; 216,000 prior); continuing claims, week ending November 10 (1.650 million expected; 1.676 prior); existing home sales, October (5.20 million expected; 5.15 million prior); existing home sales month-on-month, October (+1.0% expected; -3.4% prior); University of Michigan sentiment index, November (98.3 expected; 98.3 prior)
Thursday: Thanksgiving Day – Markets will be closed
Friday: Half market day – close at 1 p.m. ET
Here’s what caught markets correspondent Myles Udland’s eye…
2018 is over. Welcome to 2019.
Over the last week, we’ve seen surveys indicating investors turning more cautious, Wall Street have a falling out with its favorite stock (Apple), and data showing just how harshly investors judged poor earnings over the last quarter.
The more than 18% drop in shares of Nvidia (NVDA) on Friday — which followed the company’s earnings report on Thursday that missed expectations — was but the latest evidence of a market ready to hammer yesterday’s winners for not living up to the hype. Through Friday’s close, Nvidia shares are down 38% from their all-time high.
If 2018 was a year where investors tried to sort out how much tax cuts changed the long-run trajectory of the U.S. economy and the health of corporate America, 2019 will be about investors bracing for the start of the next downturn.
“I feel like in the last six weeks, we’ve actually exited 2018 and gotten into 2019 three months early,” Brian Nick, chief investment strategist at Nuveen, told Yahoo Finance’s The Final Round on Thursday.
“2018 was this period of high earnings growth, high economic growth, and now all of a sudden we’re zapped forward into 2019,” Nick added. “[In 2019] we know a lot of those tailwinds we had this year — tax stimulus, spending stimulus — those are wearing off and then next year, instead of tailwinds, we’re going to have headwinds.”
Nick added that the selling we’ve seen since the beginning of October have been in the “growthier” names, and the shift in investor sentiment towards more a cautious year-ahead in part explains this pressure.
This shift away from the market’s 2017-era tendency to discount all bad news quickly and bid markets higher followed the swift decline seen in October and the volatile trading that has followed since.
The darkening mood in markets was captured late in the week by CNBC’s Jim Cramer, when offered a rejoinder to his famous “they know nothing” rant from 2007 about the Fed’s ignorance of the current economic situation.
“So many CEOs have told me about how quickly things have cooled,” Cramer said on “Mad Money” Thursday night. “So many of them are baffled that we could find ourselves in this late-cycle dilemma that wasn’t supposed to occur so soon.”
On Friday, Cramer followed up by saying “I know more than they do” in response to an interview with Fed vice chair Richard Clarida.
The issues at hand for executives are rising interest rates and Trump’s trade war. Neither of which are going away. Several Fed speakers in the last few days of the week made clear that the Fed is not going to be moved off its current course of raising rates in December and then again at least two times in 2019 because of the recent bout of market volatility.
On trade, the headlines from the Trump administration may be contradictory at times but there still exists nothing more than a preliminary outline of what a trade deal with China might look like. But it’s clear Trump will continue pressing until a new deal is made.
In its latest corporate Beige Book, an overview of what companies said about the economy on their earnings conference calls, Goldman Sachs’ equity strategy team noted that though executives acknowledged a slowing pace of global growth, they see the market as overstating the potential dangers.
Cramer’s off-record comments would suggest executives think the market has sniffed out a worry about the economy they aren’t willing to express in public. A worry that will be the defining theme for investors in 2019.
Heidi Chung is reporter for Yahoo Finance. Follow her on Twitter: @heidi_chung.
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