Santa Nails the Pre-Xmas Sales

Santa Claus shopped for stocks at the end of October and beginning of November post institutional tax positioning.  The S&P 500 index rose + 1.3% last week, almost all the gain coming on Friday, led by the technology and communication services sectors.  The S&P 500 is up +15% YTD and just 8% below all-time highs set in late 4th quarter 2021.  Small caps dropped -3.15% last week and have now returned -3.18% YTD as smaller companies (think the Russell 2000) continue to be impacted by higher interest rates.

The S&P 500 ended the week at 4,415, up from the prior Friday’s close of 4,358.  Oil prices dropped again on bearish supply data.  OPEC production rose for a second straight month in October with U.S. production hitting another record high.  U.S. crude stockpiles rose for a second straight week. Natural gas prices fell back to $3/mmBtu as North American production hit a new high. Gold declined -3.08% as real interest rates rose.

Technology stocks had the largest percentage gain of the week, up +4.8%, followed by a +2.2% increase in communication services. Semiconductor stocks ripped higher late in the week on optimism of calmer USA/China tensions. Other gainers included consumer discretionary, industrials and consumer staples. There were still five sectors in the red, led by a -3.8% drop in energy, a -2.6% decline in utilities and a -2.1% slip in real estate.

The technology sector’s gains included shares of Nvidia (NVDA), which rose +7.4% as BofA Securities said it expects the chipmaker to post fiscal Q3 results above analysts’ consensus view when the company releases its quarterly results later this month.  In communication services, shares of Take-Two Interactive Software (TTWO) rose +6.5% as the video game publisher reported fiscal Q2 net bookings near the high end of its own guidance and said it plans to release a trailer of the next installment in its popular Grand Theft Auto series in early December.

The energy sector’s drop came as crude oil futures also fell on the week. Decliners included EQT Corp. (EQT), down 13% on the week, and Marathon Oil (MRO), down -8.6%.

This week, the earnings calendar features a number of retailers including Home Depot (HD), TJX Cos. (TJX), Target (TGT), Walmart (WMT) and BJ’s Wholesale Club Holdings (BJ).

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Week Ending Cumulative Total Returns Chart 11/10/2023