Stocks End Lower After an Emotionally Charged Week

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Stocks Finish Emotionally Charged Week Lower

Stocks ended last week with a sharp drop as emotions swung from optimism to pessimism.

The S&P 500 was up more than 1 percent through Thursday’s close. But then sellers came out of the woodwork on Friday morning and gave the index its worst beating since January 3. All told, it lost 0.8 percent of its value in the week.

Technology had positive sentiment. Apple (AAPL) got some big upgrades and semiconductor experts predicted a rebound in orders. Energy also benefited from a big drop in oil inventories.

But then the Federal Reserve stunned investors by swearing off any more interest-rates increases for the rest of the year. Normally low rates are good news, but this time it undermined confidence. Even worse, it caused investors to liquidate financials.

Banks Take a Beating

The SPDR Bank ETF (KBE), for instance, had its worst week since September 2011, down 8.9 percent. The worry is that lower rates cause the yield curve to invert, making it harder to profit from lending.

Economically sensitive small caps and transports also fell about 3 percent.

Safe-haven gold and silver miners fared the best, climbing about 2 percent, as gold futures (@GC) tried to break a key level. Consumer-discretionary stocks were the best-performing major sector, up almost 1 percent, thanks to gains in heavily weighted index members like Amazon.com (AMZN), Home Depot (HD), Lowe’s (LOW) and Starbucks (SBUX).

Real-estate investment trusts (XLRE) also climbed nearly 1 percent — not a huge surprise because they usually benefit from lower rates.

Buyer Fatigue?

It was the S&P 500’s second losing week in the last four. Are the bulls finally getting tired on the heels of a steady post-Christmas rally?

The index still finds itself around the important 2800 area viewed as resistance earlier in the year. Potential buyers must now pick their levels carefully if the bears remain active this week. The March 8 low around 2722 may be one potential support area to watch.

S&P 500 showing resistance line around 2800 and select moving averages.
S&P 500 showing resistance line around 2800 and select moving averages.

Food maker Conagra Brands (CAG) had the biggest gain in the S&P 500 last week, ripping 15 percent from long-term lows after profit beat estimates. Advanced Micro Devices (AMD) took the second place, up 13 percent, on news its chips would be used in Alphabet’s (GOOGL) new Stadia cloud-based streaming video-game service.

Biogen (BIIB) led to the downside. The biotechnology firm cratered 34 percent after abandoning development of an Alzheimer’s drug. Several banks vied for the second-worst spot: Regions Financial (RF), KeyCorp (KEY) and SVB Financial (SIVB).

Apple, Lyft and Brexit: This Week’s Agenda

This week has several interesting and unusual events.

AAPL gets the ball rolling with a big product announcement at 1 p.m. ET today. It’s expected to feature the introduction of a streaming-video service that will compete with the likes of Netflix (NFLX).

Tomorrow brings housing starts, building permits and consumer confidence. Cannabis firm Cronos (CRON) also reports earnings in the pre-market.

Crude-oil inventories and Lululemon (LULU) results follow the next day.

Revised gross domestic product, initial jobless claims and pending home sales are due Thursday. Lyft (LYFT) is also expected to price its initial public offering (IPO). The closely watched deal will likely spur interest in bigger rival Uber (UBER) later in the spring.

LYFT will start trading on Friday. Other items in the session include new-home sales and personal income.

Also at some point during this week, Britain’s Parliament may also vote on a twice-rejected Brexit deal. It’s all part of a complicated showdown resulting from the inability of Westminster to reach a deal with Brussels. The outcome remained unclear as of last week.

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