All 3 major indexes were down for the week ended 8/16/2019. The Dow Jones Industrial average ended the week at 25,886 a decline of 1.5%. The broader S&P 500 index ended the week at 2,889 a decline of 1.0%. The Nasdaq 100 ended the week at 7,604 a decline of 0.6%. The average change for the major averages was down 1.0%

This week had several gyrations in performance after the 10-year rate dipping below the 2-year rate for a short while. This is typically a major indicator of a potential recession in the next period of time. Some of the yield curve distress was tempered by some easing of the language related to the trade war between the US and China. President Trump has indicated that one of the waves of tariffs will be delayed until at least the middle of December so that the tariffs would have less of an impact on Christmas. The language around the tariffs was possibly eased because Macy's released earnings on the 14th and missed their earnings estimate by 38%. The analyst consensus was for a profit of $0.45 per share and earnings came in at $0.28 per share.

In non-market related news, at least for now, WeWork released their S1 for their move towards an IPO in the fall. Barron's did a very good writeup on their assessment of the potential for this IPO. We won't opine as we are really focused on data at Stavera.

Investment Style View

If you are a dividend investor, dividend stocks declined in the last week by 1.0%, with the iShares Dividend price declining from $97.66 to $96.69.

In the latest week, large cap stocks outpaced both small cap and mid cap stocks. Large cap stocks decreased by 0.8% for the week while mid-cap stocks decreased by 1.1% and small-cap stocks decreased by 1.3%. In order for us to monitor the performance difference between growth and value stocks, we look at the different capitalization levels (large, mid and small cap). In the latest week, there was a mixture in performance between growth and value stocks based on the capitalization of the underlying companies. Large-cap growth stocks outperformed large-cap value stocks this week -0.9% vs. -1.0%. Mid-cap growth stocks outperformed Mid-cap value stocks this week -1.3% vs. -1.7%. Small-cap growth stocks outperformed Small-cap value stocks this week -1.2% vs. -1.8%.

Sector View

There were more down sectors this past week than up sectors with 8 of the 11 sectors decreasing for the week. The best performing industry this week was the Consumer Staples sector, increasing by 1.52% for the week. The Energy sector lagged the other sectors this week, decreasing by 3.31% for the week.

Earnings Roundup

Earnings season has begun to slow down after July with 71 'major' earnings announcements for the week ended August 16th, 2019.

  • Macy's (M), announced earnings of $0.28 per share on Wednesday, compared with an expectation of $0.45. Shares opened the week at $19.41 and closed the week at $15.98, a decline of 17.7% for the week. Macy's announced earnings before the bell on Wednesday and most of the loss for the week happened between the close on Tuesday and the open on Wednesday.
  • NVIDIA (NVDA), announced earnings of $1.24 as compared to an expected $1.15 per share. Shares for the week climbed from last weeks' close of $154.18 to this weeks close of $159.56, an increase of 3.5% Shares declined this week leading up to the announcement on Thursday after the bell and increased by 7.3% on Friday to end the week in the black.
  • John Deere (DE), announced earnings of $2.71 per share falling short of the expected $2.84 per share. Shares for the week were down $5.61 (-3.6%) but were up on Friday 3.8%.

The Week Ahead

There are a number of important earnings releases this coming week with Home Depot and Toll Brothers both releasing earnings on Tuesday. Retailers announcing earnings this wee are Target on Wednesday, Dick's Sporting Goods, Gap and Ross Stores on Thursday. These will be important to keep an eye on the retail sector after this past weeks' release by Macy's.

The Conference Board will be releasing their leading economic indicators on Thursday this week. After the yield curve inversion earlier this past week, this will be watched very closely for further recession signs. On Friday, the Census Bureau will be reporting new residential sales for July. The seasonally adjusted figure is expected to be 647,000 as compared to June's 646,000.

About the Writer

This page was created and is maintained by Kurt Tietjen, Founder of Stavera, High Peak Media & Kurt is an executive, data scientist and software engineer who holds an MBA in Management Information Systems. In 2010, he partnered with scientists at Northwestern University to launch The Street Wire. This was one of the first mainstream uses of what would become “Narrative Science”, an artificial intelligence platform specializing in natural language generation. You can contact Kurt on LinkedIn here.