Stocks were mixed last week with the Dow Jones Industrial Average marginally increasing, the S&P 500 down 1%, and the Nasdaq Composite down nearly 3%. The ten-year Treasury yield rose to 2.39%, while the U.S. Dollar Index was slightly down to 101.1.
Crude Oil jumped above $51/barrel after OPEC agreed to cut production in a drive to end the global oil glut. After oil's drag on corporate earnings last year, this boost in oil prices could be a tailwind going forward for earnings.
With 97% of S&P 500 companies reporting quarterly results, sales growth, at +2.5% y/y, is the strongest since Q4 of 2014. Operating EPS is +14%, which is the first positive quarter since Q3 of 2014.
Third quarter GDP got a meaningful upgrade as the second estimate is at a +3.2% annualized rate, three-tenths higher than the first estimate. This includes an upgrade for consumer spending and a downgrade in inventory growth, both positives.
The U.S. Employment Situation continues to be solid. Nonfarm payrolls grew 178,000 in November, higher than expected. At 4.6%, the unemployment rate fell a sharp three-tenths for the lowest reading since August 2007.
As mentioned above, the technology sector was roughed up throughout the week. High growth and high Price-to-Earnings (PE) stocks got hit the hardest with Facebook (FB) down 4.75%, Salesforce (CRM) down 7.5%, and Nvidia (NVDA) down 6.75%.