From Briefing.com: 4:10 pm : The stock market ended the Monday affair on a higher note as investors responded to a largely in-line Personal Income and Spending Report for July by walking back fed funds rate hike expectations. The Dow Jones Industrial Average (+0.6%) finished ahead of the S&P 500 (+0.5%) and the Nasdaq Composite (+0.3%).
The major averages marched higher at the start of the session, bolstered by positive economic data that did not raise concerns of a sooner-than-expected fed funds rate hike. Personal income in July rose 0.4% (Briefing.com consensus +0.4%) while personal spending increased 0.3% (Briefing.com consensus +0.3%). The core PCE Price Index increased 0.1% in July (Briefing.com consensus +0.1%), signaling a year-over-year increase of 1.6%. The report as a whole did little to change the projected growth rate of third-quarter GDP.
The Personal Income and Spending Report took on extra significance after last week's Jackson Hole Symposium. Federal Reserve Chair Yellen indicated that the case for a rate hike had strengthened in recent months while Fed Vice Chair Fischer acknowledged that this view could be consistent with more than one rate hike before the end of the year. However, the Fed Vice Chair conditioned the potential hikes on a steady improvement in economic data. The fed funds futures market reflects the implied probability of a fed funds rate hike at the September meeting at 21.0%, falling from Friday's reading of 33.0%
The benchmark index ended off its session high, but reclaimed its 20-day simple moving average (2178.21). All ten sectors ended in the green with utilities (+0.8%), telecom service (+0.8%), materials (+1.0%), and financials (+1.0%) leading the pack. Conversely, heavily-weighted technology (+0.3%) and health care (+0.3%) ended with the slimmest gains.
The financial sector (+1.0%) enjoyed a broad-based rally as money center banks, investment brokerages, and real estate investments trusts paced the advance. Wells Fargo (WFC 49.56, +1.05) ended higher by 2.2% while Dow component Travelers (TRV 118.48, +1.34) finished ahead of the price-weighted index. Elsewhere, the iShares Dow Jones Real Estate ETF (IYR 82.52, +0.77) rebounded 0.9% after losing 0.9% in the prior session. The broader sector has gained 2.7% this month, topping the monthly leaderboard.
In the influential technology sector (+0.3%), Apple (AAPL 106.82, -0.12) ended lower by 0.1% after reports indicated that the company will be subject to fines associated with back taxes from holdings in Europe. Separately, headlines also indicated that Apple sent out invites to a September 7 press event. The company is expected to reveal the next installment of its iPhone device at the event.
Biotechnology underperformed in the health care sector (+0.3%), evidenced by the 0.5% loss in the iShares Nasdaq Biotechnology ETF (IBB 283.87, -1.27). The group remains pressured following recent calls for the industry to adjust its drug-pricing practices. On that note, Mylan Labs (MYL 43.22, +0.19) ended higher by 0.4% as investors mulled over the company's decision to produce a generic version of its EpiPen device. Conversely, Gilead Sciences (GILD 78.17, -1.60) declined 2.0%, notching a new two-year low (77.63).
The U.S. Dollar Index (95.59, +0.02, +0.02%) ended flat, erasing an overnight gain. The euro lost 0.1% against the dollar (1.1185).
Treasuries ended on a higher note as yields slipped through the curve. The yield on the benchmark 10-yr note finished lower by seven basis points (1.57%) while the yield on the 2-yr note finished at 0.81% (-4 bps).
Today's participation was below the recent average as fewer than 643 million shares changed hands on the NYSE floor.
Today's economic data included July Personal Income/Personal Spending and Core PCE Prices for July:
The Personal income and Spending Report for July had the potential to be market moving, yet it didn't create any fireworks as the key components were all right in-line with the Briefing.com consensus estimates.
The report didn't alter the outlook for Q3 GDP growth to exceed 3.0% and it doesn't alter the understanding that inflation continues to undershoot the Fed's 2.0% objective.
For further details on this economic release, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include the Case-Shiller 20-city Index for June (Briefing.com consensus 5.1%) and August Consumer Confidence (Briefing.com consensus 97.0), which will be released at 9:00 ET and 10:00 ET, respectively.
Russell 2000 +9.5% YTD
S&P 500 +6.7% YTD
Dow Jones +6.2% YTD
Nasdaq Composite +4.5% YTD
DJ30 +107.59 NASDAQ +13.41 SP500 +11.34 NASDAQ Adv/Vol/Dec 1795/1.303 bln/1069 NYSE Adv/Vol/Dec 2145/642.0 mln/827
3:30 pm :
The dollar index was trading flat around the 95.55 level, after surging +0.7% on Friday post-Yellen
Commodities, as measured by the Bloomberg Commodity Index, -0.6% around the 84.46 level
Crude oil erased all of Friday's post-rig count data gains, closed near the midpoint of session lows
October crude oil futures fell $0.68 (-1.4%) to $46.96/barrel
Contributing factors affecting the price of oil include:
Iran's comments over the weekend that they would only participate in oil price stabilization talks if other OPEC members acknowledged their right to regain all pre-sanction market share.
Reports that Iraq's government would consider selling crude through Iran should talks with in the Kurdish region on an oil revenue-sharing agreement fail
Note Iraq increased oil exports by around 150k barrels per day as a pipeline dispute is being resolved
Those factors are adding to growing skepticism surrounding the Sept upcoming OPEC meeting after previous meetings have failed to result in action to stabilize oil prices
The informal OPEC meeting will take place in Algiers, Algeria during the International Energy Forum from Sept 26-28, the next official OPEC meeting will be Nov 30 in Vienna, Austria
Additionally, Saudi oil minister Khalid al-Falih stated in an interview last Thursday that he does not believe any 'intervention of significance' in the oil market is necessary.
Continued dollar strength amid growing expectations for a near-term interest rate increase by the Fed
This week's oil catalysts include weekly inventory data (API Tuesday afternoon, EIA is Wednesday morning)
The Morgan Stanley Energy Summit 2016 will take place Aug 29-30, notable presenters include Oasis Petroleum (OAS) & Helix (HLX).
Natural gas ended near session lows after seeing gains in the previous 2 sessions
October natural gas closed $0.02 lower (-0.7%) at $2.89/MMBtu
In precious metals, gold & silver closed near session highs as the dollar struggled to find direction
December gold ended today's session up $0.40 (+0.03%) to $1327.00/oz
September silver closed today's session $0.12 higher (+0.6%) at $18.77/oz
Base metal copper futures ended at session lows, down 8% since its July high
September copper closed $0.01 lower (-0.5%) at $2.07/lb
Equity indices opened their day on a modestly higher note as investors examined the Personal Income and Spending report for July. Participants received in-line readings of July Personal Income and Personal Spending while Core PCE prices rose 0.1%. Core PCE Prices signaled an increase of 1.6% year-over-year, falling short of the Fed's 2.0% target. Overall, the report did little to change the projected growth rate of third-quarter GDP.
The PCE Price Index, which is the Fed's preferred inflation gauge, remained in focus after last week's Jackson Hole Symposium. Federal Reserve Chair Janet Yellen indicated that the case for a rate hike has strengthened in recent months while Fed Vice Chair Stanley Fischer acknowledged that this view could be consistent with more than one rate hike before the end of the year. Both Fed officials stressed the importance of the continued improvement of incoming economic data. On that note, the Employment Situation Report for August is scheduled to be released on Friday.
To start off the week, the broader market closed in a positive fashion. Leading the action higher today, the Dow Jones Industrial Average added 107.59 points (+0.58%) to 18502.99. The S&P 500 was up 11.34 points (+0.52%) to 2180.38, and the Nasdaq Composite rounded out the trio higher by 13.41 points (+0.26%) to 5232.33. Highly weighted Dow names that aided the advance today included MSFT +0,1%, XOM +0.7%, JNJ +0.7%, GE +0.4% and JPM +1.1%.
All 11 S&P sectors were in the green today, with Technology (XLK 47.23, +0.18 +0.38%) posting a relatively decent session ending just off highs. Component Micron (MU 16.91, +0.40 +2.42%) posted a solid session on the back of positive commentary out of Stifel and Deutsche Bank; we would also note the stock was downgraded to Hold at Standpoint Research. Other sectors as measured by the S&P closed IYZ +1.16%, XLB +0.90%, XLF +0.87%, XLU +0.81%, XLI +0.72%, XLE +0.68%, XLP +0.59%, XLY +0.35%, XLV +0.22%.
In the S&P 500 Information Technology (785.92, +2.27 +0.29%) sector, Monday action ended about the middle of the range as stocks were higher all day. Component Harris (HRS 92.62, +1.78 +1.96%) was an out-performer today as the company increased their quarterly dividend, much to the delight of investors. Other names in the space which out-performed today included SYMC +1.73%, FB +1.26%, STX +1.20%, TDC +1.02%, APH +0.93%, IBM +0.88%, QCOM +0.86%, INTC +0.82%, TSS +0.74%, CSCO +0.73%, GLW +0.69%.
Other notable news items among sector components:
VMware (VMW 75.23, +0.98 +1.32%) and IBM (IBM 159.72, +1.39 +0.88%) announced the availability of industry-first cloud services that enable organizations to quickly and easily move enterprise workloads to the cloud.
Fiserv, Inc. (FISV 103.28, -0.19 -0.18%) and Randolph Savings Bank renewed and expanded their relationship. The bank extended its agreement for the Cleartouch bank platform with a long-term renewal and added several Fiserv solutions to expand its digital banking capabilities, support continued growth and enhance the customer experience.
Harris (HRS) increased its quarterly dividend to $0.53 per share from $0.50 per share.
According to Bloomberg, Apple (AAPL 106.82, -0.12 -0.11%) may face 'billions of arrears' in an Irish Tax Case.
Apple (AAPL) sent out invites to its September 7 iPhone 7 event in San Diego.
According to the Financial Times, Alphabet's (GOOG 772.15, +2.61 +0.34%) YouTube live streaming views increased 80% year-over-year.
Elsewhere in the tech space:
GCL-Poly Energy (GCPEF 0.15, +0.00 +2.00%) agreed to acquire SunEdison's (SUNEQ 0.05, +0.00 +5.99%) solar materials business for $150 million.
Wipro (WIT 10.17, -0.18 -1.74%) and Stibo Systems announced a partnership for Master Data Management Solutions. Financial terms of the deal were not disclosed.
Ixys (IXYS 11.51, -0.07 -0.60%) promoted Uzi Sasson to CEO and suspended the company's quarterly stock dividend program.
FARO Techs (FARO 34.06, +0.44 +1.31%) acquired Laser Projection Technologies. Financial terms of the deal were not disclosed.
Rightside (NAME 9.50, -1.41 -12.92%) disclosed entry into new Google Services Agreement, effective as of August 1.
Intelsat (I 3.12, +0.27 +9.47%) disclosed the execution of confidentiality agreements with certain unaffiliated investment funds holding, or serving as investment advisor with respect to, 6-3/4% Senior Notes due 2018 to facilitate discussions in respect of a potential transaction.
Analyst actions:
TMUS was upgraded to Outperform from Market Perform at Wells Fargo,
KLAC was upgraded to Outperform from Market Perform at Cowen;
MU was downgraded to Hold from Buy at Standpoint Research,
RAX was downgraded to Market Perform from Outperform at Wells Fargo,
KTOS was downgraded to Sector Weight from Overweight at KeyBanc Capital Mkts;
NFLX was initiated with a Sell at Axiom Capital,
TTEC was initiated with a Neutral at Sidoti
4:16 pm Skyworks appoints Kris Sennesael as CFO (SWKS) : Sennesael most recently served as chief financial officer for Enphase Energy (ENPH). Donald Palette, who has been Skyworks' chief financial officer since 2007, will serve in an advisory role for a transitional period.
