From Briefing.com: 4:15 pm : The major averages ended the Tuesday affair sharply lower as rising long-term interest rates pressured the broader market. The upswing in interest rates was led by growing uncertainty surrounding the future path and effectiveness of global central bank policy. The S&P 500 (-1.5%) settled behind the Dow Jones Industrial Average (-1.4%) and the Nasdaq Composite (-1.1%). Equity indices began the session under pressure as investors continued to mull over central bank policy here at home and from overseas. Fed Governor Lael Brainard reaffirmed a dovish stance in the prior session, stating that the case for preemptive tightening has become less compelling. In response, the implied probability of a rate hike at the September meeting fell to 15.0% from 24.0% at the start of the week.
The dovish posture failed to carry over buying interest into today's session as participants responded to mixed performances from global markets and a downturn in crude oil. The energy component was under pressure after the International Energy Agency's monthly report struck a bearish tone. The IEA cut its global demand growth forecast for 2016 to 1.3 million barrels per day (previous: 1.4 million barrels) while the group also trimmed its 2017 growth estimate to 1.2 million barrels (previous: 1.4 million barrels). The negative revisions cast doubt on the potential timetable for an oil market rebalancing.
The benchmark index notched a session low (2120.27) shortly after midday, finishing narrowly above that level. All ten sectors ended in the red with financials (-1.8%), materials (-1.9%), telecom services (-2.0%), and energy (-2.9%) acting as notable laggards. Conversely, technology (-0.6%) and consumer staples (-1.4%) ended with the narrowest losses.
The commodity-sensitive energy sector (-2.9%) ended broadly lower amid a sustained downturn in crude oil. WTI crude finished lower by 3.0% ($44.92/bbl; -$1.37). In the group, oilfield service names underperformed with Baker Hughes (BHI 48.34, -1.36) and Halliburton (HAL 41.11, -1.29) losing 2.8% and 3.0%, respectively. On a side note, the American Petroleum Institute is slated to release its weekly inventory report this evening while the Department of Energy is scheduled to release its more influential inventory report tomorrow at 10:30 ET.
The economically-sensitive financial sector (-1.8%) was under pressure as participants reassessed rate hike expectations for the year. In the group, Wells Fargo (WFC 46.96, -1.58) declined 3.7%. The name has been under pressure since announcing a settlement with the Consumer Financial Protection Bureau last Thursday. The broader sector has declined 2.8% this month and currently sports a year-to-date loss of 0.2%.
Biotechnology underperformed in the health care space (-1.5%), evidenced by the 1.6% loss in the iShares Nasdaq Biotechnology ETF (IBB 282.62, -4.49). The ETF was under pressure after rallying 3.0% in the prior session. In the ETF, Vertex Pharmaceuticals (VRTX 95.27, -2.59) underperformed after Raymond James issued a "Market Perform" designation on the stock.
The influential technology space (-0.6%) finished ahead of the benchmark index as top-weighted component Apple (AAPL 108.12, +2.68) led. The Dow component rallied 2.6% after T-Mobile (TMUS 45.34, -0.59) and Sprint (S 6.56, -0.36) reported bullish pre-order data for the iPhone 7. The PHLX Semiconductor Index (-0.9%) also finished ahead of the broader market as iPhone suppliers drafted higher on the news. Broadcom (AVGO 165.24, +0.76) and Skyworks (SWKS69.36, +1.02) ended higher by 0.5% and 1.5%, respectively.
Treasuries ended sharply lower with the long end of the curve demonstrating relative weakness. The yield on the 2-yr note rose two basis points to 0.79% while the yield on the 10-yr note jumped six basis points to 1.72%.
Today's participation was above the recent average as more than one billion shares changed hands on the NYSE floo
Today's economic data was limited to the Treasury Budget for August:
The Treasury Budget for August showed a deficit of $107.1 billion versus a deficit of $64.4 billion in August 2015. The Treasury Budget data is not seasonally adjusted, so the August deficit cannot be compared to the $112.8 billion deficit registered in July.
Total receipts in August were $231.3 billion while total outlays were $338.4 billion.
Receipts were $20.5 billion more than receipts in August 2015. Total outlays, meanwhile, were $63.2 billion more than the same period a year ago.
The 12-month deficit widened to $529.9 billion from $487.2 billion in July.
Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index. Meanwhile, Import/Export Prices for August will each cross the wires at 8:30 ET.
Russell 2000: +6.8% YTD
S&P 500: +4.1% YTD
Dow Jones: +3.7% YTD
Nasdaq: +3.0% YTD
DJ30 -258.32 NASDAQ -56.63 SP500 -32.02 NASDAQ Adv/Vol/Dec 539/1.897 bln/2392 NYSE Adv/Vol/Dec 338/1.006 bln/2734 3:30 pm :
The dollar index was up +0.5% around the 95.61 level, weighing on commodities overall
Commodities, as measured by the Bloomberg Commodity Index, were -1.3% around the 83.02 level
Crude oil erased yesterday's gains, closed near session lows below the $45.00/barrel handle support ahead of tonight's API data
October crude oil futures fell $1.37 (-3.0%) to $44.92/barrel
IEA data highlights:
The IEA lowered global demand forecasts for FY16 by ~100k barrels per day for FY16 to +1.3 mln barrels a day. The IEA also lowered FY17 demand growth forecasts to +1.2 mln barrels per day, about 200k less than previous estimates.
Decline in oil demand in China and Europe were also cited by the IEA as factors influencing the updated forecast.
Saudi Arabia takes the top spot from US shale as the world's largest producer.
IEA estimated that the U.S. had shut in 460k barrels a day of production, while Saudi Arabia pumped out an extra 400k barrels a day.
OPEC producer United Arab Emirates increased oil production by 20k barrels per day to 3.09 mln barrels, its highest output level ever.
Data reminders:
The next OPEC meeting will take place in Algiers, Algeria from Sept 26-28
API data will be released today after the bell
Weekly EIA petroleum data will be released Wed at 10:30 am ET
Rig count data will be released Friday at 1 pm ET
Natural gas ended afternoon pit trading unchanged ahead of Thursday's EIA inventory data
October natural gas closed flat at $2.91/MMBtu
Weekly EIA data will be released Thursday at 10:30 am ET
In precious metals, gold & silver traded modestly lower & in tandem with each other as the dollar index surged
December gold ended today's session down $1.60 (-0.1%) to $1324.00/oz
December silver closed today's session $0.02 lower (-0.1%) at $18.98/oz
Today's session began on a lower note as a lack of carry over buying interest and a downturn in crude oil weighed on index futures. Global bourses finished on a mixed note, shrugging off the positive bias from yesterday's rebound here at home. China's Shanghai Composite (+0.1%) finished little changed despite a string of stronger-than-expected economic data. Meanwhile, European markets finished with losses, carving out lows during the U.S. session.
A bearish reading of the International Energy Agency's monthly report also contributed to early weakness. The IEA lowered its global demand growth forecast for 2016 to 1.3 million barrels per day (previous: 1.4 million barrels) while also cutting its 2017 estimates to 1.2 million barrels (previous: 1.4 million barrels). The disappointing outlook has called into question the potential timetable for an oil market re-balancing. At the end of the session, October crude oil futures fell $1.37 (-3.0%) to $44.92/barrel.
In terms of market data, the Treasury Budget for August announced today showed a deficit of $107.1 billion versus a deficit of $64.4 billion in August 2015. The Treasury Budget data is not seasonally adjusted, so the August deficit cannot be compared to the $112.8 billion deficit registered in July.
The major averages ended the Tuesday affair sharply lower as rising long-term interest rates pressured the broader market. The upswing in interest rates was led by growing uncertainty surrounding the future path and effectiveness of global central bank policy. Leading the three major US indices lower today, the S&P 500 was down 32.02 points (-1.48%) to 2127.02. The Dow Jones Industrial Average lost 258.32 points (-1.41%) to 18066.75, and the Nasdaq Composite posted the most tame session, shedding only 56.63 points (-1.09%) to 5155.25.
To that end, every S&P sector turned in a negative session today with Technology (XLK 46.59, -0.34 -0.72%) posting the softest losses. Component Intuit (INTU) was among the worst performers today following a premarket downgrade of the stock to an Underweight rating from an Equal Weight at Morgan Stanley. Other sectors as measured by the S&P closed the day XLE -2.86%, IYZ -2.51%, XLB -1.86%, XLF -1.77%, XLI -1.47%, XLY -1.42%, XLFS -1.41%, XLU -1.38%, XLV -1.34%, XLP -1.23% as the Energy complex lagged.
In the S&P 500 Information Technology (776.87, -4.94 -0.63%) sector, action turned lower to start and never recovered. Component Apple (AAPL 108.12, +2.68 +2.55%) turned in a solid performance today on the back of some favorable pre-order numbers for the company's latest iPhone iteration. Other names in the space which managed to stave off the weakness today included PYPL +2.81%, SWKS +1.49%, AVGO +0.46%, QRVO +0.30%, WDC +0.11%, EA +0.04%.
Other notable news items among sector components:
Apple (AAPL) posted a strong session in the midst of a broader market sell-off following favorable pre-orders announced by both Sprint (S 6.56, -0.36 -5.20%) and T-Mobile US (TMUS 45.34, -0.59 -1.28%).
Facebook (FB 127.21, -1.48 -1.15%) confirmed details of Messenger Platform v1.2 including the beginning of messages with payments.
NVIDIA (NVDA 59.87, -0.88 -1.45%) unveiled a palm-sized, energy-efficient artificial intelligence (AI) computer that automakers can use to power automated and autonomous vehicles for driving and mapping.
The U.S. Federal government has awarded Accenture (ACN 110.53, -2.23 -1.98%) Federal Services
FedRAMP certification for the Accenture Federal Cloud ERP solution, determining that its enterprise resource planning solution is compliant with federal security requirements.
CTERA Networks announced a $25 million investment round led by Bessemer Venture Partners with additional participation from Cisco (CSCO 31.06, -0.38 -1.21%), and with Vintage Investment Partners joining as a new investor.
Alliance Data (ADS 213.41, -3.08 -1.42%) announced a card services performance update. Detailed in the release, net charge offs as a % of average receivables were 4.1% for the month ending August 31, 2016. ADS noted this measure was tracking to its guidance of 4.9% to 5.0% principal loss rates for the third quarter and full year 2016, respectively.
Elsewhere in the tech space:
Pandora Media (P 14.10, -0.19 -1.33%) announced the signing of direct licensing agreements for recorded music with Merlin Network, Sony Music (SNE 32.16, -0.51 -1.56%), and Universal Music Group along with The Orchard and over 30 other independent labels/distributors. Financial terms of the deal were not disclosed.
Intersil (ISIL 21.70, +1.94 +9.82%) to be acquired by Renesas (RNECF 6.08, +0.43 +7.61%) for $22.50 per share in cash, or about $3.2 billion.
FXCM (FXCM 9.25, +0.07 +0.76%) reported August 2016 retail customer trading volumes were down 18% compared to a year ago to $270 billion.
Action Semi (ACTS 2.08, +0.07 +3.48%) entered into a merger agreement for going private transaction at $2.20 per share in cash.
Cincinnati Bell (CBB 4.08, -0.16 -3.77%) announced it plans to offer $425 million aggregate principal amount of its Senior Notes due 2024.
XO Group (XOXO 18.40, -0.19 -1.02%) acquired proposal story platform How He Asked. Financial terms of the deal were not disclosed.
Sanmina (SANM 26.91, -0.15 -0.55%) announced a $150 million stock repurchase program.
Mimecast (MIME 15.60, -1.48 -8.67%) filed a $80 million ordinary share offering by selling shareholders.
Luxoft Holding (LXFT 52.11, -1.30 -2.43%) acquired Pelagicore AB. Financial terms of the deal were not disclosed.
Vivint Solar (VSLR 2.98, -0.20 -6.29%) received an unfavorable ruling in a lawsuit against SunEdison (SUNEQ 0.04, +0.00 +2.87%) related to failed merger, according to the Wall Street Journal.
RADA Electronics (RADA 0.54, -0.02 -3.53%) to commence a 1:2 reverse split, effective tomorrow.
Sphere 3D (ANY 0.63 +0.03 +5.45%) announced they are exploring a formal non-binding expression of interest to sell certain assets and other options to increase shareholder value, in late stage discussions to seek additional access to capital.
Analyst actions:
WDC was upgraded to Buy from Neutral at Longbow,
TXN was upgraded to Outperform from Mkt Perform at Bernstein,
KLAC was upgraded to Outperform from Neutral at Credit Suisse,
SYMC and QLYS were upgraded to Buy at Wunderlich,
OTEX was upgraded to Outperform from Market Perform at BMO Capital;
NFLX was downgraded to Underperform from Neutral at Macquarie,
MOBL and CHKP were downgraded to Hold from Buy at Wunderlich,
INTU was downgraded to Underweight from Equal Weight at Morgan Stanley,
PRGS was downgraded to Neutral from Buy at Ladenburg Thalmann,
ISIL was downgraded to Hold from Buy at Drexel Hamilton;
XRX and SBAC were initiated with Buy ratings at SunTrust,
ROG was initiated with a Buy at Needham,
XPLR was initiated with a Buy at Maxim Group,
BR was initiated with an Overweight at Atlantic Equities
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