From Briefing.com: Weekly Recap - Week ending 23-Sep-16The stock market registered its second consecutive weekly gain with the S&P 500 climbing 1.2%. Thanks to the rally, the index is back to little changed for the month of September (-0.3%).
The advance in the market was broad-based as most sectors gained at least 0.4% for the week. Rate-sensitive sectors like real estate and utilities both advanced more than 3.0% for the week while energy (+0.1%) and technology (+0.4%) were the only two that failed to climb more than 1.0%. The underperformance in the technology sector masked a 20.0%+ spike in the shares of Twitter (TWTR) after CNBC reported that Salesforce (CRM) and Alphabet (GOOG) have expressed interest in the social media site.
Equity indices retreated early in the week, but buyers piled back into stocks after Wednesday's FOMC announcement called for no change to monetary policy once again. In addition to holding off on the next hike, the FOMC lowered its median policy rate projections for 2016, 2017, and 2018. However, the Fed statement was not unequivocally dovish, revealing three dissenting votes at the September meeting.
Federal Reserve Chair Janet Yellen discussed the FOMC decision, suggesting that a rate hike could take place in December. However, rate hike expectations, as expressed by the fed funds futures market, did not change much from last week. In fact, they receded a bit as the implied likelihood of a December hike ticked down to 54.2% from 55.5% at the end of last week.
Index Started Week Ended Week Change % Change YTD %
DJIA 18123.18 18261.65 138.47 0.8 4.8
Nasdaq 5244.57 5305.75 61.18 1.2 6.0
S&P 500 2139.11 2164.71 25.60 1.2 5.9
Russell 2000 1223.10 1255.11 32.01 2.6 10.5
4:11 pm Closing Market Summary: Averages Settle Lower as Apple and Oil Weigh (:WRAPX) :
The stock market ended an upbeat week on a lower note as the major averages pulled back from their recent risk rally. Other factors impacting today's trade included a downturn in crude oil futures and the underperformance of the heavyweight industrial (-0.6%), financial (-0.7%), and technology (-1.0%) sectors. The Dow Jones Industrial Average (-0.7%) finished behind both the S&P 500 (-0.6%) and the Nasdaq Composite (-0.6%). The three indices added between 0.8% and 1.2% for the week.
Equity indices stumbled at the start of the session as investors looked to lock in some profits in the wake of the recent Fed-induced rally. The Federal Reserve spurred risk appetite on Wednesday by voting to leave its key policy rate unchanged. The central bank also lowered the median projection for the fed funds rate for the years ahead. Diminished rate hike expectations eased market concerns over the potential sooner-than-expected removal of policy accommodations.
The broader market extended its loss near midday as the commodity complex came under pressure. Commodities were in focus as participants pored over proposed rule changes designed to limit the physical commodity activities of financial holding companies. Specifically, the Federal Reserve proposed strengthening existing capital requirements and quantitative limits on such companies.
Participants also expressed some misgivings about next week's OPEC meeting. Reports indicated that Saudi Arabia does not expect to make a production decision at this meeting. Separately, Russia indicated that it would not join plans with other oil producers until OPEC agreed on a supply agreement between its own members. The oil collective is scheduled to meet in Algiers, Algeria between September 26 and September 28. WTI crude ended the day lower by 3.9% ($44.53/bbl; -$1.80), but still finished the week up 3.5%.
The benchmark index settled near its session low after failing to reclaim technical support in the area of its 50-day simple moving average (2169). Nine sectors ended in the red with industrials (-0.6%), financials (-0.7%), technology (-1.0%), and energy (-1.3%) rounding out the board. On the flipside, defensively-oriented real estate (+0.3%) and telecom services (+0.4%) finished with the only gains.
The heavily-weighted technology sector (-1.0%) underperformed as large cap components Facebook (FB 127.96, -2.12) and Apple (AAPL 112.71, -1.91) weighed. Facebook was under pressure after reports indicated that the company overstated video ad view times to advertisers. Meanwhile, top-weighted Apple fell 1.6% after GfK stated that launch weekend iPhone sales fell approximately 25.0% year-over-year. Recall that the Dow component rallied 11.4% in the prior week on the heels of some bullish revisions to iPhone sales estimates. Separately, Salesforce.com (CRM 70.39, -4.20) fell 5.6% after reports speculated that the company may attempt to acquire Twitter (TWTR 22.62, +3.99). Alphabet (GOOG 786.90, -0.31) was also mentioned as a potential suitor in the CNBC report.
In the financial sector (-0.7%), investment brokerages and asset management names underperformed after the Federal Reserve released the proposed changes for holding companies. BlackRock (BLK 365.65, -8.22) and Franklin Resources (BEN 35.19, -0.87) ended lower by 2.2% and 2.4%, respectively. The broader sector gained 0.8% this week, but sports a month-to-date loss of 2.6%. This compares to a loss of 0.3% in the benchmark index.
Retail names demonstrated relative strength in the consumer discretionary space (-0.2%). Gap (GPS 22.62, +0.04) and L Brands (LB 75.20, +0.92) finished higher by 0.2% and 1.2%, respectively. On the flipside, athletic retailer Finish Line (FINL 22.75, -1.24) weighed as in-line earnings and a reaffirmed full-year outlook failed to impress investors.
Treasuries ended on a mostly higher note with the short end of the curve outperforming. The yield on the 2-yr note finished lower by two basis points (0.76%) while the yield on the 10-yr note finished flat (1.62%).
Today's participation was below the recent average as fewer than 804 million shares changed hands on the NYSE floor.
There was no economic data of note released today.
Monday's economic data will be limited to the New Home Sales Report for August (Briefing.com consensus 585k), which will be released at 10:00 ET.
Russell 2000: +10.6% YTD
Nasdaq: +6.0% YTDS&P 500: +5.9% YTD
Dow Jones: +4.8% YTD
Week in Review: Stocks Climb After Fed Holds
The stock market registered its second consecutive weeklygain with the S&P 500 climbing 1.2%. Thanks to the rally, the index isback to little changed for the month of September (-0.3%).
The advance in the market was broad-based as most sectorsgained at least 0.4% for the week. Rate-sensitive sectors like real estate andutilities both advanced more than 3.0% for the week while energy (+0.1%) and technology(+0.4%) were the only two that failed to climb more than 1.0%. Theunderperformance in the technology sector masked a 20.0%+ spike in the sharesof Twitter (TWTR) after CNBC reported that Salesforce (CRM) and Alphabet (GOOG) have expressed interest in the social media site.
Equity indices retreated early in the week, but buyers piledback into stocks after Wednesday's FOMC announcement called for no change tomonetary policy once again. In addition to holding off on the next hike, theFOMC lowered its median policy rate projections for 2016, 2017, and 2018.However, the Fed statement was not unequivocally dovish, revealing threedissenting votes at the September meeting.
Federal Reserve Chair Janet Yellen discussed the FOMCdecision, suggesting that a rate hike could take place in December. However, ratehike expectations, as expressed by the fed funds futures market, did not changemuch from last week. In fact, they receded a bit as the implied likelihood of a December hike ticked down to 54.2%from 55.5% at the end of last week.
2:55 pm Floor Talk: Cooling Off (:TALKX) :
The major indices started today's session on a defensive note, paced mostly by a profit-taking bid after the mini-bender the stock market went on following the latest FOMC meeting. The ability to bounce back from that initial selling pressure, however, has been impeded by several factors today that have led to a cooling-off period for the market:
A sharp reversal in oil prices ($44.48, -$1.84, -4.0%)Reports indicated that Saudi Arabia pooh-poohed the idea of any production cap agreement happening at next week's OPEC meeting. New rules proposed by the Federal Reserve, which would strengthen existing requirements and limitations on the physical commodities activities of financial holding companies, were also deemed a negative developmentWeakness in shares of Apple (AAPL 112.87, -1.75, -1.5%) following a market research report suggesting iPhone 7 sales have been weak. That report has run counter to other reports last week from mobile carriers highlighting record pre-orders.Facebook (FB 127.96, -2.12, -1.6%) has been a high-profile, large-cap laggard throughout the day following the news that the company overestimated video average viewing timeRenewed frustration over the seesaw communication from Fed officialsBoston Fed President Rosengren, who cast a dissenting vote at this week's meeting, reiterated his belief that the time is now for a rate hike to get in front of the economy and asset prices overheating
Dallas Fed President Kaplan (an FOMC voter in 2017) said the economy is not overheating and that the Fed can afford to be patient in raising rates
It probably hasn't been lost on today's participants either that the first presidential debate is on Monday. It should be entertaining -- and perhaps not in a good way -- but some political angst ahead of that debate has likely tempered the interest level of buy-the-dip proponents today.
12:53 pm Earnings Calendar for the week of September 26th (:SUMRX) :
Confirmed companies reporting earnings next week include:
Monday (September 26)Pre-Market: CCL, CALM, MTNAfter-Hours: SNX, THOTuesday (September 27)Pre-Market: FDS, INFO, NEOGAfter-Hours: NKE, CTAS, LNDC Wednesday (September 28)Pre-Market: PAYX, FGP, BBRY, ATUAfter-Hours: PIR, PRGSThursday (September 29) Pre-Market: PEP, ACN, CAG, CMNAfter-Hours: CAMP, COST Friday (September 30)Pre-Market: MKC
