From Briefing.com: 4:15 pm : The stock market ended Wednesday on a flat, and relatively mixed, note as the minutes from the FOMC's September policy meeting failed to disturb an otherwise quiet trading session. The S&P 500 (+0.1%) settled a hair below its 100-day simple moving average (2139.44) while the Nasdaq Composite (-0.2%) finished on a slightly lower note.
Rising bond yields and a strengthening dollar remained focal points in today's action as investors looked to substantiate their rate hike outlook with the minutes from the FOMC's September 20-21 meeting.
Bond yields and the greenback rose through the first half of trade as a solidifying rate hike outlook provided support. Market participants continued to discount the possibility of a November rate hike while betting on a policy shift at the December meeting. According to the CME's Fed Watch Tool, the probability of a rate hike at the November meeting is just 9.3% while the probability of a hike at the December meeting sits at 69.9%.
The minutes from the FOMC's September policy meeting indicated that there were a number of arguments for raising rates in September, but that the committee opted to wait for further data. All in all, there wasn't really any "new" news in the minutes, which essentially reinforced preconceived policy notions held by the market ahead of their release.
Those notions revolved around a belief that the next hike in the target range for the fed funds rate will most likely occur at the December 13-14 FOMC meeting, barring any big economic potholes hit along the way.
The U.S. Dollar Index (97.92, +0.23, +0.24%) tested, but failed to clear the psychological 98.00 price level while the yield on the 10-yr note finished higher by one basis point at 1.77%.
Although long-term rates rose again today, the real estate (+1.3%), utilities (+1.0%), telecom services (+0.6%), and consumer staples (+0.5%) sectors -- so-called "yield plays" -- all outperformed on Wednesday in a move that had the semblance of being a bounce from short-term oversold conditions. For instance, entering Wednesday's trade, the S&P 500 utilities sector had fallen 9.4% over the last three months.
The S&P 500 (+0.1%) finished the session off its high, having failed earlier in the day to clear technical resistance in the 2144/2146 area.
Eight sectors finished in positive territory while three -- health care (-0.6%), energy (-0.4%), and materials (-0.2%) -- ended the day with a loss.
Retail names outperformed in the consumer discretionary space (+0.4%), evidenced by the 0.8% gain in the SPDR S&P Retail ETF (XRT 43.68, +0.33). Separately, Amazon (AMZN 834.09, +3.09) finished ahead of the broader market after Cantor Fitzgerald raised its price target on the stock to $1,000 from $835.
The financial sector (+0.2%) displayed relative strength on a slight steepening in the yield curve and extended its gain for the month to 1.1%, helped also by insurers and asset managers.
Biotechnology underperformed once again in the health care sector (-0.6%), evidenced by the 2.5% decline in the iShares Nasdaq Biotechnology ETF (IBB 270.13, -6.87), which closed below its 200-day moving average -- a move that will be regarded as a negative technical development. Mylan (MYL 37.07, -1.24) fell 3.2% as it pulled back from an 8.2% gain on Monday.
Health care providers also weighed as Humana (HUM 168.44, -9.09) tumbled 5.5%. The stock fell after the managed care provider announced that the number of 4-star plan members declined to 1.17 million from 2.15 million in the prior year. The company also raised its full-year earnings guidance.
The energy sector (-0.4%) underperformed amid a 1.1% decline in crude oil futures ($50.15/bbl, -$0.56). As a reminder, the American Petroleum Institute will release its weekly inventory report after today's close. Meanwhile, the Department of Energy will release its more influential inventory report tomorrow morning at 11:00 a.m. ET.
Today's trading volume fell came in below the recent averages of 926 million as 655 million shares changed hands at the NYSE floor. Today's low volume was partly attributed to the Jewish holiday of Yom Kippur, which began at sunset on Tuesday and will continue until nightfall today.
Today's economic data included the weekly MBA Mortgage Index and the Job Openings and Labor Turnover Survey for August:
The MBA Mortgage Index indicated that mortgage applications fell 6.0% in the week ending October 8. This followed a 2.9% increase in the prior week.
The August Job Openings and Labor Turnover Survey showed that job openings came in at 5.443 million from a revised 5.831 million (from 5.871 million) in July.
Tomorrow's economic data will include weekly initial claims report (Briefing.com consensus 255k) and the Import/Export Price report for September, both of which will cross the wires at 8:30 a.m. ET. Separately, the Treasury Budget for September will be released at 2:00 p.m. ET.
Russell 2000: +12.4% YTD
S&P 500: +4.7% YTD
Nasdaq: +4.6% YTD
Dow Jones: +4.1% YTD
DJ30 +15.54 NASDAQ -7.77 SP500 +2.44 NASDAQ Adv/Vol/Dec 1372/1.442 bln/1513 NYSE Adv/Vol/Dec 1528/672.6 mln/1390
3:30 pm :
The dollar index extended yesterday's surge to a 7-month high
Commodities, as measured by the Bloomberg Commodity Index, were -0.6% around the 85.65 level
Crude oil extended yesterday's post-IEA slide after OPEC released their monthly oil market report, raised FY17 non-OPEC global supply growth estimate
November crude oil futures fell $0.56 (-1.1%) to $50.15/barrel
Weekly EIA inventory data will be released tomorrow 30 min after natural gas EIA data due to Monday's holiday
Rig count data will be released this Friday at 1 pm ET
Contributing factors affecting the price of oil include:
The informal meeting in Istanbul with energy ministers from Qatar, the United Arab Emirates, Algeria, Venezuela, and Russia is taking place today, details of the recently announced OPEC production cut are expected to be discussed on the sidelines of the World Energy Congress; no decision is expected at this meeting
Comments from Russian President Vladimir Putin today referencing a production freeze as opposed to a production cut he mentioned on Monday, following comments from Igor Sechin, head of state-controlled Rosneft (OJSCY, 0%), responsible for 40% of Russia's oil production. Sechin stated Rosneft would not be part of any production cut. Rosneft plans to increase its production above the 4.1 mln barrels/day it produced in 2015
Strength in the dollar index puts pressure on the price of oil, the dollar index extended yesterday's gains and was at 7-month highs
Reminder: Iran, Nigeria, & Libya are all exempt from the recently announced OPEC production cut
The next official OPEC meeting will be held in Vienna, Austria on November 30
OPEC data highlights:
OPEC raised its FY17 non-OPEC oil supply growth estimates to +240k barrels/day, a 40k barrel/day increase from last month's estimate
OPEC pumped 33.4 mln barrels/day in Sept, up about 220k barrels/day compared to the prior month, an 8-year high
Natural gas extended yesterday's decline ahead of tomorrow's regularly scheduled inventory data
November natural gas closed $0.03 lower (-0.9%) at $3.21/MMBtu
Weekly EIA natural gas storage data will be released at its normal time tomorrow at 10:30 am ET
In precious metals, gold & silver closed nearly unchanged for the day
December gold ended today's session down $2.30 (-0.2%) to $1253.50/oz
December silver futures closed flat
Today's action closed a split, albeit mostly modest, affair. Stocks hovered near flat lines for most of the day, as the S&P 500 led all others higher today by 2.45 points (+0.11%) to 2139.18. The Dow Jones Industrial Average was also higher, finishing the session up 15.54 points (+0.09%) to 18144.20, and the Nasdaq Composite was the lone under-performer, shedding 7.77 points (-0.15%) to 5239.02. Heavily weighted Nasdaq 100 components BMRN -4.1%, REGN -3.3%, MYL -3.2%, ALXN -2.5% and BIIB -2.2% aided both the Nasdaq's decline and the losses in the broader Healthcare sector.
Rising bond yields and a strengthening dollar remained focal points in today's action as investors looked to substantiate their rate hike outlook with the minutes from the FOMC's September 20-21 meeting.
Bond yields and the greenback rose through the first half of trade as a solidifying rate hike outlook provided support. Market participants continued to discount the possibility of a November rate hike while betting on a policy shift at the December meeting. According to the CME's Fed Watch Tool, the probability of a rate hike at the November meeting is just 9.3% while the probability of a hike at the December meeting sits at 69.9%.
The minutes from the FOMC's September policy meeting indicated that there were a number of arguments for raising rates in September, but that the committee opted to wait for further data. All in all, there wasn't really any "new" news in the minutes, which essentially reinforced preconceived policy notions held by the market ahead of their release.
Those notions revolved around a belief that the next hike in the target range for the fed funds rate will most likely occur at the December 13-14 FOMC meeting, barring any big economic potholes hit along the way.
The U.S. Dollar Index (97.92, +0.23, +0.24%) tested, but failed to clear the psychological 98.00 price level while the yield on the 10-yr note finished higher by one basis point at 1.77%.
Again finishing the session toward the middle of the pack, Technology (XLK 47.49, +0.08 +0.17%) turned early weakness around and ended slightly above flat lines. Component Apple (AAPL 117.34, +1.04 +0.89%) was one of the better performers in the space today following a premarket upgraded to Positive from Negative at OTR Global. Other sectors as measured by the S&P closed Wednesday XLRE +1.42%, XLU +0.98%, XLP +0.56%, XLY +0.47%, XLI +0.19%, IYZ +0.09%, XLFS +0.07%, XLF -0.10%, XLB -0.19%, XLE -0.42%, XLV -0.47%.
In the S&P 500 Information Technology (797.31, +0.48 +0.06%) sector, trading returned to positive territory in the waning moments of the session. Component Xilinx (XLNX 50.08, -0.91 -1.78%) did not follow the broader sector higher today as the company announced a production milestone for its 16nm UltraScale portfolio ahead of schedule, but was downgraded in the premarket session to Neutral from Outperform at Robert W. Baird. Other names in the space which moderately outperformed included TSS +1.64%, VRSN +1.03%, ATVI +1.00%, FISV +0.97%, FIS +0.92%, ADP +0.91%, PYPL +0.87%, TDC +0.70%, WU +0.70%, ADBE +0.63%.
Other notable news items among sector components:
Accenture (ACN 117.62, +0.65 +0.56%) was approved to provide human capital strategy, training and development, and performance-improvement services to U.S. federal agencies under an $11.5 billion Human Capital and Training Solutions Contracts award vehicle.
Microsoft (MSFT 57.11, -0.08 -0.14%) announced that Microsoft HoloLens is now available for preorder in Australia, France, Germany, Ireland, New Zealand and the United Kingdom, with devices starting to ship in late November.
Xilinx (XLNX) reached a production milestone for its 16nm UltraScale portfolio ahead of schedule. Less than a year after first ship of all devices, open order entry for production devices is available this quarter.
Alphabet (GOOG 786.14, +3.07 +0.39%) acquired technology platform company FameBit.
Symantec (SYMC 24.94, -0.12 -0.48%) filed for an offering of common stock on behalf of selling shareholders, the size of which was not disclosed.
Elsewhere in the tech space:
IEC Electronics (IEC 4.15, -0.95 -18.63%) confirmed a workforce reduction at its Newark, NY facility of about 73 full-time employees.
Fortinet (FTNT 30.66, -3.43 -10.06%) lowered its Q3 revenue outlook to $311-316 million from $319-324 million, and lowered its EPS expectations to $0.15-0.16 from $0.17-0.18. FTNT also authorized a $100 million increase to its existing share repurchase program.
Ericsson (ERIC 5.55, -1.46 -20.83%) issued downside Q3 guidance of revenues of SEK 51.1 billion. Additionally, the company announced sales declined by 14% compared to a year ago. Gross margins were down 28% following lower volumes in Segment Networks, lower mobile broadband capacity sales, and higher share of services sales.
Tesla Motors (TSLA 201.51, +1.41 +0.70%) issued an update on the pending combination with SolarCity (SCTY 19.99, +0.61 +3.15%). The companies expect to unveil a solar roof product on October 28. TSLA also established November 17 as the date for its special meeting of stockholders to vote on the proposed SCTY merger.
NCR Corp (NCR 30.88, -0.02 -0.06%) authorized and approved an amendment and restatement of its bylaws to implement proxy access effective immediately.
Amazon (AMZN 834.09, +3.09 +0.37%) introduced Amazon Music Unlimited, its $9.99 per month ($7.99 per month for Prime users) on-demand music service. Additionally, according to Handelsblatt, AMZN is considering the creation of physical store locations in Germany.
Sprint (S 6.78, flat) announced three special purpose subsidiaries have commenced an offer of up to $3.5 billion of wireless spectrum-backed notes in 3 series with varying maturities in a private transaction.
Connection (CNXN 26.49, +0.59 +2.28%) acquired privately held GlobalServe. Financial details were not disclosed.
Resonant (RESN 5.06, -0.01 -0.20%) appointed Jeff Killian as new CFO effective October 24 succeeding interim CFO Ross Goolsby.
According to Reuters, Vivendi (VIVHY 20.08, flat) said it is not planning a hostile bid for Ubisoft (UBSFY 7.06, -0.37 -4.98%).
In reaction to quarterly results:
Barracuda Networks (CUDA 25.47, +2.14 +9.17%) reported better than expected Q2 EPS of $0.21 on revenues which rose 12.1% compared to last year and beat market expectations at $87.9 million. The company also guided Q3 slightly ahead of market expectations at non-GAAP EPS of $0.14-0.15 on $85-87 million in revenues. For FY17, CUDA raised EPS and revenues guidance to $0.66-0.69 (from $0.54-0.59) and $345-349 million (from $340-345 million), respectively.
Analyst actions:
MRVL was upgraded to Outperform from Neutral at Credit Suisse,
AMD was upgraded to Neutral from Underperform at Credit Suisse,
BRKS was upgraded to Buy from Neutral at Citigroup,
CUDA was upgraded to Overweight from Neutral at Piper Jaffray,
MSI was upgraded to Outperform from Market Perform at BMO Capital,
NMBL was upgraded to Outperform at Wells Fargo,
AAPL was upgraded to Positive from Negative at OTR Global;
LRCX and NANO were downgraded to Sector Weight from Overweight at Pacific Crest,
XLNX was downgraded to Neutral from Outperform at Robert W. Baird,
FTNT was downgraded to Equal Weight from Overweight at Stephens,
NOW was downgraded to Mixed from Positive at OTR Global;
MU was initiated with a Buy at Cowen,
EEFT was initiated with a Buy at SunTrust,
AEIS was initiated with a Neutral at Citigroup,
MKSI was initiated with a Buy at Citigroup,
CDK was initiated with a Market Perform at William Blair,
GRUB was initiated with a Buy at Argus
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