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S&P 500 sets new records on dovish policy expectations
20-Jun-19 16:20 ET
Dow +249.17 at 26753.17, Nasdaq +64.02 at 8051.33, S&P +27.72 at 2954.18
https://www.briefing.com/investor/markets/stock-market-update/2019/6/20/s-and-p-500-sets-new-records-on-dovish-policy-expectations.htm
[BRIEFING.COM] The S&P 500 advanced 1.0% on Thursday, setting a new intraday high and new record close, bolstered by expectations for easier monetary policy and lower sovereign bond yields.
The Dow Jones Industrial Average gained 0.9%, the Nasdaq Composite gained 0.8%, and the Russell 2000 gained 0.5%.
The Fed captured the headlines yesterday and received plenty of attention today, but the market has also been paying attention to global developments. Monetary policy is getting more dovish and sovereign bond yields continue to decline around the world. The Bank of England and the Bank of Japan both left rates unchanged on Thursday with Japan indicating its key policy rate could stay at its current level until spring 2020.
Expectations for lower rates remained the biggest driver in the equity and bond markets. The 10-yr note yield and the 2-yr note yield declined three basis points each to 1.72% and 2.00%, respectively. The lower yields put some pressure on the U.S. dollar (96.65, -0.47, -0.5%) and continued to favor risk assets.
Leading equities higher were the energy stocks, as oil prices ($57.12/bbl, +$3.13, +5.8%) climbed amid the weaker dollar and escalated tensions in the Middle East. Iran shot down a U.S. military drone, which President Trump said was a "very big mistake." Geopolitical tensions briefly unnerved the market before the influence of the Fed pushed stocks higher during the afternoon.
The S&P 500 energy sector led all sectors higher with a gain of 2.2%. The other ten sectors finished with gains between 0.4% (health care) and 1.6% (industrials). The turnaround in the S&P 500 financials sector (+0.5%), which was down as much as 0.6% during the day, contributed to the strong finish in the broader market.
In corporate news, Slack (WORK 38.62, +12.62, +48.5%) made its public debut, opening at $38.50 per share after setting its reference price at $26 per share. Oracle (ORCL 56.99, +4.31, +8.2%) pleased investors with solid earnings results, while Carnival (CCL 48.80, -4.04, -7.7%) disappointed investors with weak full-year guidance.
Separately, gold futures also made a big move, settling 3.4% higher at $1393.95/oz on expectations that interest rates will continue to decline.
Reviewing Thursday's economic data:
Initial claims for the week ending June 15 decreased by 6,000 to 216,000 (Briefing.com consensus 220,000). Continuing claims for the week ending June 8 decreased by 37,000 to 1.662 million.
The key takeaway from the report is that it covers the period in which the survey for the June employment report was conducted. Accordingly, the low level of initial claims should set an expectation for a solid gain in nonfarm payrolls for June.
The Conference Board's Leading Economic Index was unchanged in May (Briefing.com consensus +0.1%) following a downwardly revised 0.1% increase (from 0.4%) in April.
The key takeaway from the report is that it reflects an environment of slower economic growth unfolding in the second quarter. According to the Conference Board, the Leading Economic Index increased 0.3% for the six-month period ending May 2019, versus 2.2% growth during the previous six months.
The Q1 Current Account Deficit was $130.4 billion (Briefing.com consensus -$125.0 billion) versus a downardly revised $143.9 billion (from -$134.4 billion) for the fourth quarter.
The Philadelphia Fed Index fell to 0.3 (Briefing.com consensus 11.5) from 16.6 in May.
Looking ahead, investors will receive Existing Home Sales for May on Friday.
Nasdaq Composite +21.3% YTD
S&P 500 +17.8% YTD
Russell 2000 +15.9% YTD
Dow Jones Industrial Average +14.7% YTD
Stocks push higher after Fed rate decision
19-Jun-19 16:20 ET
Dow +38.46 at 26504.00, Nasdaq +33.44 at 7987.31, S&P +8.71 at 2926.46
https://www.briefing.com/investor/markets/stock-market-update/2019/6/19/stocks-push-higher-after-fed-rate-decision.htm
[BRIEFING.COM] The stock market finished with modest gains on Wednesday after the Fed kept rates unchanged and indicated it was more open to lower rates in upcoming meetings. The 0.3% gain in the S&P 500 left the benchmark index less than 1.0% from its record close.
The Dow Jones Industrial Average increased 0.2%, the Nasdaq Composite increased 0.4%, and the Russell 2000 increased 0.4%.
The FOMC's policy directive came in largely as expected. The fed funds rate was unchanged, the word "patient" was removed, and the directive noted that the Fed will act as appropriate to sustain the economic expansion amid increased uncertainties to the outlook. St. Louis Fed President James Bullard was the lone dissident among voting members, preferring to lower the fed funds rate by 25 basis points.
The Fed's updated dot plot showed a divided stance in policy for the remainder of the year, but it did show the Fed is leaning toward a rate cut in 2020. Eight voting members indicated they were in favor of a rate cut in 2019, while eight preferred to keep rates unchanged. One member forecast a rate hike. Nevertheless, the fed funds futures market now sees a 100% implied likelihood of a rate cut in July.
The major averages barely budged from their flat lines prior to the rate decision and wavered with modest gains afterwards. Most S&P 500 sectors finished higher, led by the defensive-oriented health care (+1.0%), utilities (+0.8%), and real estate (+0.7%) sectors. The materials (-0.5%), energy (-0.2%), and financials (-0.2%) sectors underperformed.
U.S. Treasury yields fell sharply after the release of the directive and took a leg lower during Fed Chair Powell's follow-up press conference.
The fed funds-sensitive 2-yr yield dropped nine basis points to 1.75% after touching 1.90% at its high. The benchmark 10-yr yield declined three basis points to 2.03% after touching 2.10% at its high. The U.S. Dollar Index declined 0.4% to 97.25. WTI crude declined 0.3% to $53.99/bbl.
In corporate news, Adobe Systems (ADBE 291.21, +14.43, +5.2%) reported upbeat earnings results, helping investors overlook its downside Q3 guidance. U.S. Steel (X 15.17, +0.59, +4.1%) lowered its Q2 EPS guidance due to softening end market demand, but shares pushed higher as investors presumably viewed the news as already being priced in.
Separately, the weekly MBA Mortgage Applications, which was Wednesday's lone economic report, declined 3.4% following a 26.8% surge in the prior week.
Looking ahead, investors will receive the following reports on Thursday: weekly Initial and Continuing Claims, the Current Account Balance for the first quarter, the Philadelphia Fed Index for June, and the Conference Board's Leading Economic Index for May.
Nasdaq Composite +20.4% YTD
S&P 500 +16.7% YTD
Russell 2000 +15.4% YTD
Dow Jones Industrial Average +13.6% YTD
Stocks rally on trade optimism, dovish expectations
18-Jun-19 16:20 ET
Dow +353.01 at 26465.54, Nasdaq +108.86 at 7953.87, S&P +28.08 at 2917.75
https://www.briefing.com/investor/markets/stock-market-update/2019/6/18/stocks-rally-on-trade-optimism-dovish-expectations.htm
[BRIEFING.COM] The stock market rallied on Tuesday, boosted by U.S.-China trade optimism and dovish comments out of the European Central Bank (ECB). Each of the major indices advanced between 1.0% (S&P 500) and 1.4% (Nasdaq Composite).
The advance began overnight after ECB President Mario Draghi said the central bank is willing to provide additional stimulus if economic conditions don't improve and inflation remains low. Sovereign bond yields fell on the news, sending Germany's 10-yr bund yield to a fresh record low at -0.32%, while U.S. equity futures pushed higher.
U.S. stocks took a leg higher minutes after the opening bell after President Trump updated the market with U.S.-China trade news. Specifically, the president tweeted that the U.S. will resume trade talks with Beijing before the G-20 summit and that he will have an extended meeting at G-20 with President Xi.
Increased hopes for a trade deal contributed to an 4.6% gain in the price of oil ($54.16/bbl, +$2.40) and to the outperformance of the S&P 500 cyclical sectors. The industrials (+1.9%), information technology (+1.7%), energy (+1.4%), and financials (+1.3%) sectors finished with gains above 1.0%.
Apple (AAPL 198.45, +4.56, +2.4%) and the semiconductor space, both of which are highly sensitive to U.S.-China trade relations, also outperformed the broader market. The Philadelphia Semiconductor Index climbed 4.3%. Conversely, the defensive-oriented consumer staples (-0.6%), real estate (-0.3%), and utilities (-0.3%) sectors were the lone sectors that finished lower.
The Fed will presumably keep a watchful eye as to how trade talks unfold in front of its July meeting. In the meantime, its two-day policy meeting wraps up tomorrow with a rate decision due in the afternoon. While no rate cut is expected, the market has high expectations for the Fed to take a dovish-minded stance like its European counterpart in its policy directive.
U.S. Treasuries spent a bulk of intraday action pulling back from session highs, leaving yields slightly lower. The 2-yr yield declined one basis point to 1.84%, and the 10-yr yield declined three basis points to 2.06%. The U.S. Dollar Index increased 0.1% to 97.62.
Separately, Facebook (FB 188.47, -0.54, -0.3%) released the white paper for its cryptocurrency project. The stock popped to a 2.9% gain at the open, but quickly retreated and finished in negative territory, as the stock had already climbed over 15% since June 3 prior to the session.
Reviewing Tuesday's economic lone economic report, Housing Starts and Building Permits for May:
Housing starts dipped 0.9% m/m in May to a seasonally adjusted annual rate of 1.269 million (Briefing.com consensus 1.240 million) from an upwardly revised 1.281 million (from 1.235 million) in April. Permits increased 0.3% m/m in May to a seasonally adjusted annual rate of 1.294 million (Briefing.com consensus 1.295 million) from an upwardly revised 1.290 million (from 1.269 million) in April.
The key takeaway from the report was that the number of units under construction at the end of the period held at a seasonally adjusted annual rate of 1.131 million for the third straight month. That left the second quarter average 1.5% below the first quarter average, which will be a negative input for Q2 GDP forecasts.
Looking ahead, investors will receive the FOMC's Rate Decision and the weekly MBA Mortgage Applications Index on Wednesday.
Nasdaq Composite +19.9% YTD
S&P 500 +16.4% YTD
Russell 2000 +15.0% YTD
Dow Jones Industrial Average +13.5% YTD
Wall Street weighed down by Broadcom revenue warning
14-Jun-19 16:15 ET
Dow -17.16 at 26089.61, Nasdaq -40.47 at 7796.64, S&P -4.66 at 2886.98
https://www.briefing.com/investor/markets/stock-market-update/2019/6/14/wall-street-weighed-down-by-broadcom-revenue-warning.htm
[BRIEFING.COM] The S&P 500 declined 0.2% on Friday, pulled lower by weakness in the semiconductor space after Broadcom (AVGO 265.93, -15.68, -5.6%) warned of a slowdown in demand. For the week, the benchmark index finished higher by 0.5%.
The Dow Jones Industrial Average (-0.1%), the Nasdaq Composite (-0.5%), and the Russell 2000 (-0.9%) finished with weekly gains of 0.4%, 0.7%, and 0.5%, respectively.
Broadcom cited U.S.-China trade uncertainty and export restrictions on Huawei Technologies for the disappointing outlook. In addition, Broadcom missed revenue estimates and lowered its FY19 revenue guidance below consensus. The Philadelphia Semiconductor Index lost 2.6% and many of its components dragged on the S&P 500 information technology sector (-0.8%).
Global growth worries lingered after China reporting the slowest growth rate for industrial production in 17 years in May, which contributed to the underperformance in the S&P 500 energy (-0.7%), materials (-0.5%), and industrials (-0.4%) sectors.
Still, investors were placated with economic data that showed the U.S. economy is still in relatively decent footing. Retail sales for May increased 0.5% (Briefing.com consensus 0.7%) after increasing an upwardly revised 0.3% (from -0.2%) in April. Industrial production increased 0.4% in May (Briefing.com consensus 0.2%) after declining 0.4% in April.
Stocks also recouped a good chunk of their losses in late afternoon action as the S&P 500 briefly climbed into positive territory. The comeback effort was led by the utilities (+1.0%), communication services (+0.4%), and real estate (+0.3%) sectors. Facebook (FB 181.33, +3.86) was a notable standout, rising 2.2% after RBC Capital Markets provided some positive analysis on Facebook's cryptocurrency plans.
U.S. Treasuries finished mixed. The 2-yr yield increased two basis points to 1.84%, and the 10-yr yield finished unchanged at 2.09%. The U.S. Dollar Index rose 0.6% to 97.57 to reclaim its 50-day moving average (97.46). WTI crude increased 0.3% to $52.54/bbl.
Reviewing Friday's economic data:
Total retail sales increased 0.5% in May (Briefing.com consensus 0.7%) after increasing an upwardly revised 0.3% (from -0.2%) in April. Excluding autos, retail sales were also up 0.5% in May (Briefing.com consensus 0.4%) after increasing an upwardly revised 0.5% (from 0.1%) in April.
The key takeaway from the report is that the May reading was combined with an upward revision to figures for April, which largely made up for the May shortfall to headline expectations.
Industrial production increased 0.4% in May (Briefing.com consensus 0.2%) following an upwardly revised 0.4% decrease (from -0.5%) in April. Total capacity utilization increased to 78.1% (Briefing.com consensus 78.0%) from an unrevised 77.9% in April.
The key takeaway from the report is that industrial production continues holding up better in the United States than in other major economies.
The preliminary June reading for the University of Michigan Index of Consumer Sentiment decreased to 97.9 (Briefing.com consensus 98.1) from May's final reading of 100.0.
The key takeaway from the report is that the headline pullback was owed to concern about tariffs on imports from China, which reduced the Index of Consumer Expectations.
Business inventories increased 0.5% in April (Briefing.com consensus 0.4%) following an unrevised flat reading for March. Business sales decreased 0.2% after growing 1.3% in March.
The key takeaway from the report is that the gap between inventory growth on a yr/yr basis (+5.3%) and sales growth (+2.8%) has widened, which should keep prices in check.
Looking ahead, investors will receive the Empire State Manufacturing Survey for June, the NAHB Housing Market Index for June, and Net Long-Term TIC Flows for April on Monday.
Nasdaq Composite +17.5% YTD
S&P 500 +15.2% YTD
Russell 2000 +12.9% YTD
Dow Jones Industrial Average +11.8% YTD
Wall Street gets a lift from the energy stocks
13-Jun-19 16:15 ET
Dow +101.94 at 26106.77, Nasdaq +44.41 at 7837.11, S&P +11.80 at 2891.64
https://www.briefing.com/investor/markets/stock-market-update/2019/6/13/wall-street-gets-a-lift-from-the-energy-stocks.htm
[BRIEFING.COM] The S&P 500 advanced 0.4% on Thursday, lifted by shares of energy companies as oil prices rose after two oil tankers were attacked off the coast of Iran. A swarm of buyers in the last few minutes of action boosted the benchmark index from near session lows to close out the session on a high note.
The Dow Jones Industrial Average increased 0.4%, the Nasdaq Composite increased 0.6%, and the Russell 2000 increased 1.1%.
Secretary of State Mike Pompeo blamed Iran for the attack, fueling geopolitical angst between the countries but also providing relief in the price of oil ($52.37/bbl, +$1.21, +2.4%). Oil prices fell over 4% yesterday on concerns about demand and oversupply.
The higher oil prices underpinned the leadership in the S&P 500 energy sector (+1.3%). The communication services sector (+1.1%) received a boost from shares of Walt Disney (DIS 141.74, +6.02, +4.4%) after its price target was raised to $160 from $125 at Morgan Stanley. The consumer discretionary sector (+0.9%) also outperformed.
The defensive-oriented sectors -- health care (-0.1%), consumer staples (+0.1%), real estate (+0.1%), and utilities (+0.2%) -- trailed the pack after outperforming the broader market on Wednesday.
From a broader perspective, the stock market has traded sideways over the last four sessions as it waits for further policy guidance from the Fed and for any updates on the U.S.-China trade front. On a related note, China's Vice Premier Liu He called for more stimulus measures to support the Chinese economy.
In corporate news, activist investor group JANA Partners disclosed a 9.5% stake in Callaway Golf (ELY 18.19, +2.29, +14.4%). MoffettNathanson lowered its price target for Twitter (TWTR 36.34, -1.15, -3.1%) to $25 from $28 and maintained its Sell rating. RH (RH 109.91, +15.02, +15.8%) pleased investors with solid quarterly results and guidance.
Demand for U.S. Treasuries persisted amid high expectations for the Fed to cut rates, and Treasuries advanced to session highs during Mr. Pompeo's press conference. The 2-yr yield declined seven basis points to 1.82%, and the 10-yr yield declined four basis points to 2.09%. The U.S. Dollar Index increased 0.1% to 97.06.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report and Import and Export Prices for May:
Initial claims for the week ending June 8 hit 222,000 (Briefing.com consensus 220,000), up 3,000 from the prior week's revised level of 219,000 (revised from 218,000). Continuing claims for the week ending June 1 increased by 2,000 to 1.695 mln from the previous week's revised level of 1.693 mln (revised from 1.682 mln).
The key takeaway from the report is that unemployment claims continue pointing to a tight labor market.
Import prices decreased 0.3% m/m in May after increasing a revised 0.1% (from 0.2%) in April. Excluding fuel, import prices were also down 0.3%. Export prices decreased 0.2% in May after increasing a revised 0.1% (from 0.2%) in April while export prices, excluding agriculture, were also down 0.2% after growing a revised 0.2% (from 0.4%) in April.
The key takeaway from the report is that the decline in import prices should keep inflation measures at subdued levels.
Looking ahead, investors will receive the following reports on Friday: Retail Sales for May, Industrial Production and Capacity Utilization for May, the preliminary University of Michigan Index of Consumer Sentiment for June, and Business Inventories for April.
Nasdaq Composite +18.1% YTD
S&P 500 +15.4% YTD
Russell 2000 +13.9% YTD
Dow Jones Industrial Average +11.9% YTD
Stock market dips lower, weighed down by energy and financial stocks
12-Jun-19 16:20 ET
Dow -43.68 at 26004.83, Nasdaq -29.85 at 7792.70, S&P -5.88 at 2879.84
https://www.briefing.com/investor/markets/stock-market-update/2019/6/12/stock-market-dips-lower-weighed-down-by-energy-and-financial-stocks.htm
[BRIEFING.COM] The S&P 500 declined 0.2% on Wednesday in a lackluster session that saw little buying conviction from investors. Shares of energy and financial companies contributed to the lower finish, while defensive-oriented sectors helped limit losses.
The Dow Jones Industrial Average lost 0.2%, and the Nasdaq Composite lost 0.4%. The Russell 2000 (+0.04%) finished just above its flat line.
High expectations for the Fed to signal for a rate cut in its policy meeting next week were bolstered by soft inflation data in the Consumer Price Index (CPI) for May. Total CPI increased 0.1% as expected. The market also remained hopeful for a Trump-Xi meeting at the G-20 summit at the end of the month, although reports indicated there have been little preparations for a meeting.
These positive considerations continued to tame any serious selling interest and helped foster gains in six of the 11 S&P 500 sectors.
There was a bit of a defensive tilt to the session, though, evident by the increased demand for U.S. Treasuries and the outperformance of the defensive-oriented sectors. The S&P 500 utilities (+1.3%), health care (+0.5%), and real estate (+0.3%) sectors were among the day's best performers.
The S&P 500 energy sector (-1.4%) was Wednesday's worst-performing group, falling on the back of oil prices ($51.16, -$2.18, -4.1%) amid bearish inventory data. The financials sector (-1.0%) was undercut by lower Treasury yields and by shares of Wells Fargo (WFC 44.91, -1.35, -2.9%) after it warned net interest income for 2019 will be at the low end of prior guidance.
The 2-yr yield declined four basis points to 1.89%, and the 10-yr yield declined one basis point to 2.13%. The U.S. Dollar Index advanced 0.3% to 97.01.
The semiconductor space, meanwhile, was pressured by some negative commentary out of Evercore ISI. The firm expects weakness in the memory chip business to continue into year's end, pushing back a recovery to the second half of 2020. The Philadelphia Semiconductor Index lost 2.3%.
Separately, shares of Facebook (FB 175.04, -3.06, -1.7%) were hit by more scrutiny of the company's privacy practices. The Wall Street Journal indicated sources that said Facebook uncovered emails suggesting CEO Mark Zuckerberg wasn't prioritizing privacy or complying with the FTC consent decree. Facebook denied any intentional wrongdoing from Mr. Zuckerberg.
Reviewing Wednesday's economic data, which included the Consumer Price Index for May, the weekly MBA Mortgage Applications Index, and the Treasury Budget for May:
Total CPI increased 0.1%, as expected, and so did core CPI, which excludes food and energy prices (Briefing.com consensus +0.2%). The monthly changes left the yr/yr readings at 1.8% and 2.0%, respectively, versus 2.0% and 2.1% for the 12 months ending in April.
The key takeaway from the report is that consumer inflation pressures remain muted, which in turn is going to reinforce the market's inflated expectations for the Fed to cut the target range for the fed funds rate sooner rather than later.
The weekly MBA Mortgage Applications Index soared 26.8% amid a drop in mortgage rates.
The Treasury Budget for may showed a deficit of $207.8 billion versus a deficit of $146.8 billion for the same period one year ago. The Treasury Budget is not seasonally adjusted, so the May deficit cannot be compared to the $160.3 billion surplus for April.
The fiscal year-to-date deficit is $738.6 billion versus a deficit of $532.2 billion for the same period ago. The budget deficit over the last 12 months is $985.4 billion, versus $924.4 billion for the 12 months ending in April.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and Export and Import Prices for May on Thursday.
Nasdaq Composite +17.4% YTD
S&P 500 +14.8% YTD
Russell 2000 +12.7% YTD
Dow Jones Industrial Average +11.5% YTD
Mexico deal extends stock market rally
10-Jun-19 16:20 ET
Dow +78.74 at 26062.68, Nasdaq +81.07 at 7823.15, S&P +13.39 at 2886.73
https://www.briefing.com/investor/markets/stock-market-update/2019/6/10/mexico-deal-extends-stock-market-rally.htm
[BRIEFING.COM] The S&P 500 advanced as much as 1.1% on Monday, catalyzed by the U.S. and Mexico reaching a deal to avoid tariffs that were scheduled to be imposed today. At its high, the benchmark index was above the 2900 level for the first time since early May, but buying interest cooled off in the afternoon, leaving the S&P 500 up 0.5% for the session.
The Dow Jones Industrial Average gained 0.3%, the Nasdaq Composite gained 1.1%, and the Russell 2000 gained 0.6%.
President Trump could still reinstate the tariffs, though, if the U.S. thinks Mexico is not doing enough to stop the flow of illegal migration through its borders. Nevertheless, U.S. companies dodged a 5% tariff rate on all goods imported from Mexico, which kept the market in good spirits in addition to sizable M&A activity and decreased demand for U.S. Treasuries.
The S&P 500 consumer discretionary (+1.1%), information technology (+1.0%), and financials (+0.9%) sectors, which are among the most heavily weighted sectors in the S&P 500, outperformed the broader market.
Consumer discretionary received strong support from shares of Amazon (AMZN 1860.63, +56.60, +3.1%), information technology rose on the back of the semiconductor stocks, and financials benefited from higher Treasury yields amid the decreased demand for the safe-haven asset. The Philadelphia Semiconductor Index increased 2.5%.
The higher yields, on the other hand, undercut the performances of the rate-sensitive real estate (-0.3%) and utilities (-0.6%) sectors. The 2-yr yield and the 10-yr yield increased six basis points each to 1.90% and 2.14%, respectively. The U.S. Dollar Index advanced 0.2% to 96.74. WTI crude fell 1.1% to $53.31/bbl.
In M&A news, United Technologies (UTX 128.01, -4.14, -3.1%) and Raytheon (RTN 187.12, +1.21, +0.7%) agreed to an all-stock merger of equals, valued at roughly $120 billion. Salesforce (CRM 152.79, -8.48, -5.3%) announced it will acquire Tableau Software (DATA 167.41, +42.20, +33.7%) for $15.7 billion in stock, which represents a 42% premium to DATA's closing price from Friday.
Separately, shares of Beyond Meat (BYND 168.10, +29.45) continued to soar, tacking on another 21.2% on Monday. Since pricing its IPO at $25 per share on May 1, the stock has yielded a staggering 572.4% return to shareholders.
Monday's lone economic report, the April Job Openings and Labor Turnover Survey, showed that job openings decreased to 7.449 million from a revised 7.474 million in March (from 7.488 million).
Looking ahead, investors will receive the Producer Price Index for May on Tuesday.
Nasdaq Composite +17.9% YTD
S&P 500 +15.2% YTD
Russell 2000 +13.0% YTD
Dow Jones Industrial Average +11.7% YTD
InvestmentHouse - No Need to Fear, the Fed is Here (Weekend Newsletter)
https://news.investmenthouse.com/2019/06/the-daily-part-1-of-3-6-8-19.html
- Jobs report misses big headline and wages are slowing. No need to fear, the Fed is here.
- Mexico tariffs put off. It is sad it took a tariff threat to get action, but it was the one thing that got Mexico to act.
- Indices head higher another session in the rebound, again on less than solid internals.
- Market downside technical setup versus the Fed backstop.
- Fed may be behind the market again, but outside of some express talk about a rate cut, what more can the Fed do to drive stocks higher near term?
- After a big rebound week, watch for some downside. But also watch for key support to hold and suggest new upside.
Stocks stretched the post-Monday gains through Friday, aided by an even firmer conviction - thanks to a jobs report miss -- the Fed would cut rates, and the Administration indicating there would be no implementation of Mexican tariffs.
Stock futures were higher ahead of jobs, fell on the paltry 75K gain in non-farm payrolls, but then reversed to pre-market highs as traders figured a weak number even further strengthened the odds for a near term rate cut. Stocks surged into midmorning then held the very solid gains through the close.
SP500 29.85, 1.05%
NASDAQ 126.55, 1.66%
Dj30 263.28, 1.02%
SP400 0.56%
RUTX 0.72%
SOX 1.15%
NASDAQ 100 1.94%
VOLUME: NYSE -8%, NASDAQ -3%
ADVANCE/DECLINE: NYSE +2.8:1, NASDAQ +1.9:1
The action on the week managed to wipe away the late May selling, the second leg lower in the selling from the April peak and the move that broke the head and shoulders patterns through the necklines. Impressive recovery in price.
THE question, of course, is whether this was a repudiation of the break lower. I often say a head and shoulders pattern sets up just to fool you. These appeared to be serious, however, given they made up the second top to the large double top patterns.
The key fact to us is they did not break up the larger patterns formed since January 2018, the topping 'process' as I have called it. Lower volumes, weaker breadth, thinner leadership on the upside. Even the Friday breadth was not great with NASDAQ not even 2:1 and NYSE decent at 2.8:1.
That does not, however, keep you from playing upside moves as we did on this one. We took downside gain Monday, e.g. QID, then bought upside as the market rallied back Tuesday and on: HIIQ, DIS, TWLO, PEP, MCD - all provided good entries and HIIQ even gave us the gain on the week. These stocks were all in good patterns; in the kind of rebound move shown Friday, you get solid price moves even from stocks not in great patterns, e.g. AMZN, FB, GOOG. Of course we are already in other stocks that held decent patterns and started to move up again - as a good stock should: CL, PG, AMD, DE.
Thus, some very good moves from stocks in good position to move as well as stocks whose patterns were cracked. That happens even in overall downside markets, and despite the 4 sessions of gains (outside DJ30 that squeaked out a Monday gain), the bias is still lower.
No doubt the Fed and further rate cutting and other stimulus formerly known as 'extraordinary' that Powell now views as normal provides powerful upside stimulus - it did so for 9 years. If the Fed is truly in the game of playing market backstop - as the market appeared to believe to end the week, then even the 17 month topping action can give way to new highs.
That leaves the market at another proof point: will the top take over once more, or will the prospect of Fed intervention overcome the headline-led action and push stocks to new highs?
Stubborn bid refuses to quit.
Despite the negative overall look from the indices and many stock sectors, a few groups have steadily pointed higher. They are not typically viewed as related, but they are moving higher: personal products, software, food/eateries, social, credit services, drugs. We own some of these, bought into some on the week, and are looking at them more if they continue moving higher.
Why would you do so if the bias remains down? The groups have been tested but have not broken. There is a certain continued bid in the market, and even after some of these stocks were tagged Monday, they recovered and held their patterns. That says a lot for the strength: the sellers tried to take them out, but they hung on and popped back upside. Again, that demonstrates a strong bid.
Thus, even though we view the overall market pattern, internals, and leadership as downside, a stubborn bid remains. Moreover, that stubborn bid may be further augmented by the belief the Fed will help the markets sooner than later: bond yields are tanking, and no amount of Fed commentary otherwise, it fears deflation. Thus, I do believe the Fed will cut - not to join the crowd of 'I knew what was coming all along' pundits, but you recall I predicted a Fed cut in the making several months back. That, however, does not matter to the markets. What does matter is perceptions about the future, and with the Fed perceived as again having the market's back (okay, that is a growing perception, not a strong majority at the moment), the market could continue to find a bid. Has to prove it given the patterns, but the Fed is giving stocks a chance to move up when it looked as if they were in the process of rolling over.
THE MARKET
CHARTS
NASDAQ: Reversed off the Monday crash, rallying back up to the 50 day EMA by the Friday close. That puts NASDAQ back above the neckline in the head and shoulders pattern spanning early March to last week. Low volume, so-so breadth strongly suggest the move does not hold. As noted earlier, however, the Fed factor can thwart this downside technical setup - indeed, it helped thwart the break lower Monday.
SP500: Surged back from the head and shoulders breakdown as well, rallying to the 50 day SMA and January 2018 high at the close. As with NASDAQ, lower volume on the recovery, so-so breadth. Obviously a nice break upside price-wise but now at a seriously important resistance level to start the week. This week it shows if this rebound can test normally and hold on. What would be normal? A test back to 2800. Then a rebound. What is that? It would form a right shoulder to a short inverted head and shoulders - yes, from a head and shoulders to an inverted one. Have to acknowledge the changes when they occur. Of course, the operative word is 'when.' Not there yet.
DJ30: Up to the 50 day SMA as well, up all 5 sessions after showing a doji Monday just over the prior Friday low. Trying to break up that head and shoulders as well, back up to test the late February high in the left shoulder. Trying. Still has to prove it can do it.
SOX: Up on the week after holding a key low at 1300 the prior week. Many chip stocks making the same rebound move. Thus far it is truly just a rebound in a negative pattern, though there is more upside room to continue the rebound.
SP400: The midcaps posted an excellent week, up 5 sessions as was DJ30. Gapped lower two Fridays back then gapped upside Monday, a bit of an island reversal. Rallied through the 200 day SMA Friday with a gap, stalling at the 50 day EMA. That leaves SP400 smack in the middle of the range from February, and from our view, still downside bias unless the Fed has completely changed the game.
RUTX: The small caps lagged the move, making to the lows from March. Only two solid upside moves on the week, Tuesday and Friday. The small caps are still lagging and still sport the weakest pattern in the market.
LEADERSHIP
FAANG: The patterns are hashed for the most part, but Friday saw money move in with some of the best volume since the selling. AMZN jumped the 200 day SMA on strong trade. Even AAPL made it to the 200 day SMA on a gap and rally, showing above average volume as well. FB showed similar action, recovering to the 10 day EMA on above average trade. NFLX made it through the 50 day SMA on the high, just could not make it stick. GOOG finally awoke after its Monday DOJ anti-trust slam lower.
Personal products: Still solid, e.g. PG, CL, and EL.
Chips: Some names are performing as the group put in an interim bottom and is attempting a bounce. AMD up again on a big upside week. AMAT slowly climbing but on light trade. TXN to the 50 day MA. XLNX looks as if it wants to break higher, just has not done so. SWKS edging upside. INTC broke upward through the 20 day EMA; it can still be a buy this week after it tests that Friday move early week.
Software: After an ugly, ugly Monday, a very impressive recovery for this group. MSFT led the Friday breakouts. NOW is up to the old high. WDAY surged Thursday and Friday to near the old closing highs. COUP recovered to another new high. TWLO at a new closing high.
Drugs/Biotech/Healthcare: After a Thursday dip, a good recovery. PTCT, ARNA rebounded Friday off near support. PCRX surged Friday. TNDM still solid.
Social: SNAP enjoyed a strong week, testing a bit Friday. TWTR surged back through the 50 day MA's Friday on strong volume. MTCH still looks good for a new buy if it can hold one of these moves. FB finally got some snap Friday, making it to the bottom of the wedge after that sharp, anti-trust related Monday selloff.
MISC: MNST broke out Friday from a cup w/handle. We watched it, thought about putting it on Thursday night, didn't. Great. On a test Monday . . . V and MA surged upside to new highs. VRSN new highs again. TREX looks possible for a new buy. ZEN, SHOP both surged nicely; a dip early week could set up some new buys.
MARKET STATS
DJ30
Stats: +263.28 points (+1.02%) to close at 25983.04
Nasdaq
Stats: +126.55 points (+1.66%) to close at 7742.10
Volume: 2.064B (-3.05%)
Up Volume: 1.63B (+440M)
Down Volume: 497.16M (-480.52M)
A/D and Hi/Lo: Advancers led 1.93 to 1
Previous Session: Decliners led 1.26 to 1
New Highs: 152 (+71)
New Lows: 111 (-31)
S&P
Stats: +29.85 points (+1.05%) to close at 2873.44
NYSE Volume: 727.973M (-7.82%)
Up Volume: 474.4M (-15.68M)
Down Volume: 227.323M (-62.964M)
A/D and Hi/Lo: Advancers led 2.83 to 1
Previous Session: Advancers led 1.37 to 1
New Highs: 292 (+98)
New Lows: 46 (-56)
SENTIMENT
VIX: 16.30; +0.37
VXN: 19.93; -0.39
VXO: 17.39; +0.40
Put/Call Ratio (CBOE): 0.79; -0.06
Bulls and Bears:
One of the most spectacular moves in recent memory. Bulls dropped over 6 points while bears jumped 1.2 points. Of course, those more bearish moves pushed stocks the opposite direction
Indicator level: Fell from yellow to green, indicating the approach toward extremes did not make it and the pressure was released with the Friday rush higher in the stock indices.
Bulls: 42.7 versus 49.0 versus
Bears: 18.5 versus 17.3
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
OTHER MARKETS
INTEREST RATES
Threat level: Red-ish. 3 month/10 year spread inverts a third time. 5 year, and 2 year are below the 3 month treasury. Third 10 year/3 month inversion this year. The positive: the 2 year/10 year is not inverted.
The 3 month yield versus the 10 year: Spread rose 1BP to -19BP. -26BP was the high water mark on this particular move.
The 2 year versus the 10 year: Spread fell 3BP to 23BP. Made it to 26BP. Still healing itself.
10 year: 2.084% versus 2.13%
3 month: 2.277% versus 2.316%
2 year: 1.851% versus 1.875%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
The Dollar: There are two schools of thought. First, those who believe a strong dollar is in the interest of the US. Reagan (though not all of his advisors) and Clinton were strong dollar Presidents. Second, there are those who believe a strong dollar prevents the US from selling US goods abroad. The Bushes (1 and 2) and Obama were in this category. The thing is, the US is always its economic strength peak when its consumers are consuming, and that is when there is a strong economy and a strong dollar: they consume both US and foreign goods. History shows this again and again, and thus it is worth watching the dollar as a gauge of how the US economy is performing.
EUR/USD: 1.13326 versus 1.12776. Euro screamed upside Monday, Thursday, and Friday, breaking through the 200 day SMA on the Friday close. That is the first close over the 200 day MA since January, indeed, the first time it moved over that level since January.
Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.
USD/JPY: 108.18 versus 108.372. The dollar moved higher to the 10 day EMA on the week, then reversed hard downside Friday. Looks as if it failed at the 10 day EMA again.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 53.99, +2.31. After another week of selling, oil jumped higher Friday. Still in the selloff.
Gold: 1346.10, +12.50. Continued the surge up to the February high. If all is well, why is gold surging? Economic data weaker? Fed going to cut rates? Both are valid.
MONDAY
A sharp price rebound with weaker internals than the sharp selling into Monday. Friday the rebound accelerated, again in price terms, as the weaker jobs data (aka prompting a nearer Fed rate cut) and the Administration forgoing Mexican tariffs. After all, jobs are lagging indicators, and if they are slowing then the economy overall is already significantly slower.
As noted earlier, that means this week is another important one. The indices broke support, a break that hit a crescendo with the Monday reported anti-trust moves against FAANG stocks. From there a relief move after the sentiment was about as negative as it gets. The indices bounced on lower volume, mediocre internals, and just a handful of leaders. The indices moved back above the neckline in the head and shoulders patterns but closed the week at resistance. After a week of releasing the negative emotions we will see what is left in the tank, how much Fed-fuel as it were.
To us it certainly looks like a prime spot to roll back over. I know, that goes against the hope in the populace in general, but it is what the patterns suggest. Again, the Fed can change all of that, but it would have to come out with more: last week the move was ginned up with Powell's comments and the solidifying of the view a rate cut is coming next and coming relatively soon. Will more Fed speakers hit the microphones to drive home the point? Will the Fed convene and emergency meeting and cut rates? With the market surging last week? Not counting on it.
The point: the market surely surged back upside last week, but that was with the 'good' news of weaker economics and Fed-speak that convinced the markets the Fed was more than ready to cut rates if the economics indicated it was necessary. What more is going to drive stocks this week?
Well, we will see. If the bids return, we have some good positions working and will be ready with more to add. The market has not taken down all leadership groups and they could put up some more breakouts. Even if there is an early dip this week some leaders could be put into buy positions.
If there is reversal action at this resistance, however, we won't be slow to get out of upside that starts struggling and put on some more downside. Will be ready with those as well - the market is downside bias after all, even with the past week's surge.
Watch the reversal, however. Sure it appears the bias remains low and the direction of least resistance is down. But how far? SP500 at 2800, a key level? NASDAQ 7650, another key level? A drop to that level that holds suggests even more upside recovery from some inverted head and shoulders patterns. Thus, on an early drop this week, watch 2800 on SP500 and 7650 on NASDAQ. If they hold we will be ready to transition to the upside with more gusto. After all, the Fed is behind the market now, right?
Have a great weekend!
Stocks gain on increased expectations for rate cut following soft jobs data
07-Jun-19 16:25 ET
Dow +263.28 at 25983.94, Nasdaq +126.55 at 7742.08, S&P +29.85 at 2873.34
https://www.briefing.com/investor/markets/stock-market-update/2019/6/7/stocks-gain-on-increased-expectations-for-rate-cut-following-soft-jobs-data.htm
[BRIEFING.COM] The S&P 500 advanced 1.1% on Friday, and 4.4% for the week, after soft employment data for May increased expectations for the Fed to cut rates this year. Leadership from some of the stock market's biggest names set the pace.
The Dow Jones Industrial Average (+1.0%), the Nasdaq Composite (+1.7%), and the Russell 2000 (+0.7%) extended their weekly gains to 4.7%, 3.9%, and 3.3%, respectively.
The Employment Situation Report for May showed nonfarm payrolls increase by just 75,000 (Briefing.com consensus 180,000) and average hourly earnings increase 0.2% (Briefing.com consensus 0.3%). Year-over-year, average hourly earnings were up 3.1% versus 3.2% in April.
The market is hoping the data-dependent Fed will consider the soft job creation and soft wage-based inflation in its upcoming meetings as a case to lower the fed funds rate.
This optimism contributed to big gains in Facebook (FB 173.35, +5.02, +3.0%), Apple (AAPL 190.15, +4.93, +2.7%), Amazon (AMZN 1804.03, +49.67, +2.8%), Alphabet (GOOG 1066.04, +21.70, +2.1%), and Microsoft (MSFT 131.40, +3.58, +2.8%).
In turn, their outperformance contributed to the leadership from the S&P 500 information technology (+1.9%), consumer discretionary (+1.6%), and communication services (+1.5%) sectors. The financials (-0.2%) and utilities (-0.7%) sectors, however, were left out of the rally.
Aside from the bullish disposition in equities, the fed funds futures market and Treasury market have been flashing strong expectations for at least one rate cut this year.
The fed funds futures market currently sees an 85.6% implied likelihood of a rate cut at the July 30-31 FOMC meeting. On Friday, the 2-yr yield declined five basis points to 1.84%, and the 10-yr yield declined four basis points to 2.08%. The U.S. Dollar Index declined 0.5% to 96.58. WTI crude rose 2.4% to $53.92/bbl.
In earnings news, shares of Beyond Meat (BYND 138.65, +39.15) shot up 39.4% on positive results and guidance. Zoom Video Communications (ZM 94.05, +14.62) posted a humbler, but still impressive, gain of 18.4% after it also pleased investors with its earnings results and guidance.
Separately, immigration talks with Mexico were still ongoing in Washington. Market participants were hopeful that there could still be a deal to avert the planned tariffs on Mexico from going into effect on Monday.
Reviewing Friday's economic data, which included the Employment Situation Report for May, Wholesale Inventories for April, and Consumer Credit for April:
The May employment report was soft on job creation and soft on average hourly earnings growth. May nonfarm payrolls increased by 75,000 (Briefing.com consensus 180,000). May average hourly earnings were up 0.2% (Briefing.com consensus +0.3%), after increasing 0.2% in April.
The key takeaway from the report is that it gives the Fed some data-based cover to cut the target range for the fed funds rate in the not-too-distant future, assuming some positive development on the trade front doesn't unleash animal spirits in the capital markets and global economy.
Wholesale inventories increased 0.8% in April (Briefing.com consensus +0.7%) on top of an upwardly revised unchanged indication (from -0.1%) for March. Wholesale sales declined 0.4% following a downwardly revised 1.8% increase (from 2.3%) in March.
The key takeaway from the report is that inventory growth continues to outpace sales growth on a year-over-year basis, which should help keep price pressures in check.
Total outstanding consumer credit increased by $17.5 billion in April (Briefing.com consensus $13.0 billion) after increasing an upwardly revised $11.0 billion (from $10.3 billion) in March.
The key takeaway from the report is that the increase in consumer credit in April was driven by both nonrevolving credit and revolving credit, unlike the gain in March which was driven entirely by nonrevolving credit.
Looking ahead, investors will receive the JOLTS - Job Openings and Labor Turnover Survey for April on Monday.
Nasdaq Composite +16.7% YTD
S&P 500 +14.6% YTD
Russell 2000 +12.3% YTD
Dow Jones Industrial Average +11.4% YTD
Stocks extend rally on news that Mexico tariffs may be delayed
06-Jun-19 16:25 ET
Dow +181.09 at 25720.66, Nasdaq +40.08 at 7615.53, S&P +17.34 at 2843.49
https://www.briefing.com/investor/markets/stock-market-update/2019/6/6/stocks-extend-rally-on-news-that-mexico-tariffs-may-be-delayed.htm
[BRIEFING.COM] The stock market extended its rally to a third consecutive day on Thursday, boosted by news that the U.S. may delay the proposed 5% tariff rate on all imports from Mexico. The 0.6% gain in the S&P 500 lifted the benchmark index nearly 100 points above last Friday's closing price (2752) when President Trump announced those tariffs on Mexico.
The Dow Jones Industrial Average increased 0.7%, and the Nasdaq Composite increased 0.5%. The Russell 2000 (-0.2%), however, lost ground for the second straight session.
According to sources from Bloomberg News, Mexico asked for more time to reach a deal needed to avert the tariffs that are planned to go into effect on Monday. Although the report noted the tariffs may still go into effect, one official said Mexico's seriousness in talks may prove the tariffs to be short-lived. Negotiations will continue at 5:30 p.m. ET, according to CNBC.
The market took the initial report in stride, as it pushed to session highs on the back of gains across all 11 S&P 500 sectors.
A turnaround in oil prices ($52.64, +$0.98, +1.9%) padded the rebound in the energy sector (+1.7%), semiconductor stocks boosted the information technology sector (+1.1%), and the trade-sensitive materials sector (+1.1%) also outperformed. The Philadelphia Semiconductor Index advanced 1.3%.
Amid the trade headlines, the prevailing view that the Fed may cut rates at least once this year continued to support risk sentiment. Friday's release of the Employment Situation Report for May could uphold this view if jobs grow less than expected while strong jobs growth could placate economic growth concerns. A sharp increase in average hourly earnings, though, may lessen rate-cut expectations.
On a related note, the European Central Bank left its key rates unchanged as was expected, and it expects those rates to remain at their current levels at least through the first half of 2020. The euro advanced 0.5% against the dollar to 1.1272. The U.S. Dollar Index declined 0.3% to 97.06.
Shorter-dated U.S. Treasuries backtracked from yesterday's advance, pushing the 2-yr yield up five basis points to 1.89%. The 10-yr yield finished unchanged at 2.12% for the second straight day.
In corporate news, shares of Advanced Micro Devices (AMD 31.82, +2.32) surged 7.9% after the stock was upgraded to Equal-Weight from Underweight at Morgan Stanley. Fiat Chrysler (FCAU 13.30, +0.11, +0.8%) withdrew its merger proposal to Renault (RNSDF) due to unfavorable political conditions in France.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report, revised first quarter readings for Productivity and Unit Labor Costs, and the Trade Balance Report for April:
Initial claims for the week ending June 1 hit 218,000 (Briefing.com consensus 220,000), representing no change from the prior week's revised level (from 215,000). Continuing claims for the week ending May 25 increased by 20,000 to 1.682 mln.
The key takeaway from the report is that claims continue reflecting a tight labor market.
Nonfarm business sector productivity increased 3.4% in the first quarter (Briefing.com consensus 3.4%), according to the revised reading. The initial reading estimated that productivity increased 3.6% in Q1. Unit labor costs decreased 1.6% in the first quarter (Briefing.com consensus -0.8%), down from the initial estimate of a decrease of 0.9%.
The key takeaway from the report is that the decrease in unit labor costs indicates muted inflationary pressures.
The trade deficit narrowed to $50.8 bln in April from a revised deficit of $51.9 bln (from $50.0 bln) in March. Exports of $206.8 bln were $4.4 bln below the March level while imports of $208.7 bln were $5.4 bln below the March total.
The key takeaway from the report is that even with the modest April decrease, the monthly deficit level has not changed much over the past year.
Looking ahead, investors will receive the Employment Situation Report for May, Wholesale Inventories for April, and the Consumer Credit report for April on Friday.
Nasdaq Composite +14.8% YTD
S&P 500 +13.4% YTD
Russell 2000 +11.5% YTD
Dow Jones Industrial Average +10.3% YTD
Stocks advance on continued hopes for a rate cut
05-Jun-19 16:25 ET
Dow +207.39 at 25539.57, Nasdaq +48.36 at 7575.45, S&P +22.88 at 2826.15
https://www.briefing.com/investor/markets/stock-market-update/2019/6/5/stocks-advance-on-continued-hopes-for-a-rate-cut.htm
[BRIEFING.COM] The S&P 500 advanced 0.8% on Wednesday, benefiting from follow-through buying interest on hope that the Fed will cut rates amid a slowing growth environment. The Dow Jones Industrial Average gained 0.8%, and the Nasdaq Composite gained 0.6%.
The Russell 2000 lost 0.1% in part due to lower oil prices ($51.66/bbl, -$1.87, -3.5%) weighing down energy stocks following some bearish inventory data. The S&P 500 energy sector declined 1.1%.
Gains were still seen across the other ten S&P 500 sectors, led by the utilities (+2.1%) and real estate (+2.3%) sectors. The outperformance in these defensive-oriented sectors reflected some reservations in adopting a full risk-on mindset, though.
The market, after all, did receive early reminders that global growth is slowing, most notably in the ADP Employment Change Report for May. The report showed an estimated 27,000 jobs were added to private-sector payrolls, which was well below the Briefing.com consensus of 170,000.
If there were concerns about slower economic growth undercutting earnings prospects, though, the very brief dip into negative territory in the S&P 500 during the day might have manifested those concerns. Instead, the market appeared to take comfort in the idea that the Fed will cut the fed funds rate to mitigate slowing growth.
The disappointing ADP report helped bolster this view, as the 2-yr yield dropped 10 basis points to 1.78% at its low following the report. The fed funds futures market now sees a 71.8% implied likelihood of a rate cut at the July 30-31 FOMC meeting.
Demand for Treasuries eased during the day, bringing yields off session lows, as equities advanced to session highs. The 2-yr yield finished four basis points lower at 1.84%, and the 10-yr yield finished unchanged at 2.12%. The U.S. Dollar Index advanced 0.3% to 97.34.
Separately, notable movers in the stock market included Salesforce (CRM 158.44, +7.63, +5.1%) and Campbell Soup (CPB 41.93, +3.82, +10.0%), which pleased investors with their earnings reports.
Reviewing Wednesday's economic data, which included the ADP Employment Change Report for May, the ISM Non-Manufacturing Index for May, the Fed's Beige Book for June, and the weekly MBA Mortgage Applications Index:
The ADP Employment report showed an estimated 27,000 jobs were added to private-sector payrolls in May, well below the Briefing.com consensus estimate of 170,000 and the prior month's downwardly revised 271,000 (from 275,000). Jobs in the goods-producing sector decreased by 43,000 while jobs in the service-providing sector increased by 71,000.
The key takeaway from this report is that it will foment the concerns about the U.S. economy slowing in the second quarter. At the same time, though, it will feed the market's belief that the Fed is going to be forced to cut the fed funds rate sooner rather than later.
The ISM Non-Manufacturing Index increased to 56.9% (Briefing.com consensus 55.4%) from 55.5% in April. The dividing line between expansion and contraction is 50.0%, so the uptick in May reflects a slight acceleration in growth for the non-manufacturing sector.
The key takeaway from the report is that growth in the sector is leveling off; and it was said in the report that respondents are "mostly optimistic about overall business conditions, but concerns remain about tariffs and employment resources."
The Federal Reserve's June Beige Book described economic activity during the survey period as expanding at a "modest" pace, which represents a slight improvement from the previous report. Growth was reported across most districts, but there were signs of slowing in some regions. Vehicle sales decreased across most districts. Employment continued increasing nationwide while overall prices saw modest upward pressure.
The weekly MBA Mortgage Applications Index increased 1.5% following a 3.3% decline in the prior week.
Looking ahead, investors will receive the Trade Balance report for April, the weekly Initial and Continuing Claims report, and revised first quarter readings for Productivity and Unit Labor Costs on Thursday.
Nasdaq Composite +14.2% YTD
S&P 500 +12.7% YTD
Russell 2000 +11.7% YTD
Dow Jones Industrial Average +9.5% YTD
Stocks rebound from short-term oversold condition, helped by Fed comments
04-Jun-19 16:25 ET
Dow +512.40 at 25332.18, Nasdaq +194.10 at 7527.09, S&P +58.82 at 2803.27
https://www.briefing.com/investor/markets/stock-market-update/2019/6/4/stocks-rebound-from-shortterm-oversold-condition-helped-by-fed-comments.htm
[BRIEFING.COM] The stock market had its best day since early January, boosted by gains across most sectors and by the prevailing view that the market was due for a bounce from short-term oversold conditions. Each of the major averages rose at least 2.0%, led by the 2.7% gain in the Nasdaq Composite, and the S&P 500 (+2.1%) climbed back above its 200-day moving average (2775).
Tuesday's advance was rooted in yesterday's ability in the broader market to withstand heavy losses from Apple (AAPL 179.64, +6.34, +3.7%), Amazon (AMZN 1729.56, +36.87, +2.2%), Alphabet (GOOG 1053.05, +16.82, +1.6%), and Facebook (FB 167.50, +3.35, +2.0%), which all fell on antitrust concerns.
The turnaround in these mega-cap stocks ensured there was little to impede the rebound effort, especially when given the seemingly supportive comments from the Fed.
Fed Chair Powell and Chicago Fed President Evans, both of whom are FOMC voters, acknowledged the trade uncertainty and the persistently low inflation levels. Although no rate cut was promised, Mr. Powell said that the Fed will act appropriately to sustain the economic expansion, assuring the market that the Fed is still on its side.
Cyclical sectors led the rally with the S&P 500 information technology (+3.3%), materials (+2.8%), financials (+2.7%), consumer discretionary (+2.6%), and industrials (+2.4%) sectors all finishing with gains over 2.0%. The defensive-oriented utilities (unch) and real estate (-0.6%) sectors were left out of the rally.
Favorable trade headlines were pointed as having an early effect on the market. China said it wants dialogue and mutual respect in talks with the U.S. while speculation arose that President Trump's Mexico tariffs could be blocked by Congress. However, China's comments were largely in-line with prior rhetoric, and The Hill reported that President Trump is weighing a national emergency to implement new tariffs on Mexico.
Counter to the view that the stock market was oversold on a short-term basis, the Treasury market exhibited weakness on the view that it had gotten overbought on a short-term basis. The 2-yr yield increased five basis points to 1.88%, and the 10-yr yield increased four basis points to 2.12%. The U.S. Dollar Index declined 0.1% to 97.10. WTI crude increased 0.5% to $53.53/bbl.
Separately, Uber (UBER 42.75, +1.50, +3.6%) was rated positively by a host of firms on Tuesday. According to data from Briefing.com, 16 firms initiated the stock with the equivalent of a Buy rating.
Reviewing Friday's lone economic report, Factory Orders for April:
Factory orders declined 0.8% m/m in April (Briefing.com consensus -0.9%) following a downwardly revised 1.3% increase (from 1.9%) in March. Excluding transportation, orders increased 0.3%.
The key takeaway from the report is the understanding that business investment was weak in April, evidenced by the 1.0% m/m decline in nondefense capital goods orders excluding aircraft.
Looking ahead, investors will receive the ADP Employment Change report for May, the ISM Non-Manufacturing Index for May, the Fed's Beige Book for June, and the weekly MBA Mortgage Applications Index for May on Wednesday.
Nasdaq Composite +13.4% YTD
S&P 500 +11.8% YTD
Russell 2000 +11.9% YTD
Dow Jones Industrial Average +8.6% YTD
Big tech leads broader market lower on antitrust concerns
03-Jun-19 16:15 ET
Dow +4.74 at 24819.78, Nasdaq -120.13 at 7332.99, S&P -7.61 at 2744.45
https://www.briefing.com/investor/markets/stock-market-update/2019/6/3/big-tech-leads-broader-market-lower-on-antitrust-concerns.htm
[BRIEFING.COM] The S&P 500 lost 0.3% on Monday, as shares of big tech companies fell on various reports that heightened antitrust concerns. Lingering trade and growth concerns also helped curb risk sentiment and underpin the strength in U.S. Treasuries. A swarm of buyers in the last 30 minutes of action, however, helped the broader market close off its session lows.
The tech-sensitive Nasdaq Composite fell 1.6%. The blue-chip Dow Jones Industrial Average (+0.02%) finished fractionally higher, and the small-cap Russell 2000 increased 0.3%.
Facebook (FB 164.15, -13.32, -7.5%), Alphabet (GOOG 1036.23, -67.40, -6.1%), Amazon (AMZN 1692.69, -82.38, -4.6%), and Apple (AAPL 173.30, -1.77, -1.0%) were all singled out in various reports indicating that the companies could face antitrust scrutiny by the Department of Justice and/or Federal Trade Commission.
These companies represent some of the most widely-held stocks in the U.S., and their out-sized losses weighed heavily on the Nasdaq and on the S&P 500 communication services (-2.8%), information technology (-1.8%), and consumer discretionary (-1.2%) sectors. The other eight S&P 500 sectors finished higher, led by materials (+3.4%), to provide offsetting support.
Persisting concerns about trade and growth helped restrain buying conviction throughout the day. China blamed the U.S. for the setback in trade talks, which reinforced fears that a protracted trade war will squeeze global growth, and earnings, prospects. Global manufacturing PMI data, including in the U.S., revealed slower or flat growth in May.
On a related note, St. Louis Fed President James Bullard (FOMC Voter) said that slower economic growth could be sharper-than-expected due to the trade uncertainty. Mr. Bullard added that a rate cut may soon be warranted to boost inflation.
Growing expectations for a rate cut, and general growth concerns, helped send the 2-yr yield down 12 basis points to 1.83%. The 10-yr yield declined six basis points to 2.08%. The U.S. Dollar Index fell 0.5% to 97.22. WTI crude decreased 0.5% to $53.25/bbl, giving up an intraday rebound effort.
In other corporate news, German company Infineon announced plans to acquire Cypress Semiconductor (CY 22.07, +4.25, +23.9%) for approximately $10 billion, or $23.85 per share, in cash. The offer represents a 33.8% premium to CY's Friday closing price. Humana (HUM 250.32, +5.46, +2.2%) said it will not make a competing bid to acquire Centene (CNC 51.82, -5.93, -10.3%).
Reviewing Monday's economic data, which included the ISM Manufacturing Index for May and Construction Spending for April:
The ISM Manufacturing Index for May checked in at 52.1% (Briefing.com consensus 52.6%), down from 52.8% in April. The May reading is the lowest since October 2016. The May reading is the lowest since October 2016.
The key takeaway from the report is that it reflects a deceleration in national manufacturing activity that will contribute to the burgeoning growth concerns for the U.S. economy. According to the ISM, the past relationship between the PMI and the overall economy indicates the PMI for May corresponds to a 2.7% increase in real GDP on an annualized basis.
Total construction spending was unchanged in April (Briefing.com consensus +0.4%) following an upwardly revised 0.1% increase (from -0.9%) in March.
The key takeaway from the report is that it was better than the headline suggests, after accounting for the March revision, yet that still didn't change the fact that total construction spending is soft, evidenced by the 1.2% yr/yr decline that was driven by an 11.2% yr/yr decline in residential spending.
Looking ahead, investors will receive the Factory Orders report for April on Tuesday.
Nasdaq Composite +10.5% YTD
S&P 500 +9.5% YTD
Russell 2000 +9.0% YTD
Dow Jones Industrial Average +6.4% YTD
InvestmentHouse - Did the Proposed Tariffs on Mexico Break the Market's Back? (WeekendNewsletter)
https://news.investmenthouse.com/2019/06/the-daily-part-1-of-3-6-1-19.html
- Trump proposes tariffs on Mexico, perhaps breaks the market's back.
- Economic data still mixed in US, bad elsewhere.
- SP500, NASDAQ fail the attempt to hold the 200 day SMA
- Leadership as thin as tissue paper, but those leading are solid.
- One pair of bonds inverted, oil in freefall, gold jumping, stocks down for another week.
- Bias remains downside but remember oversold bounces start when things look worst.
Friday was a case of piling on. Even though there was some decent news (Chicago PMI, Incomes) there was also less than good news. Trump ready to assess 5% tariffs on Mexican goods in a bid to force Mexico to crack down on illegal immigration to the US. China PMI manufacturing fell back to contraction at 49.4. China said it is ready to 'blacklist' certain US companies. Personal spending fell to 0.3% from 1.1% with real spending flat after a surge in March. Yen and yang.
The economic data for the most part did not help - core PCE rose to 1.6% from 1.5%, though the 1.5 was a downward revision. Nonetheless, that data was seen as anti-FOMC rate cut although various contracts are pricing in a 75BP, yes 75, rate cut with 50BP as early as September.
What was the killer was what killed futures Thursday evening: the proposed 5% tariffs on all Mexican goods with the added insult that the rate could rise if Mexico does not quell the illegal immigration into the US.
This threat by the Administration may be the thing that broke the market's back. Already weak from the head and shoulders patterns the past 3 months; the double tops on SP500, NASDAQ and DJ30; the 17 months of lateral movement since January 2018; worries about China trade, European economics, a yield curve inversion . . . this news was more than the market could bear.
The indices gapped lower. SP500, NASDAQ and NASDAQ 100 all gapped below the 200 day SMA where they had shown doji Wednesday and tried to bounce Thursday. SP400 and RUTX gapped lower. SOX was actually not that bad, gapping lower but holding its recent range. DJ30 gapped lower and sold to the close, determined to fill the last January upside gap.
SP500 -36.80, -1.32%
NASDAQ -114.57, -1.51%
DJ30 354.84, -1.41%
SP400 -0.99%
RUTX -1.35%
SOX -1.45%
NASDAQ 100 -1.62%
VOLUME: NYSE +42%, NASDAQ +21%. Of course volume surged on a downside session, surging back above average on both exchanges. NASDAQ trade was the highest since March 21 when the market sold on the 3 month/2 year inversion.
ADVANCE/DECLINE: NYSE -2.2:1, NASDAQ -2.9:1. And once again, breadth expanded on a market downside session.
At the same time, VIX remains remarkably tame, rising to 18.71 on the close. Up, but not even near the early May level that crossed to 23 on this initial selloff from the highs.
To sum up. The index patterns remain bearish overall and near term breaking lower. Internals remain weak upside, stronger downside. The stock indices continue to distribute, i.e. selling in high volume, rising on weak volume. Sentiment remains remarkably calm as measured by the VIX. Day to day volatility, however, remains strong, and that often accompanies trend changes. The news ticker continues to feed the bearish bias as the market focuses on the negatives - yield curve, the weaker economic data, the lack of trade progress. Once again it acted as a trigger for the next move lower with the proposed 5% tariff on Mexico products.
What about stocks and leadership?
The overall picture is bearish, but not all stocks are being torn down at this juncture. They are the last upside outposts for the market, trying to hold back the drop. They will either be successful or the market will ultimately tear them down.
Leadership groups saw breakdowns on the week, retail a very notable sector. After the Mexico tariff announcement, other areas were weak.
Automakers, OM parts and components makers took it hard as a LOT of these are manufactured in Mexico.
Some beverage purveyors sold off as their Mexican beer labels face price increases: STZ. Better stock up on the Carta Blanca, Pacifico, Sol, Dos Equis, Modelo - heck, they were probably marked up last night after the news hit.
Interest rates rallied hard yet again - they have rallied so much the past week they are now short term overbought. As a result of the bond surge and corresponding yield decline, banks and other financials sold off.
Transports were pounded from rails to airlines. Usually airlines like weaker oil prices (pounded lower again -5.46%), but they gapped sharply downside. Truckers were decent enough, but DJ20 gapped lower to cap a very nasty week in its 6 week selloff.
Upside Groups
A key factor Friday was the performance of those stocks that had held up well during the selling thus far.
Social has been solid. SNAP, MTCH, TWTR remain so, but FB gapped below the 50 day MA.
Software has seen some of its clan sell, e.g. VMW (DELL earnings), ZS Friday, but many are holding up very well: NOW (low volume 50 day MA test), WDAY, MSFT, COUP. OKTA gapped to a new high. They keep hanging in when they look bad.
Drugs/Biotech/Healthcare: Still holding up well, e.g. ARNA, PTCT, BSX, DGX, HIIQ.
Most other areas were hit.
Big tech sold off: HPE, CSCO, ORCL (down to the 200 day SMA).
FAANG is losing its bite. FB gapped below the 50 day MA as noted, AAPL continued lower - no big drops but the daily bleed lower is having its effect. AMZN gapped lower to near the 200 day SMA. NFLX did the same, but at least NFLX is still inside its range. GOOG gapped lower to a doji, but a doji at a lower selloff low.
Retail was slaughtered on the week. Some bounced Friday, e.g. ULTA, WSM as earnings gave them life. YUM posted a very strong reversal; if it can hold it, perhaps it is a buy this coming week. Others more or less held on (TJX) or continued lower (ZUMZ, BIG).
Manufacturing/Machinery: CMI (engines) was of course sold. DE paused, still looks decent for a bounce. ETN gapped lower, EMR continued trending lower as well. MMM is down so much it has to bounce at some point - - but it is not after 60 points of losses.
Consumer products: PG broke sharply below the 50 day MA. CL dropped back o the 50 day MA.
Thus, the index patterns are bearish, they gapped through support again Friday, the news feed is considered bearish, and leadership is thin. We look at probabilities for our plays, and for much of the market the probabilities favor continued moves lower. Bounces upside in between, but lower overall.
At the same time the market has not pitched everything into the trash can, and there are some stocks still rising, e.g. AMT today where we banked some solid gain. Unfortunately, the market is taking even some good movers and throwing them back down. That is a sign of a weaker market, i.e. when breakouts are reversed as sellers swarm the move. Thus, even with great patterns you have to be ready to get out if the move reverses.
For now we will still look at some upside as well as continuing to put downside plays on. The opening gaps have made entries more challenging, but with tests of gaps down we will continue to get entries, perhaps not on the first time the play moves through the entry point.
MARKET STATS
DJ30
Stats: -354.84 points (-1.41%) to close at 24815.04
Nasdaq
Stats: -114.57 points (-1.51%) to close at 7453.15
Volume: 2.33B (+20.73%)
Up Volume: 638.49M (-411.51M)
Down Volume: 1.67B (+820.97M)
A/D and Hi/Lo: Decliners led 2.86 to 1
Previous Session: Decliners led 1.03 to 1
New Highs: 64 (+5)
New Lows: 235 (+94)
S&P
Stats: -36.80 points (-1.32%) to close at 2752.06
NYSE Volume: 972M (+41.71%)
Up Volume: 248.67M (-55.116M)
Down Volume: 711.653M (+337.162M)
A/D and Hi/Lo: Decliners led 2.23 to 1
Previous Session: Advancers led 1.12 to 1
New Highs: 82 (+22)
New Lows: 252 (+130)
SENTIMENT
VIX: 18.71; +1.41. Seriously? These kind of losses on the week and barely moving higher?
VXN: 23.23; +1.55
VXO: 20.98; +1.56
Put/Call Ratio (CBOE): 1.19; +0.09. 18 of 21 sessions closing at 1.0 or better. Definitely one indicator at an extreme. The others, alas, are not.
Bulls and Bears:
Bulls faded farther, falling below 50 with a pretty solid 6 point drop over 3 weeks. Bears fell yet again. Bears lower on selling, VIX not spiking on selling. Appears there are more issues to resolve that this range trading action at the head and shoulders neckline has not been able to rectify.
Bulls surprisingly resilient, falling but not much. Bears actually rose. Still no extremes though bulls were close to the 60's that has marked tops. Apparently this was close enough for stock market work.
It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: Shading to yellow for this week even as bulls backed off. Not in the 60's, but not much fear from the selling.
Bulls: 49.0 versus 49.5 versus
Bears: 17.3 versus 17.2
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
OTHER MARKETS
INTEREST RATES
Threat level: Red-ish. 3 month/10 year spread inverts a third time. 5 year, and 2 year are below the 3 month treasury. Third 10 year/3 month inversion this year. The positive: the 2 year/10 year is not inverted.
The 3 month yield versus the 10 year: Spread climbs 6BP to -22BP. Widest by far of this bout of inversion.
The 2 year versus the 10 year: Spread climbs 6BP to 21BP. This is healing itself.
10 year: 2.133 versus 2.217%. Bonds continue surging. TLT is up over 5 points this week with a breakout and rally from its short cup with handle. A bit overbought so bonds likely come back some this week.
3 month: 2.354% versus 2.378%
2 year: 1.924% versus 2.067%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
The Dollar: There are two schools of thought. First, those who believe a strong dollar is in the interest of the US. Reagan (though not all of his advisors) and Clinton were strong dollar Presidents. Second, there are those who believe a strong dollar prevents the US from selling US goods abroad. The Bushes (1 and 2) and Obama were in this category. The thing is, the US is always its economic strength peak when its consumers are consuming, and that is when there is a strong economy and a strong dollar: they consume both US and foreign goods. History shows this again and again, and thus it is worth watching the dollar as a gauge of how the US economy is performing.
EUR/USD: 1.11685 versus 1.11391. As anticipated, the euro bounced off support just over 1.10. The key test is the 50 day MA at 1.121.
Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.
USD/JPY: 108.291 versus 109.262. Dollar crashed lower; so much for an attempted short double bottom. 108 is next support.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 53.50, -3.09. Second straight harsh drop as oil is in full retreat after giving up the 200 day SMA the prior week. Some support near 52.50 and likely tries to hold there given the strength of the selling.
Gold: 1311.10, +18.70. Exploding higher, breaking the downtrend from the February peak. Gold is breaking out from the handle of the 13 month cup with handle base.
MONDAY
Friday saw SP500 and NASDAQ break. Already bearish in the rollovers, Friday they gapped below the 200 day SMA. Broke the neckline in the head and shoulders Wednesday, held the 200 day SMA that session and Thursday, ready to bounce. Then the next bad news and the 200 day SMA went.
Now it is a matter of time as to when the indices are oversold enough again after this news is digested to try and relief bounce. A 200 day SMA test would be a nice setup for more downside entries and we will watch for that at the start of next week.
Money is still finding the upside as it rotates through the market. The healthcare and drug side is receiving some money along with the other familiar leaders in social, software, insurance. We will still look at some plays on those - if the money is moving that way we will try some hookups for relatively quick moves.
The focus, however, has to skew toward the downside now, and thus, this weekend and as next week progresses we will look at more of these. Ideally a bit of an oversold bounce early week is best, but often after this kind of spanking on a Friday leads to more selling early week. We will see what kind of entries the market gives us.
Have a great weekend!
Stocks, yields, and oil drop after Mexico tariff threat
31-May-19 16:15 ET
Dow -354.84 at 24815.04, Nasdaq -114.57 at 7453.12, S&P -36.80 at 2752.06
https://www.briefing.com/investor/markets/stock-market-update/2019/5/31/stocks-yields-and-oil-drop-after-mexico-tariff-threat.htm
[BRIEFING.COM] U.S. stocks, Treasury yields, and oil prices all dropped on Friday after President Trump surprised the market by threatening to impose a 5% tariff rate on all goods imported from Mexico. Friday's 1.3% decline in the S&P 500 sent it below its 200-day moving average (2776) and extended its weekly decline to 2.6%.
The Dow Jones Industrial Average (-1.4%), the Nasdaq Composite (-1.5%), and the Russell 2000 (-1.4%) extended their weekly losses to 3.0%, 2.4%, and 3.2%.
The 5% tariff rate will go into effect on June 10 and will increase incrementally during the summer to reach 25% on Oct. 1. The White House could remove these tariffs altogether if Mexico makes a concerted effort to curb the flow of undocumented migrants entering the U.S.
The news catalyzed de-risking efforts, leading to eight of the 11 S&P 500 sectors finishing with losses over 1.0%. The utilities (+0.5%) and real estate (+0.8%) sectors finished higher amid a steep drop in U.S. Treasury yields.
Another trade dispute on top of a U.S.-China trade war with no clear end in sight fueled ongoing concerns that trade tensions will lower economic, and earnings, growth prospects.
China added to these fears after it announced that it is drafting a list of unreliable foreign entities that harm the interests of its firms, increasing speculation about Chinese retaliation against the U.S. On a related note, China's manufacturing sector slipped into contraction in May.
Global growth concerns were transparent by the 5.2% drop in WTI crude ($53.48/bbl, -$2.92) and by investors seeking safety in a crowded U.S. Treasury market. The 2-yr yield dropped 12 basis points to 1.94%, and the 10-yr yield dropped nine basis points to 2.14%. The U.S. Dollar Index fell 0.4% to 97.76.
In corporate news, shares of General Motors (GM 33.34, -1.48, -4.3%) underperformed on the Mexico tariff threat. Dell Technologies (DELL 59.55, -6.86, -10.3%), Gap (GPS 18.68, -1.92, -9.3%), and VMware (VMW 176.98, -14.11, -7.4%) disappointed investors with their earnings results, while Uber (UBER 40.41, +0.61, +1.5%) pleased investors with its results.
Reviewing Friday's economic data, which included Personal Income and Spending data for April, the PCE Price Index for April, the final University of Michigan Index of Consumer Sentiment for May, and the Chicago PMI for April:
Personal income increased 0.5% in April (Briefing.com consensus 0.3%) on top of a 0.1% increase in March. Personal spending rose 0.3% (Briefing.com consensus 0.2%) on top of an upwardly revised 1.1% increase (from 0.9%) in March. The PCE Price Index was up 0.3% m/m, as expected, while the core PCE Price Index, which excludes food and energy, jumped 0.2%, as expected.
The key takeaway from the report is that real PCE was unchanged in April. That will be another data point that leads to forecasts calling for much slower real GDP growth in the second quarter than the 3.1% real GDP growth seen in the first quarter.
The final May reading for the University of Michigan Index of Consumer Sentiment checked in at 100.0 (Briefing.com consensus 101.5) versus the preliminary reading of 97.2.
The key takeaway from the report was the acknowledgment that "confidence significantly eroded in the last two weeks of May" on account of concerns about the tariff actions.
The Chicago PMI for May increased to 54.2 from 52.6 in April.
Looking ahead, investors will receive the ISM Manufacturing Index for May and Construction Spending for April on Monday.
Nasdaq Composite +12.3% YTD
S&P 500 +9.8% YTD
Russell 2000 +8.7% YTD
Dow Jones Industrial Average +6.4% YTD
Stocks edge higher, Treasury yields tick lower
30-May-19 16:20 ET
Dow +43.47 at 25169.88, Nasdaq +20.41 at 7567.69, S&P +5.84 at 2788.86
https://www.briefing.com/investor/markets/stock-market-update/2019/5/30/stocks-edge-higher-treasury-yields-tick-lower.htm
[BRIEFING.COM] The S&P 500 advanced as much as 0.6% on Thursday, nearly touching the 2800 level in a rebound from short-term oversold conditions. A lack of conviction, however, knocked the benchmark index off its strong start and contributed to some sideways trading for the rest of the session. The S&P 500 finished higher by 0.2% after finding some support at its 200-day moving average (2776).
The Dow Jones Industrial Average increased 0.2%, and the Nasdaq Composite increased 0.3%. The Russell 2000 decreased 0.3%.
The S&P 500 real estate (+0.7%), information technology (+0.6%), health care (+0.5%), and consumer discretionary (+0.5%) sectors outperformed the broader market. The Philadelphia Semiconductor Index (+0.7%) advanced for the second straight day.
Shares of Dollar General (DG 127.00, +8.49, +7.2%) and Dollar Tree (DLTR 98.31, +2.99, +3.1%) gave the consumer discretionary sector a boost following their earnings results/guidance. PVH Corp. (PVH 84.49, -14.76, -14.9%), however, offset some of their strength after it disappointed investors with its lower guidance.
The S&P 500 energy sector (-1.2%) was the worst-performing group on Thursday, as oil prices ($56.40/bbl, -$2.44, -4.1%) tumbled on global growth concerns. More negative trade rhetoric out of China, coupled with reports that Beijing put U.S. soybean purchases on hold, fed into the narrative that trade tensions will slow economic growth.
The resiliency in the U.S. Treasury market perhaps signaled this view, as well, as investors returned to the safe-haven asset during the day.
The 2-yr yield and the 10-yr yield were both up five basis points in overnight action, as Treasuries cooled off from their lengthy advance. Buying interest, however, picked up during the session, leaving the 2-yr yield down two basis points to 2.06% and the 10-yr yield down one basis point to 2.23%. The U.S. Dollar Index finished unchanged at 98.15.
Reviewing Thursday's economic data, which included the second estimate for Q1 GDP, the weekly Initial and Continuing claims report, the advance advance international trade in goods deficit for April, and Pending Home Sales for April:
The second estimate for Q1 GDP showed a slight downward revision to 3.1% (Briefing.com consensus 3.1%). The GDP Price Deflator was revised to 0.8% (Briefing.com consensus 0.9%) from 0.9%.
The key takeaway from the report is that it is backward looking (we're nearly two months into the second quarter), which diminishes its market-moving impact. Still, it reinforces the notion that first quarter growth was better than most thought it would be before the quarter started.
Initial claims for the week ending May 25 increased by 3,000 to 215,000 (Briefing.com consensus 217,000) while continuing claims for the week ending May 18 decreased by 26,000 to 1.657 million.
The key takeaway from the report is that the initial claims data remains consistent with tight labor market conditions.
The advance international trade in goods deficit for April widened to $72.1 billion (Briefing.com consensus -$72.0 billion) from $71.9 billion in March. Exports were $5.9 billion less than March exports while imports were $5.6 billion less than March imports.
Pending Home Sales decreased 1.5% in April (Briefing.com consensus +1.0%). Today's reading follows a revised increase of 3.9% in March (from 3.8%).
Looking ahead, investors will receive Personal Income and Spending data for April, the PCE Price Index for April, and the final University of Michigan Index of Consumer Sentiment for May on Friday.
Nasdaq Composite +14.1% YTD
S&P 500 +11.3% YTD
Russell 2000 +10.2% YTD
Dow Jones Industrial Average +7.9% YTD
Stocks decline, Treasuries rise as investors continue to shun risk assets
28-May-19 16:20 ET
Dow -237.92 at 25347.77, Nasdaq -29.66 at 7607.32, S&P -23.67 at 2802.39
https://www.briefing.com/investor/markets/stock-market-update/2019/5/28/stocks-decline-treasuries-rise-as-investors-continue-to-shun-risk-assets.htm
[BRIEFING.COM] The S&P 500 lost 0.8% on Tuesday, while U.S. Treasuries rallied, as investors continued to show little enthusiasm for risk assets. Tuesday's decline wiped out an early gain for the benchmark index and sent it back near the 2800 level as losses accelerated into the close.
The Dow Jones Industrial Average (-0.9%), the Nasdaq Composite (-0.4%), and the Russell 2000 (-0.7%) also gave up early gains and finished near their session lows.
Trade progress remained elusive, while headlines continued to swirl. President Trump said on Monday he expects a deal in the future but said the U.S. is not ready for one at this moment. Investors showed a lack of buying conviction throughout the day, unraveling the rebound attempt and sending stocks lower in a steady, broad-based retreat.
The S&P 500 consumer staples (-1.8%), utilities (-1.6%), and health care (-1.4%) sectors led the market lower. The Dow Jones Transportation Average (-1.3%) was another laggard, as investors remained concerned about a protracted trade war with China. The communication services sector (+0.2%) was the lone sector to finish higher.
Demand for U.S. Treasuries remained strong, sending yields even lower, amid the trade uncertainty and negative disposition in equities. The 2-yr yield declined four basis points to 2.12%, and the 10-yr yield declined six basis points to 2.27% -- eight basis points below the yield on the 3-month bill. The U.S. Dollar Index advanced 0.3% to 97.93. WTI crude rose 0.8% to $59.11/bbl.
Shares of Advanced Micro Devices (AMD 29.03, +2.59, +9.8%), Total System (TSS 118.84, +5.39, +4.8%), and Fiat-Chrysler (FCAU 13.78, +0.93, +7.2%) bucked the broader trend on Tuesday.
AMD impressed investors with its new products. Total System confirmed its $21.5 billion merger of equals with Global Payments (GPN 148.87, -4.57, -3.0%). Fiat-Chrysler proposed a merger with Renault (RNSDF), which will reportedly give its preliminary approval, according to Bloomberg.
Reviewing Tuesday's economic data, which included the Conference Board's Consumer Confidence Index for May, the FHFA Housing Price Index for March, and the S&P Case-Shiller Home Price Index for March:
The Conference Board's Consumer Confidence Index increased to 134.1 in May (Briefing.com consensus 130.0) from 129.2 in April. The May reading is the highest level for the index since November 2018.
The key takeaway from the report is that it shows consumer confidence has not been impacted yet by the increased trade tension between the U.S. and China, which includes an escalation in tariff rates on Chinese imports that could ultimately be passed along to the consumer.
The FHFA Housing Price Index for March increased 0.1% (Briefing.com consensus 0.3%) following a revised increase of 0.4% in February (from 0.3%).
The S&P Case-Shiller Home Price Index for March increased 2.7% (Briefing.com consensus 2.9%) following a 3.0% increase in February.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index on Wednesday.
Nasdaq Composite +14.7% YTD
S&P 500 +11.8% YTD
Russell 2000 +11.5% YTD
Dow Jones Industrial Average +8.7% YTD
InvestmentHouse - Trade News Still Moving the Market (Weekend Newsletter)
https://news.investmenthouse.com/2019/05/the-daily-part-1-of-3-5-18-19.html
- Indices try a fourth session upside, get there, but cannot hold it.
- Overall index patterns just do not look upside positive.
- Leadership remains but it is narrower and of course the chips are down.
- SOX is at the top of its pre-breakout gains where it has to make a stand.
- If need be, get comfortable with the downside.
Friday the stock indices tried to make it four straight sessions upside, starting weaker but then powering higher into midmorning. This action occurred more than once on the week, and low to high action is typically good action.
Of course, it IS necessary to hold the moves. Thursday the indices rallied nicely, but they also gave up a good amount of the gains into the closing bell. Friday they took it a step - or two or three - farther. Decent enough low to high gains as the Administration postponed auto tariffs for six months, but they could not hold up in the withering fire of late session when trade news hit again, this time not so friendly. Reports from CNBC and others indicated that no talks were ongoing between the US and China, at least regarding trade. Not all that surprising given China's 'outrage' at the US blacklisting Huawei and several related entities as security risks. There are so many episodes of companies finding security backdoors in products sold by Huawei that it is no secret. China just doesn't like the fact that a major China company was caught stealing. It is very hard to do business with that mindset.
It might be hard on China as well. Looking at the Shanghai chart pattern and there is a very definite head and shoulders that Friday looked as if it was rolling over from the right shoulder. Better get the PBOC and everyone else working on more stimulus right now.
That said, the US stock indices were not exactly looking rosy Friday. Of course, the US stock indices are trading just off all-time highs versus almost 50% off the 2018 highs. Nonetheless, there are some serious pattern issues for US stocks after the indices stalled at the prior highs three weeks ago.
SP500 -16.79, -0.58%
NASDAQ -81.77, -1.04%
DJ30 -98.68, -0.38%
SP400 -1.15%
RUTX -1.38%
SOX -1.96%
NASDAQ 100 -1.01%
VOLUME: NYSE +14%, NASDAQ +4%. NYSE volume moved up to average as NYSE stocks rallied off lower opens but then rolled back down. Similar action for NASDAQ. That is more distribution action, i.e. higher volume dumping of stocks - clearing out on the rebound.
ADVANCE/DECLINE: NYSE -2.9:1, NASDAQ -2.5:1. Once again the downside breadth is mostly stronger than the upside.
CHARTS
Looking at the charts, there are some very clear, quite ominous double tops on SP500, NASDAQ, NASDAQ 100 when you look at a weekly chart. DJ30 showing a triple top.
SOX is a bit different: its weekly chart shows it sitting on top of the range from late 2017 to early 2019 before the run to a new high. At least it has a breakout and a test it can rally off.
On the daily charts there is that same head and shoulders look from the past three months for pretty much all the indices: SP500, NASDAQ, NASDAQ 100, DJ30, SP400.
The upshot of this is that the patterns don't look all that great. After the 2018 range/topping event, the breaks to new highs or near new highs failed. Most of the indices are now at the point of having to shake off a near term bearish pattern to have the opportunity to try and break up the bigger bearish pattern.
The market's eyes have to be on the semiconductors. A new high failed and the chips are now testing the tops of the 2018 to early 2019 range. The near term pattern here is a head and shoulders as well. If SOX can shake this off, then the rest of the market has a shot at following - for the past few years, as the chips go, so the market goes.
LEADERSHIP
Even some of the stronger sectors, e.g. software, struggled Friday. They did not roll over, but they sold back some after a series of good moves on the week. Other areas that rebounded faded some as well. Some chips are in full frontal dives while some names are hanging on - but it could be there are too few hanging on to offset those dropping.
FAANG: AMZN and GOOG were solid performers starting midweek, and Friday both faded, reversing early upside. Very good moves in recovery, but the overall patterns are not great for the upside. AAPL tapped the 200 day on the week then gapped lower, failing a rebound attempt. FB failed to hold a move over the 10 da for the third session. NFLX looks as if it is failing at the 50 day MA.
Food: Not bad still. PEP a modest Friday gain on top of good moves. KO off some. WING still looking solid.
Personal products: Strong moves through Thursday, backed off some Friday but still solid.
Software: Strong moves on the week, tested on Friday, however. NOW, COUP, HUBS, WDAY - great movers and leaders - all gave back some Friday, but darn little. TEAM exploded higher the past two weeks and it held up very well Friday as well. MSFT was a bit weak Friday after a good Wednesday/Thursday move. Still a solid group.
Big tech: Stocks such as CSCO continued to perform - CSCO's earnings reversed a four week slide off its very solid December to early April rally.
Retail: Some are still solid, e.g. COST, ROST. BBY looks rather weak and ready to fill a gap and even AMZN's overall pattern is not confidence building.
Financials: V posted a strong week, off just a bit Friday. MA showed similar action. Banks such as C, BAC do not look good. MS and GS are struggling as well.
Social: TWTR, SNAP still not bad. FB is not bad either after that big break higher Wednesday. MTCH took a day off after a big week upside.
Transports: While DJ20 shows a bear flag in a head and shoulders, rails are not bad, e.g. CSX, KSU, NSC. Truckers are okay though UPS and FDX are selling off.
Oil: Weak as large and small struggle. XOM, SWN.
MARKET STATS
DJ30
Stats: -98.68 points (-0.38%) to close at 25764.00
Nasdaq
Stats: -81.77 points (-1.04%) to close at 7816.28
Volume: 2.25B (+4.17%)
Up Volume: 734.01M (-585.99M)
Down Volume: 1.5B (+696.28M)
A/D and Hi/Lo: Decliners led 2.52 to 1
Previous Session: Advancers led 1.44 to 1
New Highs: 74 (-43)
New Lows: 104 (+30)
S&P
Stats: -16.79 points (-0.58%) to close at 2859.53
NYSE Volume: 845.375M (+13.73%)
Up Volume: 208.687M (-283.671M)
Down Volume: 628.806M (+394.428M)
A/D and Hi/Lo: Decliners led 2.88 to 1
Previous Session: Advancers led 2.25 to 1
New Highs: 112 (-64)
New Lows: 80 (+37)
SENTIMENT
VIX: 15.96; +0.67
VXN: 19.39; +0.99
VXO: 17.03; +0.84
Put/Call Ratio (CBOE): 1.09; +0.07. Eight of nine sessions over 1.0. Lots of negativity by this measure, but the other indicators are not there yet.
Bulls and Bears:
No surprise the bulls faded after trading over the 55 level. Bears faded, however, as the two sides continue to move opposite one another. Bears are falling again and that is not a good indication for the upside.
At this juncture there are still no extremes. Bulls are close to 60, but not there. Bears have overall been more complacent of late.
It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: Shading to yellow for this week even as bulls backed off. Not in the 60's, but not much fear from the selling.
Bulls: 51.4 versus 55.5
Bears: 17.5 versus 17.8
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
OTHER MARKETS
INTEREST RATES
Threat level: RED. 10 year, 5 year, and 2 year are below the 3 month treasury. This is the second 10 year/3 month inversion this year. The positive: the 2 year/10 year is not inverted.
The 3 month yield versus the 10 year: Spread is flat from 1BP.
The 2 year versus the 10 year: Spread holds at 20BP
10 year: 2.393 versus 2.394%
3 month: 2.393% versus 2.401
2 year: 2.198% versus 2.194%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
The Dollar: There are two schools of thought. First, those who believe a strong dollar is in the interest of the US. Reagan (though not all of his advisors) and Clinton were strong dollar Presidents. Second, there are those who believe a strong dollar prevents the US from selling US goods abroad. The Bushes (1 and 2) and Obama were in this category. The thing is, the US is always its economic strength peak when its consumers are consuming, and that is when there is a strong economy and a strong dollar: they consume both US and foreign goods. History shows this again and again, and thus it is worth watching the dollar as a gauge of how the US economy is performing.
EUR/USD: 1.11573 versus 1.1174. After moving up to the 50 day MA, the euro has slid back down near the April low.
Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.
USD/JPY: 110.068 versus 109.879. Dollar catching a bid Thursday and Friday after three weeks of decline from the 200 day MA.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 62.92, +0.05. After a 2.5 week test at the 200 day SMA, bounced late week, but still off the recent highs just over 66.
Gold: 1275.70, -10.50. Diving lower Thursday and Friday, the same action as in late March and early April: as soon as gold rallies some, it gets sold hard.
MONDAY
While some solid upside leaders remain in solid shape, e.g. software, food, some retail, personal products, not all of them are bull market type stocks and there are just not a lot of them as well. With semiconductors in a serious fight and the indices patterns in serious longer term topping patterns, there may not be enough leadership to move the market higher once again.
We are still playing some upside that looks quality, watching carefully for cracks in the solid patterns. There are still upside possibilities such as VZ and software to name just a couple, and we will look at them in the event they win out. At the same time, however, there are definite downside setups that correspond to the issues the indices are showing. We have more than a few of those working and will look to add more if the downside setups make the downside break.
I know some people do not like the downside, but those who embrace it when it is here find that the gains come rapidly - they also can disappear rapidly as what falls hard tends to bounce hard in relief moves before rolling over once more. If you give it a shot, you will find that gains can come as easily and even more so than in a strong move higher.
Have a great weekend!
Wall Street inches higher to cap disappointing week
24-May-19 16:15 ET
Dow +95.22 at 25585.69, Nasdaq +8.72 at 7636.98, S&P +3.82 at 2826.06
https://www.briefing.com/investor/markets/stock-market-update/2019/5/24/wall-street-inches-higher-to-cap-disappointing-week.htm
[BRIEFING.COM] The S&P 500 increased 0.1% on Friday in a lower-volume trading session in front of the holiday weekend. The benchmark index finished the week lower by 1.2%.
The Dow Jones Industrial Average (+0.4%), the Nasdaq Composite (+0.1%), and the Russell 2000 (+0.9%) finished with weekly losses of 0.7%, 2.3%, and 1.4%.
Supporting Friday's positive bias was President Trump saying there is still a good possibility of a trade deal with China and that a solution to the Huawei matter could be included in that deal. The S&P 500, however, still dipped negative during the day despite the comments. Discussions remain at an impasse.
There weren't any "new" catalysts to send stocks even lower from Thursday's steep decline, which also helped foster some buying interest. The S&P 500 financials (+0.8%) and materials (+0.5%) sectors outperformed. The consumer staples (-0.4%) and utilities (-0.2%) sectors were the lone groups in the red.
Shares of Foot Locker (FL 44.40, -8.43) dropped 16.0% after the company provided disappointing earnings results and guidance, while shares of Intuit (INTU 257.48, +16.17) climbed 6.7% after it provided upbeat results and guidance.
In M&A news, Total System (TSS 113.45, +13.83, +13.9%), according to CNBC, said it is nearing a deal to be acquired by Global Payments (GPN 153.44, +5.48, +3.7%) for $20 billion in an all-stock transaction.
U.S. Treasuries finished lower, retreating modestly from a two-day advance. The 2-yr yield increased five basis points to 2.16%, and the 10-yr yield increased three basis points to 2.32%. The U.S. Dollar Index declined 0.3% to 97.58. WTI crude rebounded 1.4% to $58.62/bbl.
Reviewing Friday's lone economic report, Durable Goods Orders for April:
Durable goods orders for April decreased 2.1% (Briefing.com consensus -2.0%) while orders, excluding transportation, were unchanged (Briefing.com consensus 0.2%).
The key takeaway from the report is that orders for nondefense capital goods, excluding aircraft, decreased 0.9% while the previous month's increase was revised down to 0.3% from 1.3%. These orders are a proxy for business spending, so it can be said that business spending decelerated in April after a smaller than previously estimated increase in March.
Investors will not receive any economic data on Monday.
Nasdaq Composite +15.1% YTD
S&P 500 +12.7% YTD
Russell 2000 +12.3% YTD
Dow Jones Industrial Average +9.7% YTD
Stocks, oil, and Treasury yields drop amid growth concerns
23-May-19 16:15 ET
Dow -286.14 at 25490.47, Nasdaq -122.56 at 7628.26, S&P -34.03 at 2822.24
https://www.briefing.com/investor/markets/stock-market-update/2019/5/23/stocks-oil-and-treasury-yields-drop-amid-growth-concerns.htm
[BRIEFING.COM] U.S. stocks sold off on Thursday, sending the S&P 500 down 1.2%, as trade tensions and growth concerns produced a risk-off mindset. Oil prices fell nearly 6%, and U.S. Treasury yields dropped as investors flocked to the safe-haven asset.
The Dow Jones Industrial Average fell 1.1%, the Nasdaq Composite fell 1.6%, and the Russell 2000 fell 2.0%. The major averages, however, did close off their session lows.
Shares of energy and technology companies were hit the hardest on Thursday following some unfavorable developments. Trade rhetoric out of the U.S. and China remained negative, more companies outside the U.S. reportedly began cutting ties with China's Huawei Technologies, and the preliminary manufacturing PMI for May for the eurozone remained weak.
The persisting uncertainty in the outcome, and duration, of the U.S.-China trade dispute fed into concerns about economic growth and corporate earnings prospects. In turn, fears of weakening demand for oil contributed to the 5.8% drop in WTI crude ($57.83/bbl, -$3.57).
The cyclical S&P 500 energy (-3.1%), information technology (-1.7%), industrials (-1.6%), and materials (-1.5%) sectors led the retreat. The rate-sensitive utilities (+0.8%) and real estate (+0.5%) sectors were the lone sectors in the green amid steep declines in U.S. Treasury yields.
Defensive positioning in U.S. Treasuries sent the 2-yr yield down 11 basis points to 2.11% and the 10-yr yield down ten basis points to 2.30%. This was the lowest level in the 10-yr yield since late 2017. The U.S. Dollar Index declined 0.2% to 97.88.
In earnings news, Best Buy (BBY 65.82, -3.35) lost 4.8% despite providing upbeat results and in-line guidance. NetApp (NTAP 61.66, -5.44) fell 8.1% after providing disappointing results and guidance. L Brands (LB 24.26, +2.76) climbed 12.8% after its positive results overshadowed its downside Q2 guidance.
Reviewing Friday's economic data, which included New Home Sales for April and the weekly Initial and Continuing Claims report:
New home sales declined 6.9% m/m in April to a seasonally adjusted annual rate of 673,000 (Briefing.com consensus 665,000) from an upwardly revised 723,000 (from 692,000) in March. On a yr/yr basis, new home sales were up 7.0%.
The key takeaway from the report is that the yr/yr growth in home sales was led by higher-priced homes ($400,000 and up), which speaks to the reluctance among builders to absorb profit-margin pressure by building lower-priced homes.
Initial claims for the week ending May 18 decreased by 1,000 to 211,000 (Briefing.com consensus 218,000). Continuing claims for the week ending May 11 increased by 12,000 to 1.676 million.
The key takeaway from the report is that the low level of initial claims is consistent with a labor market that should still be producing solid nonfarm payroll gains.
Looking ahead, investors will receive the Durable Orders report for April on Friday.
Nasdaq Composite +15.0% YTD
S&P 500 +12.6% YTD
Russell 2000 +11.3% YTD
Dow Jones Industrial Average +9.3% YTD
Wall Street declines amid persisting trade uncertainty
22-May-19 16:20 ET
Dow -100.72 at 25776.61, Nasdaq -34.88 at 7750.82, S&P -8.09 at 2856.27
https://www.briefing.com/investor/markets/stock-market-update/2019/5/22/wall-street-declines-amid-persisting-trade-uncertainty.htm
[BRIEFING.COM] The stock market wavered with modest losses on Wednesday, leaving the S&P 500 down 0.3%, amid persisting trade uncertainty. The prevalence, and volatile nature, of trade headlines that have no clear end-date helped curb some of yesterday's trade-related enthusiasm.
The Dow Jones Industrial Average lost 0.4%, the Nasdaq Composite lost 0.5%, and the Russell 2000 lost 0.9%.
Reports that the U.S. is considering blacklisting several other Chinese firms put a damper on Apple (AAPL 182.78, -3.82, -2.1%) and many of the stocks within the Philadelphia Semiconductor Index (-2.1%). Qualcomm (QCOM 69.31, -8.44, -10.9%) was further pressured by a federal judge ruling against the company in an antitrust case.
All of the S&P 500 cyclical sectors finished lower. The energy sector (-1.6%) led the decline amid lower oil prices ($61.40/bbl, -$1.67, -2.6%), which were pressured by the trade uncertainty and some bearish inventory data.
This uncertainty also fostered some defensive positioning in U.S. Treasuries and in the S&P 500 utilities (+0.8%), health care (+0.6%), consumer staples (+0.6%) and real estate (+0.4%) sectors.
The 2-yr yield declined two basis points to 2.22%, and the 10-yr yield declined three basis points to 2.39%. The U.S. Dollar Index finished little changed at 98.09.
Perhaps reassuring for the market was some assurance from the Fed that interest rates will remain low, at least according to the minutes from the Apr. 30-May 1 FOMC meeting. The minutes, however, didn't produce any meaningful effect on the market considering the meeting occurred three weeks ago.
In earnings news, shares of retailers Lowe's (LOW 97.94, -13.16, -11.9%), Nordstrom (JWN 34.35, -3.50, -9.3%), and Urban Outfitters (URBN 24.34, -2.66, -9.9%) dropped noticeably following their results and/or guidance. Target (TGT 77.56, +5.60), on the other hand, climbed 7.8% on its upbeat results and guidance.
Reviewing Wednesday's economic data, which included the FOMC Minutes and the weekly MBA Mortgage Applications Index:
The Minutes from the May FOMC meeting showed that policymakers are comfortable with the current fed funds rate range while "a number of participants" saw a moderation in risk and uncertainties surrounding their outlooks for the year.
The key takeaway is that the stock market has a reasonable assurance to think policy rates are going to remain quite low on a real and nominal basis. Low rates are supportive for risk assets like stocks.
The weekly MBA Mortgage Applications Index rebounded 2.4% following a 0.6% decline in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and New Home Sales for April on Thursday.
Nasdaq Composite +16.8% YTD
S&P 500 +13.9% YTD
Russell 2000 +13.6% YTD
Dow Jones Industrial Average +10.5% YTD
Stocks rebound after U.S. temporarily eases restrictions on Huawei
21-May-19 16:20 ET
Dow +197.43 at 25877.33, Nasdaq +83.35 at 7785.70, S&P +24.13 at 2864.36
https://www.briefing.com/investor/markets/stock-market-update/2019/5/21/stocks-rebound-after-us-temporarily-eases-restrictions-on-huawei.htm
[BRIEFING.COM] The S&P 500 rebounded 0.9% on Tuesday after the U.S. Department of Commerce granted Huawei a 90-day license to work with U.S. companies so it can service existing networks and mobile devices.
Like the S&P 500, the Dow Jones Industrial Average (+0.8%) and the Russell 2000 (+1.3%) recouped all of their losses from Monday. The tech-sensitive Nasdaq Composite (+1.1%) recouped most of its losses.
The news sent stocks higher out of the gate, as it ran counter to yesterday's reports that several companies began halting business activity with Huawei. Despite caveats that the license is only temporary and that it doesn't permit new business with Huawei, buying was largely broad-based and steady throughout the day. Stocks closed near their session highs.
The trade-sensitive S&P 500 materials (+1.5%), information technology (+1.2%), and industrials (+1.2%) sectors outperformed the broader market. The consumer staples sector (-0.3%) was the lone sector to finish lower.
The Philadelphia Semiconductor Index advanced 2.1%, although it did drop 4.0% on Monday. There remained an understanding that Huawei could still retaliate on the basis that it is still prohibited from conducting new business with U.S. suppliers without a license. Qorvo (QRVO 61.54, +0.27, +0.4%) was the latest company to cut guidance to account for lost business with Huawei.
Earnings reports were retail-heavy on Tuesday. Home Depot (HD 191.45, +0.50, +0.3%) beat earnings estimates and issued upside full-year revenue guidance, but same store sales came up short of estimates. TJX Companies (TJX 53.26, +0.29, +0.6%) and AutoZone (AZO 1032.25, +54.42, +5.6%) advanced following their results, while Kohl's (KSS 55.15, -7.76) fell 12.3% after disappointing investors.
U.S. Treasuries declined modestly, pushing yields slightly higher. The 2-yr yield increased two basis points to 2.24%, and the 10-yr yield increased one basis point to 2.43%. The U.S. Dollar Index increased 0.1% to 98.05. WTI crude declined 0.4% to $63.07/bbl.
Reviewing Tuesday's lone economic report, Existing Home Sales for April:
Existing home sales decreased 0.4% month-over-month in April to a seasonally-adjusted annual rate of 5.19 million (Briefing.com consensus 5.35 million) from an unrevised 5.21 million in March. Total sales were 4.4% lower than the same period a year ago.
The key takeaway from the report is that overall sales activity remained light despite a drop in mortgage rates and a pickup in income, demonstrating that limited inventory and relatively high prices continue to impede existing home sales.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the FOMC Minutes from May on Wednesday.
Nasdaq Composite +17.3% YTD
Russell 2000 +14.6% YTD
S&P 500 +14.3% YTD
Dow Jones Industrial Average +10.9% YTD
Tech stocks lead Wall Street lower
20-May-19 16:20 ET
https://www.briefing.com/investor/markets/stock-market-update/2019/5/20/tech-stocks-lead-wall-street-lower.htm
Dow -84.10 at 25679.90, Nasdaq -113.91 at 7702.35, S&P -19.30 at 2840.23
[BRIEFING.COM] The S&P 500 declined 0.7% on Monday, led lower by the technology stocks. Lingering concerns about Chinese retaliation against U.S. tech companies following U.S. scrutiny of Huawei Technologies dampened general buying interest.
The Dow Jones Industrial Average lost 0.3%, and the Russell 2000 lost 0.7%. The Nasdaq Composite underperformed with a loss of 1.5%.
Alphabet (GOOG 1138.85, -23.45, -2.0%) and many of the semiconductor companies reportedly began suspending business activity with Huawei to comply with new regulation that requires U.S. government approval to work with the Chinese firm. Lumentum Holdings (LITE 44.42, -1.90, -4.1%) cut its fiscal Q4 guidance to reflect lost business from Huawei.
The possibility that other semiconductor companies could also lower their guidance, and the possibility that China could retaliate against U.S. tech companies, weighed heavily on the Philadelphia Semiconductor Index (-4.0%) and the S&P 500 information technology sector (-1.8%).
Despite the gloomy mood in tech space, the broader market had rallied well off its session lows during the day. An overall lack of buying conviction, however, sent stocks back to their opening lows before a rebound in the last 45 minutes of action helped stocks close off those levels.
The S&P 500 real estate (-1.6%), materials (-1.5%), and communication services (-1.2%) sectors joined the tech sector (-1.8%) as the day's worst-performers. The utilities (+0.2%), financials (+0.1%), and energy (+0.1%) sectors were the lone sectors to finish higher.
Apple (AAPL 183.09, -5.91, -3.1%) was a notable underperformer and was further pressured by HSBC cutting its price target to $174 from $180. Tesla (TSLA 205.36, -5.67, -2.7%) finished well off its session lows (-7.5%), but it still closed at its lowest level since Dec. 2016 after Wedbush cut its price target to $230 from $275.
In M&A news, FCC Chairman Ajit Pai indicated his support for the merger deal between T-Mobile US (TMUS 78.29, +2.92, +3.9%) and Sprint (S 7.34, +1.16, +18.9%). Shares surged on the news, but lost steam after a report indicated that the Department of Justice is leaning against the merger.
U.S. Treasuries finished lower despite the negative disposition in equities. The 2-yr yield increased one basis point to 2.22%, and the 10-yr yield increased two basis points to 2.42%. The U.S. Dollar Index declined 0.1% to 97.95. WTI crude increased 0.9% to $63.30/bbl on rising U.S.-Iran tensions and OPEC+ producers signaling that production cuts may last throughout 2019.
Investors did not receive any economic data on Monday. Looking ahead, investors will receive Existing Home Sales for April on Tuesday.
Nasdaq Composite +16.1% YTD
S&P 500 +13.3% YTD
Russell 2000 +13.1% YTD
Dow Jones Industrial Average +10.1% YTD
InvestmentHouse - Get Comfortable With the Downside (Weekend Newsletter)
https://news.investmenthouse.com/2019/05/the-daily-part-1-of-3-5-18-19.html
- Indices try a fourth session upside, get there, but cannot hold it.
- Overall index patterns just do not look upside positive.
- Leadership remains but it is narrower and of course the chips are down.
- SOX is at the top of its pre-breakout gains where it has to make a stand.
- If need be, get comfortable with the downside.
Friday the stock indices tried to make it four straight sessions upside, starting weaker but then powering higher into midmorning. This action occurred more than once on the week, and low to high action is typically good action.
Of course, it IS necessary to hold the moves. Thursday the indices rallied nicely, but they also gave up a good amount of the gains into the closing bell. Friday they took it a step - or two or three - farther. Decent enough low to high gains as the Administration postponed auto tariffs for six months, but they could not hold up in the withering fire of late session when trade news hit again, this time not so friendly. Reports from CNBC and others indicated that no talks were ongoing between the US and China, at least regarding trade. Not all that surprising given China's 'outrage' at the US blacklisting Huawei and several related entities as security risks. There are so many episodes of companies finding security backdoors in products sold by Huawei that it is no secret. China just doesn't like the fact that a major China company was caught stealing. It is very hard to do business with that mindset.
It might be hard on China as well. Looking at the Shanghai chart pattern and there is a very definite head and shoulders that Friday looked as if it was rolling over from the right shoulder. Better get the PBOC and everyone else working on more stimulus right now.
That said, the US stock indices were not exactly looking rosy Friday. Of course, the US stock indices are trading just off all-time highs versus almost 50% off the 2018 highs. Nonetheless, there are some serious pattern issues for US stocks after the indices stalled at the prior highs three weeks ago.
SP500 -16.79, -0.58%
NASDAQ -81.77, -1.04%
DJ30 -98.68, -0.38%
SP400 -1.15%
RUTX -1.38%
SOX -1.96%
NASDAQ 100 -1.01%
VOLUME: NYSE +14%, NASDAQ +4%. NYSE volume moved up to average as NYSE stocks rallied off lower opens but then rolled back down. Similar action for NASDAQ. That is more distribution action, i.e. higher volume dumping of stocks - clearing out on the rebound.
ADVANCE/DECLINE: NYSE -2.9:1, NASDAQ -2.5:1. Once again the downside breadth is mostly stronger than the upside.
CHARTS
Looking at the charts, there are some very clear, quite ominous double tops on SP500, NASDAQ, NASDAQ 100 when you look at a weekly chart. DJ30 showing a triple top.
SOX is a bit different: its weekly chart shows it sitting on top of the range from late 2017 to early 2019 before the run to a new high. At least it has a breakout and a test it can rally off.
On the daily charts there is that same head and shoulders look from the past three months for pretty much all the indices: SP500, NASDAQ, NASDAQ 100, DJ30, SP400.
The upshot of this is that the patterns don't look all that great. After the 2018 range/topping event, the breaks to new highs or near new highs failed. Most of the indices are now at the point of having to shake off a near term bearish pattern to have the opportunity to try and break up the bigger bearish pattern.
The market's eyes have to be on the semiconductors. A new high failed and the chips are now testing the tops of the 2018 to early 2019 range. The near term pattern here is a head and shoulders as well. If SOX can shake this off, then the rest of the market has a shot at following - for the past few years, as the chips go, so the market goes.
LEADERSHIP
Even some of the stronger sectors, e.g. software, struggled Friday. They did not roll over, but they sold back some after a series of good moves on the week. Other areas that rebounded faded some as well. Some chips are in full frontal dives while some names are hanging on - but it could be there are too few hanging on to offset those dropping.
FAANG: AMZN and GOOG were solid performers starting midweek, and Friday both faded, reversing early upside. Very good moves in recovery, but the overall patterns are not great for the upside. AAPL tapped the 200 day on the week then gapped lower, failing a rebound attempt. FB failed to hold a move over the 10 da for the third session. NFLX looks as if it is failing at the 50 day MA.
Food: Not bad still. PEP a modest Friday gain on top of good moves. KO off some. WING still looking solid.
Personal products: Strong moves through Thursday, backed off some Friday but still solid.
Software: Strong moves on the week, tested on Friday, however. NOW, COUP, HUBS, WDAY - great movers and leaders - all gave back some Friday, but darn little. TEAM exploded higher the past two weeks and it held up very well Friday as well. MSFT was a bit weak Friday after a good Wednesday/Thursday move. Still a solid group.
Big tech: Stocks such as CSCO continued to perform - CSCO's earnings reversed a four week slide off its very solid December to early April rally.
Retail: Some are still solid, e.g. COST, ROST. BBY looks rather weak and ready to fill a gap and even AMZN's overall pattern is not confidence building.
Financials: V posted a strong week, off just a bit Friday. MA showed similar action. Banks such as C, BAC do not look good. MS and GS are struggling as well.
Social: TWTR, SNAP still not bad. FB is not bad either after that big break higher Wednesday. MTCH took a day off after a big week upside.
Transports: While DJ20 shows a bear flag in a head and shoulders, rails are not bad, e.g. CSX, KSU, NSC. Truckers are okay though UPS and FDX are selling off.
Oil: Weak as large and small struggle. XOM, SWN.
MARKET STATS
DJ30
Stats: -98.68 points (-0.38%) to close at 25764.00
Nasdaq
Stats: -81.77 points (-1.04%) to close at 7816.28
Volume: 2.25B (+4.17%)
Up Volume: 734.01M (-585.99M)
Down Volume: 1.5B (+696.28M)
A/D and Hi/Lo: Decliners led 2.52 to 1
Previous Session: Advancers led 1.44 to 1
New Highs: 74 (-43)
New Lows: 104 (+30)
S&P
Stats: -16.79 points (-0.58%) to close at 2859.53
NYSE Volume: 845.375M (+13.73%)
Up Volume: 208.687M (-283.671M)
Down Volume: 628.806M (+394.428M)
A/D and Hi/Lo: Decliners led 2.88 to 1
Previous Session: Advancers led 2.25 to 1
New Highs: 112 (-64)
New Lows: 80 (+37)
SENTIMENT
VIX: 15.96; +0.67
VXN: 19.39; +0.99
VXO: 17.03; +0.84
Put/Call Ratio (CBOE): 1.09; +0.07. Eight of nine sessions over 1.0. Lots of negativity by this measure, but the other indicators are not there yet.
Bulls and Bears:
No surprise the bulls faded after trading over the 55 level. Bears faded, however, as the two sides continue to move opposite one another. Bears are falling again and that is not a good indication for the upside.
At this juncture there are still no extremes. Bulls are close to 60, but not there. Bears have overall been more complacent of late.
It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: Shading to yellow for this week even as bulls backed off. Not in the 60's, but not much fear from the selling.
Bulls: 51.4 versus 55.5
Bears: 17.5 versus 17.8
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
OTHER MARKETS
INTEREST RATES
Threat level: RED. 10 year, 5 year, and 2 year are below the 3 month treasury. This is the second 10 year/3 month inversion this year. The positive: the 2 year/10 year is not inverted.
The 3 month yield versus the 10 year: Spread is flat from 1BP.
The 2 year versus the 10 year: Spread holds at 20BP
10 year: 2.393 versus 2.394%
3 month: 2.393% versus 2.401
2 year: 2.198% versus 2.194%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
The Dollar: There are two schools of thought. First, those who believe a strong dollar is in the interest of the US. Reagan (though not all of his advisors) and Clinton were strong dollar Presidents. Second, there are those who believe a strong dollar prevents the US from selling US goods abroad. The Bushes (1 and 2) and Obama were in this category. The thing is, the US is always its economic strength peak when its consumers are consuming, and that is when there is a strong economy and a strong dollar: they consume both US and foreign goods. History shows this again and again, and thus it is worth watching the dollar as a gauge of how the US economy is performing.
EUR/USD: 1.11573 versus 1.1174. After moving up to the 50 day MA, the euro has slid back down near the April low.
Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.
USD/JPY: 110.068 versus 109.879. Dollar catching a bid Thursday and Friday after three weeks of decline from the 200 day MA.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 62.92, +0.05. After a 2.5 week test at the 200 day SMA, bounced late week, but still off the recent highs just over 66.
Gold: 1275.70, -10.50. Diving lower Thursday and Friday, the same action as in late March and early April: as soon as gold rallies some, it gets sold hard.
MONDAY
While some solid upside leaders remain in solid shape, e.g. software, food, some retail, personal products, not all of them are bull market type stocks and there are just not a lot of them as well. With semiconductors in a serious fight and the indices patterns in serious longer term topping patterns, there may not be enough leadership to move the market higher once again.
We are still playing some upside that looks quality, watching carefully for cracks in the solid patterns. There are still upside possibilities such as VZ and software to name just a couple, and we will look at them in the event they win out. At the same time, however, there are definite downside setups that correspond to the issues the indices are showing. We have more than a few of those working and will look to add more if the downside setups make the downside break.
I know some people do not like the downside, but those who embrace it when it is here find that the gains come rapidly - they also can disappear rapidly as what falls hard tends to bounce hard in relief moves before rolling over once more. If you give it a shot, you will find that gains can come as easily and even more so than in a strong move higher.
Have a great weekend!
Stocks decline following news that trade talks have stalled
17-May-19 16:25 ET
Dow -98.68 at 25764.00, Nasdaq -81.76 at 7816.26, S&P -16.79 at 2859.53
https://www.briefing.com/investor/markets/stock-market-update/2019/5/17/stocks-decline-following-news-that-trade-talks-have-stalled.htm
[BRIEFING.COM] The S&P 500 lost 0.6% on Friday, closing near session lows, following late-session news that talks between the U.S. and China have stalled. The Dow Jones Industrial Average lost 0.4%, the Nasdaq Composite lost 1.0%, and the Russell 2000 lost 1.4%.
Prior to the news, the stock market began the day retreating from a three-day advance after China called out the U.S. on its aggressive negotiating tactics. China suggested the U.S. change its approach if it wants to come to Beijing for meaningful discussions.
The major averages, however, each rallied into positive territory after consumer sentiment for May hit a 15-year high. It should be mentioned, though, that the results were tabulated before the recent setback in trade negotiations with China and implementation of new tariff rates on both sides. This understanding helped temper buying interest.
Still, the S&P 500 was on pace for a relatively flat week before CNBC reported that scheduling discussions for further trade talks have been put on hold since the White House increased scrutiny of "Chinese telecom companies." Although the news wasn't entirely surprising, it did stir concerns about possible retaliation from China.
The cyclical S&P 500 industrials (-1.1%), energy (-1.1%), information technology (-0.8%), and consumer discretionary (-0.8%) sectors led Friday's retreat. The utilities sector (+0.5%) was the lone sector to finish in the green.
Deere & Co. (DE 134.82, -11.17, -7.7%) and China's Baidu (BIDU 128.31, -25.39, -16.5%) dropped noticeably following disappointing results/guidance attributed to weakness in China. Many semiconductor stocks with Chinese exposure also underperformed. The Philadelphia Semiconductor Index lost 2.0%
Tesla (TSLA 211.03, -17.30) fell 7.6% after CEO Elon Musk emailed employees that he will be reviewing all expenses as part of "hardcore" cost cutting efforts. Pinterest (PINS 26.70, -4.16) fell 13.5% after missing earnings estimates and guiding FY19 revenue below consensus.
Separately, the U.S. and Canada agreed to eliminate aluminum and steel tariffs within 48 hours. The White House also confirmed that President Trump will delay auto tariffs for 180 days. Market reaction was muted to both developments, as reports earlier this week had already suggested these outcomes.
U.S. Treasuries finished mixed in a curve-flattening trade. The 2-yr yield increased one basis point to 2.21%, and the 10-yr yield declined two basis points to 2.39%. The U.S. Dollar Index increased 0.1% to 97.99. WTI crude declined 0.4% to $62.73/bbl.
Reviewing Friday's economic data, which included the preliminary University of Michigan Index of Consumer Sentiment for May and the Conference Board's Leading Economic Index for April:
The Conference Board's Leading Economic Index increased 0.2% in April, as expected, following a downwardly revised 0.3% increase (from 0.4%) in March.
The key takeaway from the report is that strengths among the leading indicators became more widespread than weaknesses; nonetheless, the 0.6% increase for the six months ending in April 2019 was much slower than the 2.1% growth during the previous six months.
The preliminary University of Michigan Index of Consumer Sentiment jumped to 102.4 (Briefing.com consensus 96.9) in May from 97.2 in April. The May reading is the highest reading since 2004.
The key takeaway from the report is that it was driven by positive attitudes about the outlook, although it would be remiss not to mention that the results were tabulated before the recent setback in trade negotiations with China and implementation of new tariff rates on both sides. That understanding raises the prospect of a downward revision with the final report for May.
Investors will not receive any notable economic data on Monday.
Nasdaq Composite +17.8% YTD
S&P 500 +14.1% YTD
Russell 2000 +13.9% YTD
Dow Jones Industrial Average +10.4% YTD
Stocks advance for third straight day, pushing S&P 500 back above key technical level
16-May-19 16:20 ET
Dow +214.66 at 25862.68, Nasdaq +75.90 at 7898.02, S&P +25.36 at 2876.32
https://www.briefing.com/investor/markets/stock-market-update/2019/5/16/stocks-advance-for-third-straight-day-pushing-s-and-p-500-back-above-key-technical-level.htm
[BRIEFING.COM] U.S. stocks advanced for the third straight session on Thursday, boosted by positive earnings reports from Cisco Systems (CSCO 55.93, +3.49, +6.7%) and Wal-Mart (WMT 101.31, +1.43, +1.4%). The 0.9% gain in the S&P 500 helped the benchmark index reclaim its 50-day moving average (2866) on a closing basis.
The Dow Jones Industrial Average increased 0.8%, the Nasdaq Composite increased 1.0%, and the Russell 2000 increased 0.6%.
One can attribute Thursday's broad-based rally to several factors: (1) the earnings beats from Dow components Cisco and Wal-Mart, (2) a steady U.S. economy that was reflected in a pick-up in April housing starts, and (3) reduced trade anxiety despite an executive order signed by President Trump that was viewed as an attempt to stifle China's Huawei Technologies.
Early efforts to buy risk assets presumably prompted some short-covering activity that also gave stocks an added boost out of the gate. All 11 S&P 500 sectors finished higher with gains ranging from 0.4% (energy) to 1.3% (materials).
Boeing (BA 353.81, +8.17, +2.4%) was a notable standout. Shares received a late-session boost after the company said it has "flown the 737 MAX with updated MCAS software for more than 360 hours on 207 flights."
Many stocks within the Philadelphia Semiconductor Index (-1.7%), however, did not participate in today's advance. The semiconductor space was pressured by President Trump signing an executive order on Wednesday to protect U.S. technology from "foreign adversaries" that pose a threat to national security.
Many viewed the order as an attempt to restrict Huawei from conducting business with U.S. companies, which include Qualcomm (QCOM 82.81, -3.45, -4.0%) and Lumentum (LITE 50.20, -6.55, -11.5%) among other semiconductor companies.
U.S. Treasuries retreated on Thursday, driving yields higher, as investors embraced a risk-on mindset. The 2-yr yield increased four basis points to 2.20%, and the 10-yr yield increased three basis points to 2.41%. The U.S. Dollar Index increased 0.3% to 97.82. WTI crude rose 1.5% to $62.99/bbl.
Reviewing Thursday's economic data, which included Housing Starts and Building Permits for April, the weekly Initial and Continuing Claims report, and the Philadelphia Fed Index for May:
Housing starts increased 5.7% m/m in April to a seasonally adjusted annual rate of 1.235 million (Briefing.com consensus 1.200 mln), led by a 6.2% increase in single-unit starts. Building permits rose 0.6% m/m to 1.296 million (Briefing.com consensus 1.280 mln), although permits for single-unit dwellings declined 4.2%.
The key takeaway from the report, however, is that there hasn't been any acceleration in building activity. Total housing starts are down 2.5% yr/yr and single-unit starts are down 4.3% yr/yr.
Initial claims for the week ending May 11 decreased by 16,000 to 212,000 (Briefing.com consensus 222,000). Continuing claims for the week ending May 4 decreased by 28,000 to 1.66 million.
The key takeaway from the report is that the initial claims level remains consistent with a tight labor market that is expected to translate into another month of solid nonfarm payrolls growth.
The Philadelphia Fed Index for May jumped to 16.6 (Briefing.com consensus 7.5) from 8.5 in April. The dividing line between expansion and contraction is 0.0.
The key takeaway from the report is that firms were more optimistic about hiring plans over the next six months, which suggests they expect end demand to remain solid.
Looking ahead, investors will receive the preliminary University of Michigan Index of Consumer Sentiment for May and the Conference Board's Leading Economic Index for April on Friday.
Nasdaq Composite +19.0% YTD
Russell 2000 +15.5% YTD
S&P 500 +14.7% YTD
Dow Jones Industrial Average +10.9% YTD
Wall Street overcomes slow start on more positive trade headlines
15-May-19 16:15 ET
Dow +115.97 at 25648.02, Nasdaq +87.65 at 7822.12, S&P +16.55 at 2850.96
https://www.briefing.com/investor/markets/stock-market-update/2019/5/15/wall-street-overcomes-slow-start-on-more-positive-trade-headlines.htm
[BRIEFING.COM] The S&P 500 advanced 0.6% on Wednesday, overcoming a lower start that was attributed to concerns about slowing growth. The market, though, has shown a propensity to bounce on any positive-sounding trade headline, and today was no different.
The Dow Jones Industrial Average (+0.5%) and the Nasdaq Composite (+1.1%), like the S&P 500, were each down as much as 0.7% intraday before rallying. The Russell 2000 increased 0.3% after being down as much as 0.9%.
Stocks climbed into positive territory, and extended gains, after reports indicated that President Trump is expected to delay a decision on auto tariffs by up to six months. Treasury Secretary Steven Mnuchin also said that the U.S. is close to resolving a dispute with Canada and Mexico pertaining to tariffs on aluminum and steel.
These developments helped assuage investors that the U.S. would not be distracted in its trade talks with China by also having to deal with other tariff disputes. The U.S. could return to Beijing as soon as next week to continue talks, but shortly thereafter is more likely, according to sources from The Wall Street Journal.
The S&P 500 communication services (+2.1%), information technology (+1.0%), consumer staples (+0.8%), and consumer discretionary (+0.8%) sectors outperformed the broader market. The financials (-0.5%), materials (-0.2%), and utilities (-0.1%) sectors were the lone groups to finish lower.
Shares of Ford Motor (F 10.36, +0.12, +1.2%) and General Motors (GM 37.37, +0.33, +0.9%) reacted positively to the possible delay in auto tariffs. Semiconductor stocks also outperformed, evident by the 0.8% gain in the Philadelphia Semiconductor Index, although the group had been up as much as 1.5% intraday.
These results were still a nice turnaround for a market that began the day fretting over slower economic growth. The U.S. and China released weaker-than-expected figures for retail sales and industrial production for April. Specifically, U.S. retail sales declined 0.2% (Briefing.com consensus +0.2%), and industrial production declined 0.5% (Briefing.com consensus +0.1%).
The data underpinned the buying interest in U.S. Treasuries, which only tapered off slightly during the rally in equities. The 2-yr yield and the 10-yr yield declined four basis points each to 2.16% and 2.38%, respectively. The U.S. Dollar Index increased 0.1% to 97.58. WTI crude increased 0.4% to $62.06/bbl.
Reviewing Wednesday's economic reports:
Total retail sales declined 0.2% (Briefing.com consensus +0.2%) after increasing an upwardly revised 1.7% (from 1.6%) in March. Excluding autos, retail sales rose just 0.1% in April (Briefing.com consensus +0.6) following an upwardly revised 1.3% increase (from 1.2%) in March.
The key takeaway from the report is that consumers curtailed discretionary spending on goods in April in a way that will temper the outlook for Q2 GDP growth.
Industrial production declined 0.5% in April (Briefing.com consensus +0.1%) following an upwardly revised 0.2% increase (from -0.1%) in March. Total capacity utilization fell to 77.9% (Briefing.com consensus 78.8%) from a downwardly revised 78.5% (from 78.8%) in March.
The key takeaway from the report is the understanding that it marked the fourth straight month in which there was no growth in manufacturing output.
Business inventories were unchanged in March, as expected, following an unrevised 0.3% increase in February. Business sales increased 1.6% on the heels of an upwardly revised 0.2% increase (from 0.1%) in February.
The key takeaway from the report is that the inventory growth on a yr/yr basis (+5.0%) continues to outpace sales growth (+3.7%), which should keep price pressures in check.
The weekly MBA Mortgage Application Index declined 0.6% following a 2.7% increase in the prior week.
The Empire State Manufacturing Survey for May increased to 17.8 (Briefing.com consensus 7.7) from the prior month's reading of 10.1.
The NAHB Housing Market Index increased to 66 (Briefing.com consensus 64) from 63 in April.
Looking ahead, investors will receive Housing Start and Building Permits for April, the weekly Initial and Continuing Claims report, and the Philadelphia Fed Index for May on Thursday.
Nasdaq Composite +17.9% YTD
Russell 2000 +14.8% YTD
S&P 500 +13.7% YTD
Dow Jones Industrial Average +10.0% YTD
Stocks rebound on positive trade rhetoric but close off highs
14-May-19 16:15 ET
Dow +207.06 at 25532.05, Nasdaq +87.47 at 7734.47, S&P +22.54 at 2834.41
https://stockcharts.com/def/servlet/ScanUI
[BRIEFING.COM] The S&P 500 advanced as much as 1.5% on Tuesday on positive U.S.-China trade rhetoric. The broad-based rebound effort, however, lost steam into the close, leaving the S&P 500 up 0.8% for the session.
The Dow Jones Industrial Average gained 0.8%, the Nasdaq Composite gained 1.1%, and the Russell 2000 gained 1.3%.
The stock market began the day modestly higher, propped up by friendly trade chatter between the U.S. and China. The market liked that both sides expressed intentions to continue to work on a trade deal, which helped foster a belief that the recent dip in stocks was a good buying opportunity.
The market also liked President Trump's comments on the matter, although they weren't particularly new or substantive. President Trump touted his relationship with President Xi as "extraordinary" and described the current trade dispute as a "little squabble." According to Mr. Trump, he will meet with President Xi at G-20 next month.
The lighter tone on trade led investors to pick up some of the more beaten-up stocks within the S&P 500 information technology (+1.6%), energy (+1.1%), industrials (+1.1%), and consumer discretionary (+0.9%) sectors. The utilities sector (-0.9%) was the lone sector with a loss after it was the only group to finish higher yesterday.
In corporate news, Comcast (CMCSA 42.91, +0.63, +1.5%) agreed to give Walt Disney (DIS 133.20, +1.86, +1.4%) immediate and full operational control of Hulu. Disney will also be able to buy Comcast's stake in Hulu in 2024 at a valuation of at least $27.5 billion. Uber (UBER 39.96, +2.86) was a notable standout, increasing 7.7% after a rough start as a public company.
The U.S. Treasury market was more reserved on Tuesday, registering modest declines amid the rebound in equities. The 2-yr yield increased two basis points to 2.20%, and the 10-yr yield increased one basis point to 2.42%. The U.S. Dollar Index increased 0.2% to 97.53. WTI crude rose 1.2% to $61.84/bbl, bolstered by increased concerns about supply disruption in the Middle East.
Reviewing Tuesday's economic data, which included Import and Export Prices for April and the NFIB Small Business Optimism Index for April:
Import prices increased 0.2% month-over-month and declined 0.1% excluding fuel. Export prices rose 0.2% and were up 0.4% excluding agricultural exports. On a yr/yr basis, overall import prices declined 0.2%. Excluding fuel, they were down 0.9%. Export prices were up just 0.3%, versus 3.7% for the 12-months ending in April 2018, and up only 0.7% excluding agricultural products, versus 3.9% for the 12 months ending in April 2018.
The key takeaway is that import prices declined, creating another data point that shows a lack of worrisome inflation pressure.
The NFIB Small Business Optimism Index for April increased to 103.5 from 101.8 in March.
Looking ahead, investors will receive the following economic reports on Wednesday: Retail Sales for April, the weekly MBA Mortgage Applications Index, the Empire State Manufacturing Survey for May, Industrial Production and Capacity Utilization for April, Business Inventories for March, and Net Long-Term TIC Flows for March.
Nasdaq Composite +16.6% YTD
Russell 2000 +14.4% YTD
S&P 500 +13.1% YTD
Dow Jones Industrial Average +9.5% YTD
U.S. stocks drop, as China retaliates with tariff hike
13-May-19 16:20 ET
Dow -617.38 at 25324.99, Nasdaq -269.92 at 7647.00, S&P -69.53 at 2811.87
https://www.briefing.com/investor/markets/stock-market-update/2019/5/13/us-stocks-drop-as-china-retaliates-with-tariff-hike.htm
[BRIEFING.COM] U.S. stocks sold off on Monday, as trade tensions escalated after China retaliated with a tariff rate hike on U.S. imports. The 2.4% drop in the S&P 500 sent it back near the 2800 level in a broad-based effort to de-risk amid global growth concerns.
The Dow Jones Industrial Average dropped 2.4%, the Nasdaq Composite dropped 3.4%, and the Russell 2000 dropped 3.2%.
The stock market opened sharply lower after China increased the tariff rate on $60 billion of U.S. imports to a floating range of 5-25%, from 5-10%, starting June 1. Prior to the news, China said it would "not surrender" to external pressure. There was also speculation that Beijing could reduce its consumption of other U.S. goods and services, including orders from Boeing (BA 337.37, -17.30, -4.9%).
Although the amount of goods China imports from the U.S. is substantially less than the goods the U.S. imports from China, the retaliatory actions fueled concerns about an elongated trade war. In turn, a longer-than-anticipated feud with Beijing contributed to global growth concerns and a dearth of buying interest in cyclical assets.
Growth concerns were manifested in the underperformance of the S&P 500 information technology (-3.7%), consumer discretionary (-3.0%), financials (-2.9%), and industrials (-2.8%) sectors. The Philadelphia Semiconductor Index (-4.7%), and oil ($61.08/bbl, -$0.58, -0.9%) and copper ($2.72/lb, -$0.05, -1.8%) prices, also succumbed to the growth worries.
The utilities (+1.1%) and real estate (unch) sectors outperformed given their defensive-oriented nature and a drop in U.S. Treasury yields, as investors flocked to the safe-haven Treasuries. The 2-yr yield dropped six basis points to 2.18%, and the 10-yr yield dropped five basis points to 2.41%.
Firmness in the U.S. Dollar Index (97.34, +0.01, unch) and a huge spike in the CBOE Volatility Index (VIX 20.53, +4.49, +28.0%) were also indicative of the defensive mindset in the market. The move in the VIX also showed increased hedging interest against further downside in equities.
In corporate news, Apple (AAPL 185.72, -11.72) fell 5.8% on increased trade tensions and a Supreme Court ruling that would allow iPhone users to pursue an App Store antitrust case. Teva Pharmaceutical (TEVA 12.23, -2.13) fell 14.8% after more than 40 states sued the company, accusing it of price-fixing with 19 other drug companies.
Uber (UBER 37.10, -4.47) also stood out, losing 10.8% to extend its losses since its IPO on Friday.
Investors did not receive any notable economic data on Monday.
Looking ahead, investors will receive the NFIB Small Business Optimism Index for April and Import and Export Prices for April on Tuesday.
Nasdaq Composite +15.3% YTD
Russell 2000 +12.9% YTD
S&P 500 +12.2% YTD
Dow Jones Industrial Average +8.6% YTD
InvestmentHouse - Anyone Going to Lose Sleep Over No China Trade Deal? (WeekendNewsletter)
https://news.investmenthouse.com/2019/05/the-daily-part-1-of-3-5-11-19.html
MARKET SUMMARY
- More trade angst sends stocks lower, but stocks then rebound to close the week positive.
- More encouraging trade quotes from the administration turn stocks, or was it just that the indices made the technical tests of support we have discussed?
- So there is no trade deal with China. Anyone really going to lose sleep over it?
- CPI remains low-ish, and Powell may have to start wondering just how 'transitory' those prices are.
- Chips rebound but not as convincing as other leadership areas.
- Indices make the tests, leaders hold up quite well, will they now bounce to try the highs again?
Friday came and went and all that the market got was more Chinese tariffs and a dud UBER IPO. No trade deal, lots of market volatility, market selling -- that was the week. On top of that, Saturday Trump proposed tariffs on ALL Chinese goods entering the US. Hey, if you are going to do it as a weapon, the do it. No half measures.
Okay, it was not all tariffs. After the President said there was 'no need to rush' on any trade deal, setting off more market weakness, he later noted that there could still be a deal. Then trade cheerleader Mnuchin chimed in that the Friday discussions, while just 2 hours, went very well.
After diving from the open to midmorning, that was enough -- along with the prior market selloff to key support before -- to rebound the market. Like the Thursday rebound the indices and leading stocks rebounded off the lows to hold key support with nice doji with tail. Unlike the Thursday reversal off the lows, Friday the indices upped the ante, closing positive on the session.
SP500 10.60, 0.37%
NASDAQ 9.65, 0.08%
Dj30 114.01, 0.44%
SP400 0.30%
RUTX 0.19%
SOX 0.14%
NASDAQ 100 0.05%
VOLUME: NYSE -6%, NASDAQ -5%. NYSE trade was lower and still below average Friday, not a big shot of reversal-style volume. NASDAQ trade was also lower, though still nicely above average similar to Thursday's higher volume when the index reached lower and reversed to close higher than the open. Not a clear signal from NASDAQ the buyers were swarming, but a good shot of volume on the reversal.
ADVANCE/DECLINE: NYSE +1.9:1, NASDAQ +1.2:1. Nothing major here, but then again, on reversal sessions breadth does lag the reversal.
Trade deal not the real deal?
Perhaps it was na ve for the market to believe a trade deal would gel. China is still communist, after all. When push came to shove it realized it could not commit to not steal technology. Sure, the large US multinationals scream that they MUST be able to manufacture in China given they chose to manufacture there and decided not to use the last year to move production elsewhere. That was their choice, both to move there and then not to move. MOREOVER, many will be allowed to file for exemptions -- it won't be a horrendous ordeal for most and for the US and US consumers.
You already know my feelings about importing cheap products from China -- using cheap Chinese-made screws are enough to turn anyone against Chinese imports. Not to mention lead in paint on toys (something the US dealt with 50+ years ago), poisonous dog food -- all the things the US went through with US manufacturing in the 1950's to 1980's and resolved we are now importing once again from China. And don't get me started on the return of measles, polio, diphtheria, resistant TB and other diseases we eradicated from the US at the cost of billions of dollars but are now letting walk back in on an unchecked border. Argh!!
But, I digress. The point: we will survive the lack of a trade deal with China. Nothing can be worse than the one-sided theft that has taken place the past 40 years. Having no trade deal is not the horror that it is made out to be. Predictions of massive jobs losses, higher prices, etc. are -- as ALWAYS -- grotesquely exaggerated. Hell, I ALREADY am willing and do pay more for US made screws that actually work after throwing those from China into the metal recycling bin, or US made 3/8" aluminum that can be bent without cracking as does Chinese aluminum -- the time and labor saved from using quality materials, even at a higher price, is at worst a wash.
As US businesses and the economy survive without cheap Chinese crap, so will the market.
Indeed, the market, as noted above, did an admirable job of holding up at support even with all the angst experienced at the lack of a trade deal. Same as Thursday, the indices undercut the 50 day MA or 200 day MA as the case may be, then rebounded nicely to hold that support, this time turning positive. Many leaders did the same.
Perhaps the market needed this test -- as discussed here on many occasions -- and the trade failure was an excuse to take it. At this juncture the market action the past two weeks certainly looks like a good, ordinary test of the next important support. Perhaps there is more there, but the indices and leaders look quite good after this pullback.
The Fed
What is forgotten in the near term angst is the Fed, fading from the headlines but still the force. Friday was more reason the Fed remains the real issue, not a trade deal or lack thereof with China.
Friday the April CPI issues. The overall and core were less than expected month/month (0.3 vs 0.4, 0.1 vs 0.2%, respectively) and still 'tame' year/year (2.0% and 2.1%).
Real hourly earnings year/year rose 1.2%. Real weekly earnings year/year rose 0.9%. Hardly leading the so-called 'wage push' inflation the Fed buys into.
These figures keep the Fed in play. Not in terms of raising rates, but in terms of Powell living up to his prior words. The PPI and CPI show the lower prices are not 'transitory,' but are holding. More and more companies are automating tasks, further driving down the cost of goods and services. Disinflationary trends in industry offsetting inflation in other areas. We won't go into the specifics, how some inflation in certain key areas (e.g. Shelters +3.8%, food, education) are the ones that really bite. Why not? Because the Fed looks at the aggregate, not parsing areas where say the lower income brackets really feel the hit because they don't go buy new computers, TV's, software, etc. on a weekly basis. Hard to feel lower prices when the stuff you buy is rising in price.
In any event, the Fed may have to conclude in 2 to 3 months that the prices are not transitory, putting pressure on Powell to do as the President bids, i.e. cut rates. Oh, it won't cut 1% as the President suggests, but a token rate cut if prices remain low would appear necessary for Powell to keep his reputation of making adjustments when he sees the Fed off course. The Fed holds the currency's value in its hands. The Fed is still very much in play. That makes the Fed MUCH more important than these worries about trade. When you look at the index pullbacks, thus far they indicate this as well.
THE MARKET
CHARTS
For a second session the indices sold to or below a key level, then rebounded to hold that level. The positive close Friday was a nice upside touch. Volume disappointing. Basically, the indices again tested key levels and recovered. Another session of good shakeout action that sets up a bounce.
The bounce is set up. First, will it happen or will the indices just roll over again and break the near support? Second, if they do bounce, will the bounce be more than just a relief move that again fails, e.g. DJ30 at the late February high, a potential left shoulder to a head and shoulders pattern?
Those are questions that are answered as the indices make the moves and the leaders make their moves. The prior highs of course have many fearful this is the top of at least this part of the rally and will trigger even more selling. Again, the leaders will tell this party of the market story as they move higher, and after Thursday and Friday, many held on and several started higher. It would appear they will show us soon enough their intentions.
SP500: Reached to a lower pullback low below the 50 day MA's then reversed to a gain in an 'outside day' that was lower on the low and higher on the high than Thursday. Moreover, it was a reversal session at a key level after four moves up the 10 and 20 day EMA led to a 50 day MA test. Pretty classic action in an uptrend, testing a bit deeper after a good move. Again, the proximity of the old highs makes the test a bit more frightening to many.
NASDAQ: Also an outside day with a reach lower below the 50 day MA and recovery to positive. NASDAQ also made four moves up the 20 and 10 day EMA and then tested the 50 day MA with good shakeout sessions. That is normal: 4 rotations up the 10 and 20 day after a 50 day MA test, then another 50 day MA test. That said, this weekend Nidec cut its guidance for demand for hard drives 13%.
NASDAQ 100: Reached much lower below the 50 day MA, reversed to positive. Same setup as NASDAQ though the large cap techs have been spotty day to day with their leadership abilities.
SOX: Gapped lower Thursday to a doji at the 50 day MA. Friday a duplicate doji. Holding support on big volume, but not that convincing for the upside. An ABCD pattern on both SOX and SMH, but as noted Thursday, not the cleanest, and with these patterns, cleaner is better. Definitely will show if it has the chops to move back up. Of course, what SOX shows means a lot for the rest of the market.
SP400: A second session testing the 200 day SMA on the low, rebounding this time to close above the 50 day MA's. Not bad action to end the week, but a bit of a rounded top the past 5 weeks with lower MACD on the higher recovery highs. That indicates momentum is waning. If the small caps are to hold, this is where they should do so.
DJ30: A second test of the 200 day SMA and a second rebound from the test. Moved to positive Friday but closed just below the 50 day MA. This hold of the 200 day SMA was necessary, but also does nothing to change the possibility of a right shoulder setting up to a head and shoulders top from mid-February. The failure below the prior all-time highs at the 'head' is what makes this action very much worth watching.
RUTX: A second bug doji with tail, touching down to the same level then rebounding to a modest gain over the 200 day MA and 50 day MA's. Held where it needs to, but the pattern is not healthy: Broke out 2 Fridays back but was rejected two sessions later. Not good action overall. Again, the holds at the 200 day SMA are what it had to do but did not change the character to positive.
LEADERSHIP
Software: Remains very solid. WDAY, COUP, TEAM, NOW, TWLO rose on Friday. Those are just a few. MSFT moved on volume up from the 20 day EMA. VMW held the 20 day and started upside. FFIV had a big shakeout and reversal at the bottom of its range; may be ready to rebound.
Semiconductors: Mixed and concerning. AMD bounced from the 50 day MA on a solid volume shot. AVGO showing a doji at the 50 day and trendline. Okay, that is good, but the double top from late April is something of a concern. UCTT tested the 10 day EMA and is trying to bounce. RMBS still in a lateral consolidation at the 20 day. LRCX trying to hang on at some price support at 195. BRKS similar to UCTT in nice test of its surge higher. INTC . . . is still in the depts of its gap lower.
FAANG: Still set up well . . . FB a very nice doji at the 20 day EMA Friday in a downward pointing wedge. AAPL a big doji tap at the 200 day MA Friday. Okay, this is the time to move upside. AMZN struggled Friday, reaching near 1850 before reversing but still showing a loss on the session. At the lick log. NFLX a second doji below the 50 day MA. Lick log here as well. GOOG plunged to test the 200 day SMA on the low, the reversed to positive on the day. Perhaps that was the shakeout GOOG needs to start bouncing it after that earnings gap lower.
Financials: Tested more and then bounced Friday. C tested the 50 day EMA then rebounded positive in decent action. JPM made the same low and rebounded to the same close. It looks as if it needs to test lower before it is done. TCBI regional bank hanging in at the 20 day EMA. MS holding over the 50 day MA in nondescript trade. V attempting a bounce off the 50 day MA after a second intraday tap at that level.
Retail: Some are still testing the 50 day, some are moving. COST jumped 1.5% Friday off the 50 day. ROST showed good volume as it started higher. TJX still at the 50 day. BBY reached to the 200 day SMA then rebounded to hold the 50 day -- questionable pattern. DLTR slipped below the 50 day MA on the close for the first time since late December.
Machinery/Manufacturing: As a group, still struggling in a tough 3 weeks. CMI still in a nice 50 day MA test. CAT with another doji at support but well below the 200 day SMA. DE a second doji at the 200 day SMA, but a big selloff and gap lower on the week. UTX tapped at the 50 day MA on the low for a second session. Not bad looking, just had that weak Tuesday.
MARKET STATS
DJ30
Stats: +114.01 points (+0.44%) to close at 25942.37
Nasdaq
Stats: +6.35 points (+0.08%) to close at 7916.94
Volume: 2.41B (-4.74%)
Up Volume: 1.22B (+180M)
Down Volume: 1.14B (-320M)
A/D and Hi/Lo: Advancers led 1.22 to 1
Previous Session: Decliners led 1.47 to 1
New Highs: 70 (+17)
New Lows: 105 (+9)
S&P
Stats: +10.68 points (+0.37%) to close at 2881.40
NYSE Volume: 781.73M (-5.46%)
Up Volume: 457.557M (+160.899M)
Down Volume: 309.821M (-205.672M)
A/D and Hi/Lo: Advancers led 1.89 to 1
Previous Session: Decliners led 1.37 to 1
New Highs: 70 (+5)
New Lows: 60 (-26)
SENTIMENT
VIX: 16.04; -3.06. Deflated rapidly after the Thursday spike to 23.38 that then reversed intraday. Back below the 200 day SMA and into the lateral range from February.
VXN: 19.10; -2.93
VXO: 18.00; -3.87
Put/Call Ratio (CBOE): 1.24; -0.04. Four of five sessions over 1.0 as the extreme sessions are stacking up. The more they do so, the better chance of a rebound IF the other indications line up as well.
Bulls and Bears:
Bears stopped the decline but did not bounce, holding 17.8 for a second week. Bears finally broke their semi-negativity and dropped the past few weeks. As noted, that was a negative indication for the rally as they had remained more bearish in a relative sense than bulls. The decline suggested a selloff and that occurred, more or less.
Bulls backed off a point after rising steadily. Just as they got within 5 points of that 60% range where the upside moves have stalled, bulls lost their nerve a bit.
At this juncture there are still no extremes. Bulls are close to 60, but not there. Bears have overall been more complacent of late.
It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: Shading to yellow for this week even as bulls backed off. Not in the 60's, but not much fear from the selling.
Bulls: 55.5 versus 56.4
Bears: 17.8 versus 17.8
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
OTHER MARKETS
INTEREST RATES
Threat level: FLASHING Yellow. No current inversion but close. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread rises 1BP to 3BP. Still too damn close.
The 2 year versus the 10 year: Spread rises 1BP to 20BP
10 year: 2.473% versus 2.451%
3 month: 2.431% versus 2.432%
2 year: 2.272% versus 2.262%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
The Dollar: There are two schools of thought. First, those who believe a strong dollar is in the interest of the US. Reagan (though not all of his advisors) and Clinton were strong dollar Presidents. Second, there are those who believe a strong dollar prevents the US from selling US goods abroad. The Bushes (1 and 2) and Obama were in this category. The thing is, the US is always its economic strength peak when its consumers are consuming, and that is when there is a strong economy and a strong dollar: they consume both US and foreign goods. History shows this again and again, and thus it is worth watching the dollar as a gauge of how the US economy is performing.
EUR/USD: 1.1234 versus 1.12187. A second session tapping the 50 day MA's after rebounding off the lower low from late April.
Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.
USD/JPY: 109.957 versus 109.706. Dollar found support at 109.50, and after 3 weeks of weakness is trying to make a stand for at least a bounce from the selling.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 61.66, -0.04. Flat lined still at the 200 day SMA.
Gold: 1287.40, +2.20.
MONDAY
The trade news is old news. It is sinking in there will not be a deal. What needs to sink in next is that it won't make much difference, that the Fed is still the primary game for stocks, AND without a trade deal the fear of a slowdown will at the LEAST keep the Fed on a pause. The President, of course, wants Powell to admit lower prices are not transitory and cut rates.
Either way, the Fed is compliant. Still. That is still a market positive.
Also a positive: indices holding at support with doji. Leaders holding at support in good patterns. That bodes well for a rebound to take on the old highs.
Negatives include the action of the chips. Some look great. Some are trying to hold. Some are problematic, and some are downright bad (e.g. INTC, XLNX, NVDA). If the chips go, the market will follow at some point.
Trade is also a negative on the stray headline or tweet. It can add upside if a deal is struck. As for more downside, not sure how much is remaining given the reality is sinking in that a deal is less than likely.
The bounce is the thing that shows the conscience of the . . . rally. Could not think of a rhyme to fit the Shakespeare line. The leaders and indices are set up to make the move. Will they make the bounce? If so, will the bounce have strength and this time take out those prior highs? We will be playing the quality leaders that held up during the selling as they are the strongest in the market. Hopefully the leading chips will have the strength to pull the rest of that sector with them in a rally.
Have a great weekend and Mother's Day!
Stocks stage major reversal, close higher on positive trade rhetoric
10-May-19 16:15 ET
Dow +114.01 at 25942.37, Nasdaq +6.35 at 7916.92, S&P +10.68 at 2881.40
https://www.briefing.com/investor/markets/stock-market-update/2019/5/10/stocks-stage-major-reversal-close-higher-on-positive-trade-rhetoric.htm
[BRIEFING.COM] U.S. stocks staged a major reversal on Friday, climbing from steep losses to modest gains. The S&P 500 was down as much as 1.6% on persisting trade uncertainty, but positive trade rhetoric helped lift the benchmark index to a gain of 0.4%.
The Dow Jones Industrial Average (+0.5%), the Nasdaq Composite (+0.1%), and the Russell 2000 (+0.2%) also finished higher after being down as much as 1.4%, 1.9%, and 1.5%, respectively.
Ten of the 11 S&P 500 sectors swung positive, led by utilities (+1.7%), materials (+1.3%), and consumer staples (+1.2%). The lone exception was the health care sector (-0.1%).
President Trump fueled early trade angst when he said there was no need to rush a deal after the tariff rate on $200 billion of Chinese imports was raised to 25% from 10% early Friday. He added that the U.S. was working on another set of 25% tariffs on $325 billion of Chinese imports.
The persisting trade uncertainty prompted broad-based selling in equities and general efforts to de-risk. The S&P 500 also fell below its 50-day moving average (2862). Selling conviction abated soon after the conclusion of the current round of trade negotiations in Washington.
Treasury Secretary Steven Mnuchin described the talks as "constructive," and China's Vice Premier Liu He said they went "fairly well." Bloomberg indicated sources that said the discussions produced little progress, but the positive-sounding comments helped spark a rebound attempt.
The U.S. is also reportedly giving China three to four more weeks to reach a deal, which helped provide some clarity on a timeline and improve optimism about the prospects for a deal. President Trump said that talks will continue in the future, and that tariffs may or may not be removed depending on the outcome of these discussions.
The rally caught investors off guard, especially considering that nothing concrete in terms of plans was established. Nevertheless, it prompted short-covering activity that helped strengthen the recovery attempt. The S&P 500 was able to close above its 50-day moving average.
In corporate news, Uber (UBER 41.57, -3.43, -7.6%) made its public debut on Friday, although the price action was much more subdued than past IPOs this year. Shares opened at $42 after pricing at $45 per share, which was already at the lower end of the $44-$50 range.
U.S. Treasuries finished little changed after backing off their morning highs. The 2-yr yield declined two basis points to 2.24%, and the 10-yr yield was unchanged at 2.46% The U.S. Dollar Index was little changed at 97.33. WTI crude declined 0.1% to $61.66/bbl.
Reviewing Friday's economic data, which included the Consumer Price Index for April and the Treasury Budget for April:
Total CPI increased 0.3% m/m in April (Briefing.com consensus 0.4%) while core CPI, which excludes food and energy, rose just 0.1% (Briefing.com consensus 0.2%) for the third consecutive month. That left the yr/yr increases at 2.0% and 2.1%, respectively.
The key takeaway from the report is that it will keep the Fed in a neutral state of policy-setting mind and the market in an uncertain state over what the Fed's next move will be -- and when.
The Treasury Budget for April showed a surplus of $160.3 billion versus a surplus of $214.3 billion for the same period one year ago. The Treasury Budget is not seasonally adjusted, so the April surplus cannot be compared to the $146.9 billion deficit for March.
The fiscal year-to-date deficit is $530.9 billion versus a deficit of $385.4 billion for the same period ago.The budget deficit over the last 12 months is $924.4 billion, versus $870.5 billion for the 12 months ending in March.
Looking ahead, investors will receive the NFIB Small Business Optimism Index for April and Import and Export Prices for April on Tuesday.
Nasdaq Composite +19.3% YTD
Russell 2000 +16.6% YTD
S&P 500 +14.9% YTD
Dow Jones Industrial Average +11.2% YTD
Stocks decline for fourth straight day, but close near highs
09-May-19 16:20 ET
Dow -138.97 at 25828.36, Nasdaq -32.73 at 7910.57, S&P -8.70 at 2870.72
https://www.briefing.com/investor/markets/stock-market-update/2019/5/9/stocks-decline-for-fourth-straight-day-but-close-near-highs.htm
[BRIEFING.COM] The S&P 500 declined 0.3% on Thursday, although it had dropped as much as 1.5% on concerns about an elongated trade war with China. The Dow Jones Industrial Average (-0.5%), the Nasdaq Composite (-0.4%), and the Russell 2000 (-0.3%) also finished near their highs after being down as much as 1.7%, 1.9%, and 1.8%, respectively.
The stock market began the day noticeably lower following tariff-related comments from President Trump. The president told a rally of supporters Wednesday that China "broke the deal," and said he had no problem with following through with tariffs on China. The tariff rate on $200 billion of Chinese imports is set to increase to 25% at midnight.
Investors were steadfast on de-risking, pushing stocks to session lows in morning action. All 11 S&P 500 sectors showed considerable losses, which helped send the S&P 500 below its 50-day moving average (2860). U.S. Treasuries rose in a flight-to-safety trade, and the CBOE Volatility Index (VIX 19.35, -0.26) touched 23.38 at its high.
A sense that the negativity had gotten too far, though, helped abate the selling pressure. Renewed buying interest helped the S&P 500 reclaim its 50-day moving average on a closing basis while trade headline volatility persisted.
A CNBC headline was quick to point out that President Trump said he had an "excellent alternative" to a trade deal, which was later clarified that the tariffs were the alternative. President Trump also said he received a letter from President Xi and intended to give him a call later, which was a sign of good will ahead of a Thursday dinner between Vice Premier Liu He and USTR Lighthizer.
Nevertheless, the trade-sensitive S&P 500 materials (-0.8%) and information technology (-0.7%) sectors were the worst-performing groups. The real estate (+0.3%) and energy (+0.1%) sectors were the lone sectors to finish higher.
Shares of Walt Disney (DIS 133.59, -1.40, -1.0%) finished lower despite it beating top and bottom-line estimates. Shares of Intel (INTC 46.62, -2.62, -5.3%) dropped after it was downgraded to Market Perform from Outperform at BMO Capital Markets. Chevron (CVX 121.19, +3.69, +3.1%), meanwhile, decided to not provide a counteroffer to acquire Anadarko Petroleum (APC 73.39, -2.47, -3.3%).
U.S. Treasuries finished on a higher note, although buying interest cooled off as equities staged a recovery. The 2-yr yield declined four basis points to 2.26%, and the 10-yr yield declined three basis points to 2.46%. The U.S. Dollar Index lost 0.2% to 97.42. WTI crude lost 0.6% to $61.73/bbl.
Reviewing Thursday's batch of economic data:
The Producer Price Index for final demand increased 0.2% m/m in April, as expected, while the index for final demand, less food and energy ("core PPI"), increased 0.1% (Briefing.com consensus 0.2%). That left the yr/yr increases at 2.2% and 2.4%, respectively, unchanged from March.
The key takeaway from the report is that it didn't show any acceleration in core producer inflation, which will keep the market's pass-through concerns for the consumer in check.
Initial claims for the week ending May 4 decreased by 2,000 to 228,000 (Briefing.com consensus 220,000). Continuing claims for the week ending April 27 increased by 13,000 to 1.684 million.
The key takeaway from the report is that the four-week moving average of 220,250 remains relatively close to a 50-year low, which implies there hasn't been any undue weakening in the labor market.
The trade deficit was $50.0 billion in March (Briefing.com consensus -$51.2 bln), up from -$49.3 billion in February. Exports of $212.0 billion were $2.1 billion more than February exports. Imports of $262.0 billion were $2.8 billion more than February imports.
The key takeaway from the report is that there hasn't been a meaningful improvement in the trade deficit despite efforts to reduce it with increased tariffs.
Wholesale inventories declined 0.1% in March (Briefing.com consensus +0.1%) on top of an upwardly revised 0.4% increase (from 0.2%) in February. Wholesale sales jumped 2.3% following an unrevised 0.3% increase in February.
The key takeaway from the report is that inventory growth continues to outpace sales growth on a year-over-year basis, which should help keep price pressures in check.
Looking ahead, investors will receive the Consumer Price Index for April and the Treasury Budget for April on Friday.
Nasdaq Composite +19.2% YTD
Russell 2000 +16.4% YTD
S&P 500 +14.5% YTD
Dow Jones Industrial Average +10.7% YTD
Stocks fade into the close, extend skid as trade uncertainty persists
08-May-19 16:20 ET
Dow +2.24 at 25967.33, Nasdaq -20.44 at 7943.30, S&P -4.63 at 2879.42
https://www.briefing.com/investor/markets/stock-market-update/2019/5/8/stocks-fade-into-the-close-extend-skid-as-trade-uncertainty-persists.htm
[BRIEFING.COM] The S&P 500 declined 0.2% on Wednesday, as investors remained cautious about a U.S.-China trade deal. The benchmark index was on pace to end a two-day slide, being up as much as 0.5% on optimism that a trade deal may still get done, but the recovery attempt faded in last 30 minutes of trading.
The Nasdaq Composite lost 0.3%, and the Russell 2000 lost 0.5%. The Dow Jones Industrial Average (unch) managed to finish unchanged.
President Trump pumped some optimism into the market after he tweeted that China's Vice Premier was coming to Washington to make a deal. Press Secretary Sarah Sanders later chimed in that the White House received an indication that China wants to make a deal. Both remarks sent stocks higher in a knee-jerk reaction despite both statements being nearly identical and neither giving the market any new information.
China had already confirmed it was planning on coming to the U.S. this week, and it wouldn't have done so if it didn't intend to work on a trade deal. The one new component, if true, is that Reuters indicated sources said China backtracked on nearly all aspects of a trade deal last week.
The report raises uncertainty about when, if it all, a deal might get done with the tariff rate on $200 billion of Chinese imports set to increase on Friday. Nevertheless, the stock market traded with modest, but broad-based, gains during the afternoon before selling off into the close.
Most of the S&P 500 sectors finished little changed. The utilities (-1.4%) and communication services (-0.4%) sectors underperformed, while the health care (+0.1%) and real estate (+0.1%) sectors outperformed.
Shares of Lyft (LYFT 52.91, -6.43) dropped 10.8% after the company missed earnings estimates by a wide margin. The stock was also pressured by many ride-hailing drivers around the world turning off their apps Wednesday in protest for better pay, benefits, and worker protections.
U.S. Treasuries lost steam, sending yields higher, as equities gained traction during the day. The 2-yr yield increased two basis points to 2.30%, and the 10-yr yield increased three basis points to 2.48%. The U.S. Dollar Index held firm, finishing unchanged at 97.62. WTI crude rose 1.2% to $62.12/bbl following bullish inventory data out of the Energy Information Administration.
In economic data, the weekly MBA Mortgage Applications Index increased 2.7% following a 4.3% decline in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the Producer Price Index for April, the Trade Balance report for March, and Wholesale Inventories for March on Thursday.
Nasdaq Composite +19.7% YTD
Russell 2000 +16.8% YTD
S&P 500 +14.9% YTD
Dow Jones Industrial Average +11.3% YTD
Stocks Fall on U.S.-China Trade Uncertainty
07-May-19 16:25 ET
Dow -473.39 at 25965.09, Nasdaq -159.53 at 7963.74, S&P -48.42 at 2884.05
https://www.briefing.com/investor/markets/stock-market-update/2019/5/7/stocks-fall-on-uschina-trade-uncertainty.htm
[BRIEFING.COM] U.S. stocks sold off on Tuesday, as increased uncertainty about a U.S.-China trade resolution contributed to a broad-based effort to de-risk. The 1.7% drop in the S&P 500, which was down as much as 2.4% at one point and flirting with its 50-day moving average (2856.44), sent the benchmark index below the 2900 level on a closing basis for the first time in nearly a month.
The Dow Jones Industrial Average dropped 1.8%, the Nasdaq Composite dropped 2.0%, and the Russell 2000 dropped 2.0%.
The stock market began the day noticeably lower after USTR Robert Lighthizer accused China of reneging on its prior commitments, and said the higher 25% tariff rate on $200 billion of Chinese imports will go into effect Friday. China is prepared to impose retaliatory tariffs on U.S. imports, but it will still send Vice Premier Liu He to Washington to continue trade talks later this week.
Investors yesterday had largely shrugged off President Trump's threat to raise the tariff rate to 25% from 10% on $200 billion of Chinese imports starting Friday. Unlike yesterday, though, there was little effort to buy the dip, which helped exacerbate selling interest throughout the day.
All 11 S&P 500 sectors finished lower as investors also sought to de-risk after a strong start to the year with an understanding that a meaningful trade resolution may take longer than expected. Nine of the 11 sectors finished with losses of at least 1.0%.
The trade angst also contributed to general growth concerns, which were manifested in lower oil prices ($61.24/bbl, -$1.01, -1.6%) and relative weakness in the cyclical sectors. The trade-sensitive S&P 500 information technology (-2.1%), industrials (-2.0%), and materials (-1.8%) sectors were among Tuesday's worst-performers.
Trading was largely defensive, evidenced by a flight-to-safety in U.S. Treasuries, firmness in the U.S. dollar, and a huge spike in the CBOE Volatility Index (VIX 20.94, +5.50, +35.1%). The move in the VIX reflected interest in hedging against further downside.
The 2-yr yield declined three basis points to 2.28%, and the 10-yr yield declined five basis points to 2.45%. The U.S. Dollar Index increased 0.1% to 97.60.
Reviewing Tuesday's economic data, which included the JOLTS - Job Openings and Labor Turnover Survey for March and the Consumer Credit report for March:
The JOLTS report showed that job openings increased to 7.488 million in March from a revised 7.142 million (from 7.087 million) in February.
Total outstanding consumer credit increased by $10.3 billion in March (Briefing.com consensus $17.0 billion) after increasing an upwardly revised $15.4 billion (from $15.2 billion) in February.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index on Wednesday. China's trade balance report will also be released overnight, which will play directly into the market's mindset about where the trade negotiations might be headed.
Nasdaq Composite +20.0% YTD
Russell 2000 +17.3% YTD
S&P 500 +15.1% YTD
Dow Jones Industrial Average +11.3% YTD
Stocks Pare Tariff-Related Losses as Investors Still Hope for a Deal
06-May-19 16:20 ET
Dow -66.47 at 26438.48, Nasdaq -40.71 at 8123.27, S&P -13.17 at 2932.47
https://www.briefing.com/investor/markets/stock-market-update/2019/5/6/stocks-pare-tariffrelated-losses-as-investors-still-hope-for-a-deal.htm
[BRIEFING.COM] The S&P 500 declined 0.5% on Monday, although it had dropped as much as 1.6% after threats from President Trump to increase China tariffs fueled concerns about a trade deal. Investors regrouped to buy the dip, though, lifting stocks off their lows on hopes that a trade deal will still be secured.
The Dow Jones Industrial Average lost 0.3%, and the Nasdaq Composite lost 0.5%. The domestically-oriented Russell 2000 managed to finish higher by 0.1%.
President Trump said on Sunday that he will increase tariffs on $200 billion of imported Chinese goods to 25% from 10%, effective Friday. An additional $325 billion of imported goods could also face a 25% tax. The news rattled equity markets around the world and catalyzed a 5.6% drop in China's Shanghai Composite.
The worst levels in the U.S., however, came at the beginning of the day as all 11 S&P 500 sectors traded lower. Buying interest throughout the day contributed to a steady advance off early lows.
Many market participants viewed President Trump's threat more as a negotiation tactic to speed up trade talks than a move prevent the completion of a trade deal. Confidence that President Trump would not try to upend a market coming off session highs by jeopardizing a deal supported a reversal in stocks. China reportedly said it still plans to send a trade delegation to Washington this week.
There is increased uncertainty, though, which contributed to the underperformance of the S&P 500 materials (-1.4%), industrials (-1.0%), and information technology (-0.8%) sectors. These sectors contain many companies with Chinese exposure. The health care sector (+0.6%) was the lone group to finish higher.
The energy sector (-0.1%) showed relative strength following positive reactions to Occidental Petroleum (OXY 58.77, +0.82, +1.4%) revising its offer to acquire Anadarko Petroleum (APC 75.49, +2.77, +3.8%) to include more cash. Shares of Chevron (CVX 118.40, +1.13, +1.0%) also outperformed on the news, as its likely defeats its proposal to acquire Anadarko for a premium.
A turnaround in oil prices ($62.31/bbl, +0.38, +0.6%) amid rising tensions between the U.S. and Iran also provided some support for the energy space.
U.S. Treasuries finished higher but lost steam as equities regained buying interest. The 2-yr yield declined one basis point to 2.31%, and the 10-yr yield declined three basis points to 2.50%. The U.S. Dollar Index finished little changed at 97.53.
Investors did not receive any economic data on Monday.
Looking ahead, investors will receive the JOLTS - Job Openings survey for March and the Consumer Credit report for March on Tuesday.
Nasdaq Composite +22.4% YTD
Russell 2000 +19.8% YTD
S&P 500 +17.0% YTD
Dow Jones Industrial Average +13.3% YTD
InvestmentHouse - Berkshire Lets On It Bought Some AMZN (Weekend Newsletter)
https://news.investmenthouse.com/2019/05/the-daily-part-1-of-3-5-3-19.html
- Jobs strong on the headlines, Berkshire lets on it bought some AMZN, and Fed speakers walk back Powell's comments. Of course stocks jump.
- Stocks break higher but indices still in the same relative position and on light volume again, sans RUTX.
- RUTX finally breaks some resistance, still miles from a high, while SP500, NASDAQ still trying to put in a definitive high.
- Jobs created but still almost 1/3 of the US, over 100M working aged citizens, are not working.
- Plenty of good tech setups along with financials, rails, to name a few.
- After the excitement from Friday dies down, will the buyers remain or will sellers that showed up the past week show up again?
Futures were up pre-Jobs Friday, and when the jobs report headline numbers beat expectations the market hesitated briefly. A big top line beat, unemployment drops 2BP, wages decent at 3.2% year/year. Still, Powell's comments from Wednesday about 'transient' weak prices and no need to move either direction with rates were fresh.
With some other Fed commentary, however, commentary that walked back Powell's post-FOMC statements, stocks held the bid and indeed improved upon it. They rallied to midmorning, tested a bit, then rallied to mid-afternoon where they pretty much flat-lined to the close. Not a bad day upside after some shaky sessions, but in reality the action simply left the indices in the same old, same old -- except for RUTX.
SP500 28.12, 0.96%
NASDAQ 127.23, 1.58%
DJ30 197.16, 0.75%
SP400 1.43%
RUTX 1.98%
SOX 0.65%
NASDAQ 100 1.58%
VOLUME: NYSE -5%, NASDAQ -6%. Again below average volume on a move higher. That would not be such a downer if there was no selling on the week. There was some distribution, however, right at the prior highs as upside was turned back.
ADVANCE/DECLINE: NYSE +3.5:1, NASDAQ +3.9:1. Now THAT is impressive breadth, more of a bullish indicator.
Now I know, gains of 1% and better by the indices are not chicken feed. They just didn't change the game from where it is being played: in a range near the SP500 and NASDAQ prior highs or other key resistance for the indices.
Thus, while Friday was a solid upside session from start to finish, if it is going to show more it will have to . . . show more next week.
Quite frankly much of the move was due to AMZN. Berkshire has been buying AMZN for the first time, something Buffett told everyone this morning. AMZN gapped higher 49 points and closed over 60 points higher on the session. That is what pushed DJ30 higher and indeed played a very large role in SP500's and NASDAQ's gains. Indeed, NASDAQ scored a new closing high though it was off the intraday high all-time high. Interestingly, NASDAQ 100 did not put in a new high all-time high though it also put in an all-time closing high.
The point: great moves on Friday, and perhaps they presage great moves in the coming week. At the same time, the great moves upside only managed to take the large cap indices back up to the top of the same range of the past two weeks for SP500 and NASDAQ, and the past 4 weeks for DJ30 and SP400.
RUTX was a bit different. It broke over the recovery high hit in February. After 2.5 months the small caps finally cleared that recovery high resistance. Nice move for sure, but does it make a big difference? RUTX is still 128 points off its all-time high. Perhaps it is now going to play catchup to the other indices, but there is no question it is lagging big time.
The positives.
Of course the move was a positive for the upside. It did not accomplish a clear new break higher for the overall stock market, but it did show bids are ready, willing and able even after 5 weeks upside and a stall at formidable resistance. This could certainly set the indices in position for yet another break higher in the coming week as they did not back off from another failure at resistance.
Many stocks remain very solid, ready to break higher. FB, AMZN (started), NFLX, VRSN, software stocks (OKTA, COUP, WDAY, HUB, NOW, ZS). Chip stocks are also still in good patterns though perhaps a bit winded (LRCX, MCHP, AVGO, AMAT, AMD). Banks are set up well (C, JPM, TCBI, BAC). Leaders in position are always a good upside indication.
The lack of sellers. Yes, some sellers showed up twice over the last 12 sessions, both times on a Wednesday. The indices shook off those sellers and held the range. They held despite earnings gaps lower from INTC, GOOG and a few others. Sellers of individual stocks but not the market overall.
The Fed. Despite Powell's 'no, there is no rate cut planned' comments Wednesday, the Fed is still at worst neutral. Moreover, Friday Evans, Clarida and other Fed speakers were fast-talking to I suppose reassure the markets that Powell was not shifting hawkish.
Evans: Listen to me, not Powell. These lower prices are serious and you can't be "too dismissive" of them.
You know, the entire Fed is worried about falling prices in better economic times. They act as if they are attempting to fathom how the universe will end, as if there is simply no explanation for how this could be. For goodness sake, just crack a history book and look at the dates of economic prosperity -- and low prices -- and what economic policies were in place: policies that result in investment lead to prosperity with low prices as supply meets and indeed makes its own demand. It is not difficult, it is just that these people are so married to their theories that do not reflect reality that they cannot see the cause and effect. It is the biggest farce in the world. At least weathermen deal in facts; they may not understand the why but they don't try to convince us why the weather is happening, they just try, albeit poorly, to predict it. In that respect weathermen and economists are VERY much alike. At least the weathermen are not so pompous -- in most cases -- to try and pretend to us they actually know how the systems work.
But, I digress.
In sum, the market remains stuck at resistance, but it is also still mostly free from sellers. The lack of sellers is powerful; if no one is there trying to sell, when the bids pause the market holds the line and 'falls forward' or upward. After two weeks of lateral movement, the sellers are still one of the rarest breeds in the market.
It is thus possible that the indices simply wander laterally a bit more as an extension of these past two weeks and then make new upside breaks. That may be the 'test.' Stranger things have happened in this market.
NEWS/ECONOMY
Jobs beat expectations, prompting the usual impressed responses, but the internals continue to show some of the same problems that plagued the Obama administration. Certainly the mix of jobs has changed to more high-paying jobs, but the totals of who is working and who is not continue showing a worrisome shift in the US that goes beyond jobs.
Non-Farm jobs: 253K vs 200K expected vs 189K March (from 196K)
Unemployment rate: 3.6% versus 3.8% expected vs 3.8% prior. Lowest unemployment reading since the Neil Armstrong walked on the moon and the Mets won the World Series in 1969.
Wages: +0.2% vs 0.3% expected vs 0.2% prior (from 0.1%). 3.2% year/year.
Workweek: 34.4 vs 34.5 expected vs 34.5 March
Workforce Participation: 62.8% vs 63.0% March.
Overall labor force lost 490K: Unemployed -387K, Employed -103K
Those not in the labor force: 96.2M, +646K.
Where the jobs were:
Professional and business: +76K
Construction +33K
Healthcare: +27K
Financial activities: +12K
Manufacturing: +4K
Retail: -12K (the 3 month series: -14K, -15K, -12K)
Mining: -3K
Hispanic unemployment: 4.2%, the lowest on record.
Why so many working aged people not working?
The number of working aged people out of the workforce is an ongoing problem from the Obama administration to present: 96M working aged people are not even in the labor force looking for work.
Add to that those who are counted as unemployed and you have over 102M people. In a country with a population near 320M, you are looking at close to one-third of the people not working, and those are people who COULD work and does not count children, the aged, the infirmed, etc.
Some will say those are retirees and thus natural. True, there are many baby boomers retiring, but then again, those people are NOT working aged so they are NOT counted. No, we now have a social benefits program where those who do not want to work -- for whatever reason -- do not have to. They can rely upon those who DO work to subsidize their life of no work. Moreover, I have actually had discussions with some of these people in their twenties and thirties who feel it is their RIGHT not to work and their RIGHT to make us pay for their choice not to work. By choosing to work, we are agreeing to pay for their choice not to work.
What they do not understand is that if the majority (and they are continuing to grow in numbers as is always the case when a country turns socialist) then there won't be enough to pay for their choice. The social security 'safety net' is now down to 2.7 people paying for each person on SS. Wow.
The thing is, when you have someone busting their buns on an assembly line, having to get to work early, press hard all shift long, take guff from the supervisor, get home exhausted then repeat the next day -- for not much more disposable income than a person choosing not to work and collect benefits -- eventually those workers start wondering why they are doing it and decide to 'opt out' as well. They are not bad for doing it; they are simply making a rational decision. The person not working can still have a 4K TV, a gaming console, a high speed internet connection, a smartphone, transportation in addition to the usual necessities of food, a roof overhead, a bed, etc. If you do not get ahead, why put yourself through it?
Well, this is sadly all academic. We all see the issue but the structure in the US has changed and now it is engrained with each new graduating class out of university and high school.
The irony is, we hear Bill Gates, Zuckerberg and company bemoan the lack of workers in the US. We have 96.2M working aged people NOT working! Is it better to import millions of foreign workers who were not socialized in the US versus training those 96.2M people to fill US jobs? And, quite frankly, MANY of the unemployed are holding STEM degrees, the very degrees and skills the captains of industry say they need. Or you can go the Disney route and fire all of your people who had been with the company for decades and replace them with young foreign workers who barely if at all speak English. And you threaten your terminated employees that they will lose their pensions if they refuse to train their replacements. Wonderful World of Disney, 21st century style.
THE MARKET
CHARTS
A 3.24% move higher in AMZN can energize otherwise wandering indices. It gapped NASDAQ and SP500 off the 20 day EMA. It rescued DJ30 from a trip to the 50 day MA. And of course, it brought NASDAQ 100 back to the top of the recent range. What happens without Berkshire letting people know it was buying AMZN? Not much. That is why we did not buy AMZN Friday but will see if it tests a bit early week. We want to buy it, just didn't want to buy options inflated by the Berkshire news.
RUTX: The logical starting point, AMZN or not. Finally the small caps broke to a higher recovery high from the December low. Still miles from the prior highs but a VERY important level to finally break. After Wednesday selling post-Powell and more indecision Thursday, a clear break higher. Jobs solid -- kind of -- along with the Fed-speak almost frenetically trying to walk back Powell's bluntness.
SP400: Why not? The midcaps too broke to a new recovery high, though just a closing one. Solid enough and much closer to the all-time high than RUTX, but if RUTX continues moving as it did Friday, that won't be for long.
DJ30: Gapped higher and cleared the 20 day EMA after it was well on the way to the 50 day MA. Without AMZN the Dow is at the 50 day. As it is, DJ30 managed to hold the five week lateral range below the January 2018 high. Oh yes, there is still another peak from early September before the all-time high from early October.
NASDAQ: A new closing high by 2 points. Smashing move. No, it was not bad. A test of the 20 day EMA in a very shallow 3-day pullback then a gap and rally upside. AMZN really helped and all the FAANG played a roll, even GOOG as it rallied 1.96%, back toward the 50 day MA it gapped below on Tuesday. Lots of stocks helped the move back to the top of the range. The question for next week is will they help it break through that range with a -- altogether now -- definitive move.
SP500: Gapped off the 20 day EMA the same as NASDAQ, missing an all-time closing high by 0.2. Still at the prior highs, still suffering from some distribution the past week at the highs. Even so, it is hanging in, and if the techs lead, SP500 will follow. Oh, and the financials are still solid.
SOX: Still a pretty solid lateral consolidation, sitting on the 10 day EMA all week as it shook off some selling from the prior week when INTC gapped lower on earnings.
NASDAQ 100: A very solid two week lateral move, riding out INTC, GOOG and putting in a solid session Friday to take it back to the top of the range and a new closing high though not a new all-time high.
THE LEADERSHIP
FAANG: All up, GOOG recovered some from the gap lower on earnings. FB in a nice 1.5 week earnings upside gap consolidation. AAPL similar action. NFLX to a higher high. AMZN gapped to a higher high on volume as everyone wanted to buy what Berkshire had bought at a lower price.
Transports: Truckers recovered some though orders for Class 8 trucks, the large ones, are off 57% year/year. Airlines are holding well. Rails are starting to break higher again. Very nice and very needed after DJ20's losses on the week.
Financial: Banks continued a nice consolidation of the breaks higher, indeed some started upside Friday such as JPM and C. TCBI broke nicely higher Friday. MA and V still testing after their last good runs; may need a longer break. MS holding its gains. GS looks as if it might try a break over the 200 day SMA.
Software: After never really forming new bases, just working laterally-ish for 3 months, they are moving up and we are moving in. WDAY, COUP, OKTA. HUBS, NOW, VMW. The bids are returning.
Semiconductors: Overall solid but a lot of testing, some breaks higher. UCTT gapped sharply higher on results. AVGO in a nice doji with tail test of the 20 day EMA. LRCX testing laterally in a flat move all week; the 10 day EMA has caught up to it now. MCHP Similar to LRCX. XLNX trying to recover but bear flaggish. NVDA made it to the 20 day EMA in a very weak move up off the 50 day MA. AMD, MU trying to break higher. AMAT spent the week testing the 20 day EMA, still decent.
Machinery: CMI breaking to a new recovery closing high. CAT bounced back from a very weak Thursday. DE decent. MMM still divining the lows. ETN, EMR trying to bounce off the 50 day MA after selling back to those levels this week.
Metals: After three weeks of weakness, a good upside session Friday. AKS, STLD, RS -- mostly steel related.
MARKET STATS
DJ30
Stats: +197.16 points (+0.75%) to close at 26504.95
Nasdaq
Stats: +127.22 points (+1.58%) to close at 8164.00
Volume: 2.07B (-6.33%)
Up Volume: 1.54B (+290M)
Down Volume: 473.91M (-456.4M)
A/D and Hi/Lo: Advancers led 3.87 to 1
Previous Session: Advancers led 1.05 to 1
New Highs: 118 (+51)
New Lows: 34 (-32)
S&P
Stats: +28.12 points (+0.96%) to close at 2945.64
NYSE Volume: 788.963M (-5.03%)
Up Volume: 656.395M (+320.026M)
Down Volume: 125.345M (-353.846M)
A/D and Hi/Lo: Advancers led 3.49 to 1
Previous Session: Decliners led 1.19 to 1
New Highs: 154 (+54)
New Lows: 9 (-49)
SENTIMENT
VIX: 12.87; -1.55
VXN: 15.98; -1.64
VXO: 12.65; -1.51
Put/Call Ratio (CBOE): 0.77; -0.16
Bulls and Bears:
Bears continue to fall, and rather precipitously. After stubbornly holding for weeks on end, they are giving up, throwing in the towel. That is not a bullish indication after the initial money is thrown into the market.
Bulls are rising as well but are still below the 60 level that has presaged corrections.
There are still no extremes in this indicator, but with bears breaking lower, if bulls hit 60+ then near term there is an increased chance of a steeper pullback.
It did its work in the late 2018 selling with a crossover of the bulls and bears, and when that occurs you expect a recovery. That has been the case. Now with the indices bumping resistance you look for extremes, but bulls are not hitting that 60ish level that has prompted selling/corrections in this long rally from 2009.
Indicator level: green toward yellow (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 56.4 versus 53.4
Bears: 17.8 versus 18.4
Theory: When everyone is bullish and has put all their capital to work, where does the ammunition to drive the market come from? There is always new money to start a new year. After that is used will more money be coming? That is the question.
OTHER MARKETS
INTEREST RATES
Threat level: Yellow. No current inversion. One prior inversion of 3 month/10 year but it was just 2 days. Curve is flat at the short end but still upward sloping.
The 3 month yield versus the 10 year: Spread fell 1BP to 10BP
The 2 year versus the 10 year: Spread falls 1BP to 19BP
10 year: 2.530% versus 2.547%
3 month: 2.434% versus 2.437%
2 year: 2.339% versus 2.345%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018. 2.6% for quite some time, then yields started higher, first run from November to January, then mid-March.
The Dollar: There are two schools of thought. First, those who believe a strong dollar is in the interest of the US. Reagan (though not all of his advisors) and Clinton were strong dollar Presidents. Second, there are those who believe a strong dollar prevents the US from selling US goods abroad. The Bushes (1 and 2) and Obama were in this category. The thing is, the US is always its economic strength peak when its consumers are consuming, and that is when there is a strong economy and a strong dollar: they consume both US and foreign goods. History shows this again and again, and thus it is worth watching the dollar as a gauge of how the US economy is performing.
EUR/USD: 1.12023 vs 1.11748. After falling away from the 50 day MA test Wednesday, euro sold hard Friday but then reversed to positive. Fighting to hold in the 6-month range.
Historical: Back into the 6-month range formed after the euro sold off from the early 2018 peaks after a week below it.
USD/JPY: 111.097 vs 111.421. This time dollar closed below the 50 day MA's. Looks as if it is going to sell toward 110, possibly 109.50.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Oil: 61.94, +0.13. Held just over the 200 day and 50 day MA. Lick log for the near term of oil.
Gold: 1281.30, +9.30. Sharp bounce off 1270. Goodness, from bearish to not a bad move.
MONDAY
Earnings continue. At least the data deluge abates somewhat. The big news will be the PPI and CPI. And any Fed-speak where governors will further try to mitigate Powell's comments.
Okay, okay. Friday was a good price move. The indices are again at the threshold of a breakout by NASDAQ and SP500. Still leadership in position to push the indices higher. Breadth very good. Volume, disappointing. Gee, pretty much the same story for the week, just not as much news.
We picked up some software stock positions Friday, edging into them as they looked good. We didn't buy anything else, e.g. AMZN, as we want to see how they fare to start the week, AMZN without the influence of Berkshire having bought before. This is typical Buffett. He never utters a word that will not benefit his holdings. He bought AMZN, says they are 'buying for the first time,' implying they are still buying. Yeah, right. They WILL buy again, but they bought ahead of the company meeting just to announce they were buying so they shares would rise 3+% as on Friday. Thus, we will let it come back some, let the implied volatility in the options die down, then enter.
Can it really be that easy? Yes, it can. Suckers.
Perhaps the lateral consolidation is all the indices need to break higher yet again. AMZN gave a push and we will see if others do the same this week. We tried some downside the past week -- all rebounded to certain degrees. The sellers entered but did not close the deal on the week. We will see if they show up again early week.
We will look at more upside as there are still good setups, and if NASDAQ leads SP500 on a breakout to higher highs there will be good entries off these setups. Again, since some sellers did enter this past week, early week will be important -- will they show again after a Friday that was all gushing upside because Berkshire bought some AMZN stock. If they do show up, well, the market is not ready for the new highs and needs to consolidate some more.
Have a great weekend!
U.S. Stocks Buoyed by Strong Employment Report
03-May-19 16:15 ET
Dow +197.16 at 26504.95, Nasdaq +127.22 at 8163.98, S&P +28.12 at 2945.64
https://www.briefing.com/investor/markets/stock-market-update/2019/5/3/us-stocks-buoyed-by-strong-employment-report.htm
[BRIEFING.COM] The S&P 500 advanced 1.0% on Friday, as a strong employment report underpinned a move back to near all-time highs. Friday's gains helped the benchmark index finish the week higher by 0.2%.
The Nasdaq Composite (+1.6%) set a new closing record, and it also finished the week higher by 0.2%. The Russell 2000 (+2.0%) outperformed and finished the week with a gain of 1.4%. The Dow Jones Industrial Average (+0.8%) reduced its weekly loss to 0.1%.
Once again, the April Employment Situation report pointed to strong headline growth and subdued inflationary pressure stemming from rising wages. Nonfarm payrolls increased by 263,000 while average hourly earnings were up just 0.2%, leaving them up 3.2% yr/yr and unchanged from the March report.
The robust jobs data fueled a broad-based rally in U.S. equities, abated the selling in the Treasury market, and contributed to a noticeable decline in the CBOE Volatility Index (12.95, -1.46, -10.1%).
All 11 of the S&P 500 sectors finished higher with gains ranging from 0.7% (utilities) to 1.4% (consumer discretionary).
Amazon (AMZN 1962.46, +61.64) rose 3.2% after Warren Buffet said Berkshire Hathaway (BRK.B 218.60, +2.67, +1.2%) has been buying shares of the company. Its outperformance contributed to the leadership of the consumer discretionary sector.
The S&P 500 energy sector (+0.8%) was a strong performer for most of the session as oil prices ($61.93/bbl, +$0.16, +0.3%) stabilized, but the group succumbed to selling interest into close. The energy space had fallen in tandem with oil this week, finishing the week with a steep loss of 3.3%.
U.S. Treasuries ended the week on a higher note, pushing yields slightly lower. The 2-yr yield and the 10-yr yield declined two basis points each to 2.32% and 2.53%, respectively. The U.S. Dollar Index lost 0.4% to 97.49.
Reviewing Friday's economic data, which included the Employment Situation Report for April, the ISM Non-Manufacturing Index for April, and the Advance reports for International Trade in Goods, Wholesale Inventories, and Retail Inventories for March.
The Employment Situation report pointed to strong headline growth and subdued inflationary pressure stemming from rising wages. Nonfarm payrolls increased by 263,000 while average hourly earnings were up just 0.2%, leaving them up 3.2% yr/yr, unchanged from what was seen in the March report.
The April report should support the Fed's case for staying on its current policy path.
The ISM Non-Manufacturing Index (NMI) for April decreased to 55.5% (Briefing.com consensus 57.4%) from 56.1% in March. The dividing line between expansion and contraction is 50.0%. The April reading is the lowest level for the index since August 2017.
The key takeaway from the report is that all index components remained above 50.0, indicating continued growth, though at a slower pace. According to the ISM, the past relationship between the NMI and the overall economy indicates the NMI for April corresponds to a 2.4% increase in real GDP on an annualized basis.
The Advance report for International Trade in Goods for March showed a deficit of $71.5 billion. The Advance report for Wholesale Inventories for March showed a decrease of 0.3%, and the Advance report for Retail Inventories for March showed no change in retail inventories.
There is no economic data on the calendar for Monday.
Nasdaq Composite +23.0% YTD
Russell 2000 +19.7% YTD
S&P 500 +17.5% YTD
Dow Jones Industrial Average +13.6% YTD
Wall Street Down for Second Straight Day as Energy Stocks Fall
02-May-19 16:15 ET
Dow -122.35 at 26307.79, Nasdaq -12.87 at 8036.76, S&P -6.21 at 2917.52
https://www.briefing.com/investor/markets/stock-market-update/2019/5/2/wall-street-down-for-second-straight-day-as-energy-stocks-fall.htm
[BRIEFING.COM] The S&P 500 declined 0.2% on Thursday, although it had been down as much as 0.8% in the session. Energy stocks weighed on the broader market for the second straight day, as oil prices ($61.77/bbl, -$1.82, -2.9%) fell to a one-month low.
The Dow Jones Industrial Average lost 0.5%, and the Nasdaq Composite lost 0.2%. The Russell 2000, however, increased 0.4%.
There was a lack of buying conviction following the Fed's decision Wednesday to remain firmly on hold. With few market catalysts to support a move back to all-time highs, investors continued to embrace a profit-taking mindset that sent the S&P 500 back to the 2900 level.
Buying support at this level, coupled with a stabilization in Treasury yields, helped abate selling pressure, though. Still, an awareness that the market was overextended and due for a pullback contributed to tepid buying interest in front of Friday's release of the April employment report.
The S&P 500 energy sector (-1.7%) was the day's worst-performing group amid a drop in the price of oil. Prices were pressured by rising U.S. inventory and by reports that Asian refiners asked Saudi Arabia for additional supply amid global disruptions.
Conversely, the broader market found support from the S&P 500 health care (+0.5%), financials (+0.2%), and real estate (+0.2%) sectors. Many stocks within the Dow Jones Transportation Average (+1.2%) and the Philadelphia Semiconductor Index (+1.1%) provided additional support.
In corporate news, Dow Inc (DOW 72.50, -3.43, -6.1%), Square (SQ 67.74, -5.88, -8.0%), Kellogg (K 57.38, -2.01, -3.4%), and Cigna (CI 158.22, -3.78, -2.3%) were some of the more notable companies that fell after disappointing investors with their earnings results/guidance. Tesla (TSLA 244.10, +10.09) rose 4.3% after the company announced plans to raise $2.0 billion through new equity and convertible notes.
U.S. Treasuries continued their post-FOMC retreat, sending yields higher across the curve. The 2-yr yield and the 10-yr yield increased four basis points each to 2.34% and 2.55%, respectively. The U.S. Dollar Index increased 0.2% to 97.83.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report, preliminary first quarter readings for Nonfarm Productivity and Unit Labor Costs, and Factory Orders for March:
Initial claims for the week ending April 27 were unchanged from the prior week at 230,000 (Briefing.com consensus 212,000). Continuing claims for the week ending April 20 increased by 17,000 to 1.671 million.
Initial claims might have been higher than expected, yet the key takeaway is that they still remain relatively low, evidenced by a four-week moving average of 212,500 that isn't far off a 50-year low.
Nonfarm business sector productivity increased 3.6% in the first quarter (Briefing.com consensus 2.3%) following a downwardly revised 1.3% increase (from 1.9%) for the fourth quarter. The first quarter increase was the strongest pace since the third quarter of 2014. Unit labor costs decreased 0.9% in the first quarter (Briefing.com consensus +1.6%) following an upwardly revised 2.5% increase (from 2.0%) in the fourth quarter.
The key takeaway from the backward-looking report is that it fit quite well with the understanding that U.S. economic activity is solid while inflation pressures are muted.
Factory orders increased 1.9% in March (Briefing.com consensus +1.6%) on the heels of an upwardly revised 0.3% decline (from -0.5%) in February.
The key takeaway from the report is that business investment picked up in March, evidenced by the 1.4% increase in orders for nondefense capital goods excluding aircraft, which are a proxy for business spending.
Looking ahead, investors will receive the following reports on Friday: the Employment Situation Report for April; the ISM Non-Manufacturing Index for April; and the Advance figures for International Trade in Goods, Wholesale Inventories, and Retail Inventories for March.
Nasdaq Composite +21.1% YTD
Russell 2000 +17.4% YTD
S&P 500 +16.4% YTD
Dow Jones Industrial Average +12.8% YTD
Wall Street Pulls Back after Powell Holds Firm on Policy Stance
01-May-19 16:20 ET
Dow -162.77 at 26430.14, Nasdaq -45.75 at 8049.63, S&P -22.10 at 2923.73
https://www.briefing.com/investor/markets/stock-market-update/2019/5/1/wall-street-pulls-back-after-powell-holds-firm-on-policy-stance.htm
[BRIEFING.COM] The S&P 500 lost 0.8% on Wednesday, pulling back from all-time highs, after Fed Chair Jerome Powell dismissed the idea of a rate-cut to combat low inflation. The Dow Jones Industrial Average (-0.6%), Nasdaq Composite (-0.6%), and Russell 2000 (-0.9%) also succumbed to selling interest.
The stock market traded with modest gains leading up to the release of the Fed's policy directive. Apple (AAPL 210.52, +9.85, +4.9%) provided strong support after it beat top and bottom-line estimates and issued upbeat guidance for its fiscal third quarter. The outperformance in Apple also helped push the S&P 500, and information technology sector (-0.3%), to new intraday highs.
The move to record highs prompted some technically-driven selling, but overall the market held steady despite calls that the market had gotten overextended. The release of the Fed's policy decision briefly sent equities and U.S. Treasuries back to session highs in front of Fed Chair Powell's press conference.
The Federal Open Market Committee left the fed funds rate unchanged at 2.25-2.50%, as was expected. The committee also acknowledged that overall inflation and core inflation have declined and remained below its 2 percent target. Some market participants believed the Fed was setting the precedent for a rate cut should inflation continue to remain persistently below the Fed's target.
Fed Chair Powell, however, downplayed the need to address the muted inflation pressure with a change in policy, including a rate cut, since he thinks the recent deceleration in inflation is being caused by transitory factors. The news provided an excuse to sell a market trading near record highs, sending the S&P 500 into negative territory where selling would pick up into the close.
Ten of the 11 S&P 500 sectors finished lower, led by energy (-2.2%), materials (-1.8%), and consumer staples (-1.2%). The weakness in the energy space was also driven by lower oil prices ($63.59/bbl, -$0.21, -0.3%) following bearish inventory data out of the Energy Information Administration.
The Treasury market reacted visibly to Fed Chair Powell's message that a rate cut should not be expected. The 2-yr yield, which fell to 2.22% before the conference, finished higher by three basis points to 2.30%. The 10-yr yield, which fell to 2.46% before the conference, returned to its unchanged mark at 2.51%.
Reviewing Wednesday's economic data, which included the ISM Manufacturing Index for April, the ADP Employment Change report for April, Construction Spending for March, and the weekly MBA Mortgage Applications Index:
The ISM Manufacturing Index for April fell to 52.8% (Briefing.com consensus 55.0%) from 55.3% in March. The April reading is the lowest since October 2016. The dividing line between expansion and contraction is 50.0%.
The key takeaway from the report is that it shows there was a notable deceleration in manufacturing activity to begin the second quarter, which is a data point that will contribute to the Fed's patient mindset.
The ADP Employment Report showed an increase of 275,000 in April (Briefing.com consensus 170,000), and the March reading was revised to 151,000 (from 129,000).
Total construction spending declined 0.9% in March (Briefing.com consensus +0.1%) on the heels of a downwardly revised 0.7% increase (from 1.0%) in February.
The key takeaway from the report is the understanding that private residential construction spending is weak due to a downturn in new single family construction.
The weekly MBA Mortgage Applications Index decreased 4.3% following a 7.3% decline in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, preliminary first quarter readings for Nonfarm Productivity and Unit Labor Costs, and Factory Orders for March on Thursday.
Nasdaq Composite +21.3% YTD
Russell 2000 +16.9% YTD
S&P 500 +16.6% YTD
Dow Jones Industrial Average +13.3% YTD
Stock Market Sets New Records amid Positive Data
29-Apr-19 16:15 ET
Dow +11.06 at 26554.39, Nasdaq +15.46 at 8161.85, S&P +3.15 at 2943.03
https://www.briefing.com/investor/markets/stock-market-update/2019/4/29/stock-market-sets-new-records-amid-positive-data.htm
[BRIEFING.COM] The S&P 500 (+0.1%) and Nasdaq Composite (+0.2%) both set new closing, and intraday, records on Monday. It was a tight-ranged session, but positive economic data and the outperformance of the financial and communication services stocks helped maintain the market's bullish bias.
The Russell 2000 increased 0.4%, while the Dow Jones Industrial Average (+0.04%) finished fractionally higher.
The latest personal income and spending data helped advance the narrative that the U.S. economy seems to be benefiting still from solid consumer spending activity and muted inflation pressures.
Personal spending jumped 0.9% (Briefing.com consensus 0.8%) in March. The PCE Price Index, the Fed's preferred inflation gauge, was up 1.5% yr/yr in March while the core PCE Price Index was up 1.6% yr/yr in March -- both below the Fed's annual inflation target of 2.0%.
The positive data helped keep selling conviction to a minimum in front of a busy news week that will include another wave of earnings reports, U.S.-China trade negotiations, an FOMC meeting, and the April employment report.
At the same time, the outperformance of the S&P 500 financials (+0.9%) and communication services (+0.9%) sectors helped keep the broader market afloat.
Financial stocks benefited from some sector rotation and an increase in U.S. Treasury yields. The communication services sector was boosted by shares of Alphabet (GOOG 1287.58, +15.40, +1.2%), which outperformed in front of the company's earnings report.
On the other hand, the rate-sensitive real estate (-1.1%) and utilities (-0.6%) sectors showed some weakness amid the uptick in yields.
The 2-yr yield and the 10-yr yield increased three basis points each to 2.30% and 2.54%, respectively. The U.S. Dollar Index declined 0.2% to 97.87. WTI crude increased 0.4% to $63.44/bbl.
Reviewing Monday's economic data, which included the PCE Price Index for February and March:
Briefly, personal spending increased 0.1% in February while the PCE Price Index and core PCE Price Index, which excludes food and energy, both rose just 0.1%. For March, personal income increased 0.4%, as expected, while personal spending surged 0.9% (Briefing.com consensus +0.8%). The PCE Price Index increased 0.2% while the core PCE Price Index was flat (Briefing.com consensus +0.1%).
The key takeaway from the report is that this data was imputed in the first quarter GDP report, so it shouldn't be too surprising. Ultimately, it helps advance the narrative that the U.S. economy seems to be benefiting still from solid consumer spending activity and muted inflation pressures.
Looking ahead, investors will receive the following economic reports on Tuesday: the Conference Board's Consumer Confidence Index for April, the Employment Cost Index for the first quarter, the S&P Case-Shiller Home Price Index for February, the Chicago PMI for April, and Pending Home Sales for March.
Nasdaq Composite +23.0% YTD
Russell 2000 +18.5% YTD
S&P 500 +17.4% YTD
Dow Jones Industrial Average +13.8% YTD