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InvestmentHouse - SOX Remains the Market Key (Weekend Newsletter)
https://news.investmenthouse.com/2019/04/the-daily-part-1-of-3-4-27-19.html
- SP500, NASDAQ start breaking to new highs, but despite the excitement on the Friday close, the breaks higher are still nominal and on no volume.
- Lots of earnings, lots of movement, little upside advancement by the major indices.
- SOX remains the market key, and it shows some cracks.
- GDP Q1 surprises big upside. Sure it can be explained away, but with lower prices and inflation, Powell's comments about cutting rates could be put to the test.
- Huge week of data, FOMC decisions, and more and more big name earnings.
- Struggle at the old highs after 5 weeks upside and lots of better than expected earnings suggests the market may be a bit winded near term.
You could hear the excitement in the final few seconds of Friday trade. The British CNBC anchor gave the play by play as to whether NASDAQ and SP500 would post new highs. NASDAQ looked to be a done deal but SP500 was going down to the wire. Then, yes, a new NASDAQ AND SP500 high exclaimed the usually reserved Brit.
SP500 13.71, 0.47%
NASDAQ 27.72, 0.34%
DJ30 81.25 0.31%
SP400 0.96%
RUTX 1.03%
SOX -0.83%
NASDAQ 100 0.12%
VOLUME: NYSE -4%, NASDAQ -4%. Volume remained well below average as SP500 and NASDAQ pushed at new highs. Just not a lot of volume as NASDAQ and SP500 attempt new highs, and that is typically an indication the move will at least have a harder time making it happen.
ADVANCE/DECLINE: NYSE 2.1:1, NASDAQ 2.1:1. Not bad breadth, but that was thanks to the small and midcaps coming back around after a weak Thursday. Perhaps with the GDP they will try to exert some leadership in the coming week as well.
Yes, new highs for certain. By a fraction. Actually, SP500 failed to take out the all-time high just a point or so higher though it was a new closing high. NASDAQ put in a new closing high and topped the prior intraday highs from 2018, though it closed below Thursday's high hit on that day's opening gap higher.
NASDAQ 100 showed the same action as NASDAQ, a new closing high but below the Thursday intraday high. SOX gapped lower gratis INTC's guidance, and though it put in an admirable recovery, it still closed below the prior week's upside gap point. Even so, SOX and NASDAQ 100 cleared the path for the other indices to hit new highs.
DJ30 dutifully followed though it is still well off the old highs thanks to a series of setbacks starting with BA and most recently INTC on Friday. In between it dealt with MMM, IBM, CAT, WBA, XOM, CVX, DOW -- all of these have recently caused DJ30 to stumble despite solid results from other components. Thank goodness for CSCO, MSFT, AXP, JPM (hard to believe), UTX, DIS, V.
SP400 midcaps and RUTX small caps put in solid Friday performances, leading the indices, no doubt in response to the 3.2% Q1 GDP growth rate. Still, they are back and forth on a daily basis, hanging in but not doing much more. That said, this kind of action is base-building, and both continue working on their large inverted head and shoulders patterns, very bullish bases. Lagging yes, but lagging with a purpose? Could be.
SOX remains the key to the rally, lagging Friday but making a very game showing of coming back. Prior to Friday, SOX posted the first new high and then a lot more after that breakout. But now, some stumbles, perhaps a victim of its own success and needing a pullback, perhaps also a victim of expectations out in front of reality as INTC's guidance indicated. SOX is so important to the market: the market could not hold together a sustained move until SOX took the lead in January. Even then it was problematic overall until SOX broke out.
But even then, even now with SOX testing after a breakout and rally lasting four weeks, the other indices are struggling to get through resistance, and those that are cannot really drive through it a la SOX. As noted, so much excitement on the Friday close (okay, in a British way), but it was for MARGINALLY higher closes. With SP500 +0.47% and NASDAQ +0.34%, these were not explosive moves. With marginal new highs they were not clear new moves.
Indeed, with SOX in a test and SP500 and NASDAQ sitting on the top of 5 week moves and still at key resistance, the new high euphoria Friday may need a bit of a pause. The market makers purposefully rallied the indices to those highs at the close. Buy on Monday, sell on Friday, right?
More than just a Friday surge, those 5 upside weeks have two key indices at resistance. Lots of positive earnings reports have helped get them there. Yes, there are other big names to announce this next week, starting with GOOG Monday after the close and AAPL Tuesday after the close. Perhaps they will drive NASDAQ and SP500 sharply higher through resistance. Perhaps, but as noted before, at some point earnings news and moves reach a saturation point in each season. With all the surprisingly strong results thus far (e.g. AMZN's impressive beat, F, MAT, SBUX, etc.), the indices for the most part have not made breakouts.
I am not saying a rollover is imminent. Nope. Just that near term -- near term -- things are perhaps a bit overdone in terms of the move (5 weeks on this leg), sentiment (new high watches every session), economics (GDP just hit 3.2%), and the Fed (with stronger GDP will Powell REALLY still say he would cut rates if inflation remained low? Would he leave them as is or perhaps start wondering about resuming hikes?). It seems realistic to consider the indices may need to test relatively near term in order to better set up the next leg higher.
That is not a bearish position, it is just acknowledging the run to this point and that the indices, after all the good news and good moves, are still struggling at resistance. Some retracing and resetting would not be signs the market is in trouble. SOX needs to be watched as it will forecast the rest of the market down the road, but as of Friday, there was nothing overtly negative or worrisome in the larger picture.
LEADERSHIP
FAANG: A solid week overall. AMZN earnings Thursday night pushed it to a higher recovery high after a sluggish start. FB gapped upside Thursday on earnings, off some Friday, testing the upside gap. NFLX surged early week, tested, started to bounce again Friday. GOOG up early week then Friday after a 2-day lateral move. Earnings Monday, up 5 weeks into the results and at the mid-2018 all-time highs. You make the call on the direction Tuesday post-earnings. AAPL faded modestly to end the week ahead of the Tuesday earnings.
Software: Came to life upside for some key members. NOW gapped upside Thursday. WDAY broke to a new high Friday. HUBS is on a 4-day rally after coming off the bottom of its range. VMW up nicely on the week. ZS looks really good. COUP broke to a higher high Friday. Game stocks TTWO, ATVI showing some life.
Semiconductors: INTC bombed lower on weak guidance. NVDA struggled in sympathy, but held the 50 day SMA and bounced to a doji with tail. AMD, MU struggled. MCHP opened lower, rebounded nicely. XLNX continued its struggles after the Wednesday gap lower through the 50 day MA's. SWKS sold but looks as if it could set up again. QRVO gapped lower Friday to test the 50 day MA. On the other hand, LRCX gapped upside Thursday and continued Friday. A good group still, but getting a bit volatile with regard to some of its big leaders.
Social: FB gapped upside on earnings. TWTR gapped and tested and we moved in on the test. SNAP dropped on results, but managed to hold the 50 day EMA as of Friday.
Manufacturing/Machinery: MMM bombed on earnings. UTX remains solid near the 2018 highs. ETN, EMR decent but slowly trending. CAT trying to come off the 200 day MA after dropping there on earnings. DE fell to the 50 day MA and is trying a bounce. CMI broke below the 20 day EMA Thursday and we closed it. Still decent, but experiencing very recent issues.
Financial: Still quite solid. MS moved up Friday and we picked up a position Thursday. BAC broke over the 2 week range Friday. C started higher off a weeklong test to the 10 day EMA. JPM not bad, trying higher after a test. TCBI a decent move on the week. V broke to a new high Friday. Man, it just keeps moving higher.
MARKET STATS
DJ30
Stats: +81.25 points (+0.31%) to close at 26543.33
Nasdaq
Stats: +27.72 points (+0.34%) to close at 8146.40
Volume: 1.98B (-4.35%)
Up Volume: 1.21B (+386.58M)
Down Volume: 757.05M (-462.95M)
A/D and Hi/Lo: Advancers led 2.11 to 1
Previous Session: Decliners led 1.47 to 1
New Highs: 109 (+31)
New Lows: 48 (-11)
S&P
Stats: +13.71 points (+0.47%) to close at 2939.88
NYSE Volume: 760.816M (-3.64%)
Up Volume: 532.917M (+265.653M)
Down Volume: 214.575M (-302.033M)
A/D and Hi/Lo: Advancers led 2.07 to 1
Previous Session: Decliners led 1.79 to 1
New Highs: 120 (+51)
New Lows: 29 (-13)
SENTIMENT
VIX: 12.73; -0.52
VXN: 15.79; -0.70
VXO: 12.21; -0.62
Put/Call Ratio (CBOE): 0.86; +0.01
Bulls and Bears:
The surprise is that bulls fell instead of rising as the indices continued higher. The bigger surprise is that bears fell a significant amount. Of the two, I would suggest the drop in bears -- very stubborn to fall -- is the bigger news and more an indication of the market turning to the more ebullient side.
At this juncture there are no extremes in this indicator. 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 (all is well), but rising toward the 60's that would start to represent a threat (a yellow indicator).
Bulls: 53.4 versus 54.8
Bears: 18.4 versus 19.2
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: 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 drops 2BP to 8BP
The 2 year versus the 10 year: Spread rises 2BP to 22BP
10 year: 2.50% versus 2.536%
3 month: 2.423% versus 2.429%
2 year: 2.286% versus 2.33%
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.
EUR/USD: 1.11419 versus 1.11350. Euro rebounds ever so modestly after a dump lower early week.
Historical: Breaking below the 1.12 level and that 6-month range formed after the euro sold off from the early 2018 peaks.
USD/JPY: 111.565 versus 111.547. Dollar weakened late week but managed to hold the 50 day MA in its 8 week lateral range. Perhaps just a shakeout before breaking higher. Perhaps.
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: 63.30, -1.91. Weak Friday and started weakening midweek after a higher recovery high. Gave up the Monday breakout move.
Gold: 1288.80, +9.10. Sold to the upper trendline of its large triangle, held for a week, then bounced nicely Friday. Not buying the economic data?
MONDAY
Huge week of data. Personal income, Spending, and PCE Monday. Tuesday Chicago PMI, Consumer Confidence. Wednesday ADP, FOMC rate decision, ISM. Thursday productivity, factory orders. Friday the Jobs Report.
Earnings. More earnings. GOOG Monday after the close AAPL Tuesday after the close along with MA, MCD, GM, TWLO, AMD and about a billion others. Heavy earnings week.
Lots of data, 5 weeks upside, lots of earnings on top of lots of earnings. Nominal at best breaks to new highs by SP500, NASDAQ while SOX is showing some signs of wear after a long rally and breakout to a new high.
Yes, I am focusing on the probabilities of significant more upside from here without a test being lower. GOOG and AAPL can drive a further move and can certainly drive themselves higher, but even GOOG is sitting on a substantial upside leg of over 100 points since its last test of note. That is pretty much the definition of building in the good news ahead of results.
Thus, we added some downside plays to the report last week in the event of some rotation rollovers or the market overall gets a bit winded and needs to drop a bit.
Even so, there are still many, many solid patterns in many sectors. To ignore those is to ignore the continued upside bias and falling forward posture of the market.
Therefore, we will still have new upside plays for this week; just too many good setups not to. Moreover, even if the leaders of the rally need to rest and test, this move has shown rotation to new areas that then rally as the leaders take deserved break. Not to acknowledge that ignores the ongoing theme in the market, i.e. money moving to new areas and driving them higher, maintaining the upside bias.
Accordingly, some more upside plays in some new and even recycled areas that have now had some rest. A few downside remain on the report as well because as we saw with CMG, the gains can be quite satisfying and come in very quickly.
Have a great weekend!
Amazon Lifts S&P 500 and Nasdaq Composite to New Closing Highs
26-Apr-19 16:20 ET
Dow +81.25 at 26543.33, Nasdaq +27.72 at 8146.39, S&P +13.71 at 2939.88
https://www.briefing.com/investor/markets/stock-market-update/2019/4/26/amazon-lifts-s-and-p-500-and-nasdaq-composite-to-new-closing-highs.htm
[BRIEFING.COM] The S&P 500 (+0.5%) and Nasdaq Composite (+0.3%) set new closing highs on Friday, as shares of Amazon (AMZN 1950.63, +48.38, +2.5%) and strong Q1 GDP data helped the market steer past early weakness. The underperformance in the energy and semiconductor stocks, however, put a lid on further gains.
The Dow Jones Industrial Average increased 0.3%, and the Russell 2000 outperformed with a gain of 1.0%.
Amazon easily topped earnings expectations and announced that one-day shipping will be the new standard for Amazon Prime members. The results underpinned the stock's outperformance, while the shipping news undercut shares of Wal-Mart (WMT 101.53, -1.99, -1.9%) and Target (TGT 77.12, -4.62, -5.7%).
The big moves in Amazon and Ford (F 10.41, +1.01, +10.7%), which also provided solid results, boosted the S&P 500 consumer discretionary sector (+0.9%). The health care (+1.0%), financials (+0.9%), and consumer staples (+0.9%) sectors also outperformed.
Signs that the U.S. economy is exhibiting solid growth and muted inflation pressures was another positive consideration for equities and U.S. Treasuries alike. The advance estimate for first quarter GDP increased 3.2% (Briefing.com consensus 1.9%), while the GDP Price Deflator was up just 0.9% (Briefing.com consensus 1.4%) after increasing 1.7% in the fourth quarter.
The 2-yr yield declined four basis points to 2.27%, and the 10-yr yield declined three basis points to 2.51%. The U.S. Dollar Index declined 0.2% to 98.04.
Intel (INTC 52.43, -5.18), meanwhile, dropped 9.0% after issuing disappointing guidance. Its lower guidance also contributed to the declines in the S&P 500 information technology sector (-0.4%) and the Philadelphia Semiconductor Index (-0.8%).
The S&P 500 energy sector (-1.2%) underperformed following a decline in oil ($63.23/bbl, -$1.94, -3.0%), which was pressured by President Trump telling OPEC to tame fuel costs. Underwhelming earnings reports from Exxon Mobil (XOM 80.49, -1.73, -2.1%) and Chevron (CVX 117.10, -0.80, -0.7%) also weighed on the space.
Reviewing Friday's economic data, which included the advance estimate for first quarter GDP and the final reading for the University of Michigan Index of Consumer Sentiment for April:
Real GDP increased at an annual rate of 3.2% (Briefing.com consensus 1.9%), according to the advance estimate for first quarter GDP. The GDP Price Deflator was up just 0.9% (Briefing.com consensus 1.4%) after increasing 1.7% in the fourth quarter.
The key takeaway from the report is that it reinforced the market's Goldilocks view of the U.S. economy, which is exhibiting solid growth and muted inflation pressures.
The final reading for the University of Michigan Index of Consumer Sentiment for April edged up to 97.2 (Briefing.com consensus 96.7) from the preliminary reading of 96.9. That was down from the final reading of 98.4 for March, but right in-line with the average for the past 28 months.
The key takeaway from the report is that 44% of consumers said they were feeling better about their financial prospects for the year ahead. That is the highest level for that reading since 2004 and another indication that should quiet recession talk.
Looking ahead, investors will receive the PCE Price Index for February and March on Monday.
Nasdaq Composite +22.8% YTD
Russell 2000 +18.0% YTD
S&P 500 +17.3% YTD
Dow Jones Industrial Average +13.8% YTD
Wall Street Closes Mixed as Industrial Stocks Weigh
25-Apr-19 16:20 ET
Dow -134.97 at 26462.08, Nasdaq +16.67 at 8118.67, S&P -1.08 at 2926.17
https://www.briefing.com/investor/markets/stock-market-update/2019/4/25/wall-street-closes-mixed-as-industrial-stocks-weigh.htm
[BRIEFING.COM] The S&P 500 (-0.04%) finished fractionally lower on Thursday, although strong earnings reports from Facebook (FB 193.26, +10.68, +5.9%) and Microsoft (MSFT 129.15, +4.14, +3.3%) helped the broader market overcome early weakness stemming from 3M (MMM 190.72, -28.36, -13.0%) and other industrial stocks.
Gains in Facebook and Microsoft also helped the Nasdaq Composite increase 0.2%. The Dow Jones Industrial Average lost 0.5%, dragged lower by shares of 3M after it provided weak results and disappointing guidance. The Russell 2000 lost 0.8%.
The stock market began the day with several reminders about slowing growth overseas. South Korea reported a 0.3% qtr/qtr contraction in first quarter GDP; the Bank of Japan signaled rates will be kept at extremely low levels until at least the spring of 2020; and 3M attributed its poor results to slowing conditions in China and other end markets.
Slowing global growth, though, really hasn't deterred investors from U.S. stocks this year. The U.S. economy, after all, appears to remain in solid footing. The latest economic data today showed durable goods orders increase 2.7% m/m in March (Briefing.com consensus +0.9%).
At the same time, expectations that mega-cap companies will continue to post solid growth has helped renew their leadership. The strong earnings reports from Facebook and Microsoft, both of which included double-digit revenue growth, helped reinforce buying interest.
Strength in Facebook also contributed to the 1.1% gain the S&P 500 communication services sector. The health care sector (+1.1%) also outperformed, while the industrials sector (-2.0%) dragged on the market following a host of negative responses to earnings reports.
The 13% drop in 3M carried the most weight with shares of UPS (UPS 105.13, -9.30, -8.1%), Raytheon (RTN 177.37, -8.08, -4.4%), Rockwell Automation (ROK 176.22, -12.68, -6.7%), and Masco (MAS 37.50, -2.49, -6.2%) following suit.
Visa (V 161.02, -0.47, -0.3%), Tesla (TSLA 247.63, -11.03, -4.3%), Chipotle Mexican Grill (CMG 678.07, -31.68, -4.5%), and Xilinx (XLNX 115.86, -23.86, -17.1%) also fell following their results.
U.S. Treasuries finished slightly lower, pushing yields slightly higher. The 2-yr yield and the 10-yr yield increased one basis point each to 2.31% and 2.53%, respectively. The U.S. Dollar Index finished unchanged at 98.18. WTI crude lost 1.0% to $65.17/bbl.
Reviewing Thursday's economic data, which included Durable Goods Orders for March and the weekly Initial and Continuing Claims report:
Durable goods orders for March increased 2.7% m/m (Briefing.com consensus +0.9%) while orders, excluding transportation, rose 0.4% m/m (Briefing.com consensus +0.3%).
The key takeaway from the report is that orders for nondefense capital goods, excluding aircraft, jumped 1.3%. These orders are a proxy for business spending, so one can say that business spending accelerated in March in an encouraging fashion.
Initial claims for the week ending April 20 increased by 37,000 to 230,000 (Briefing.com consensus 215,000). Continuing claims for the week ending April 13 increased by 1,000 to 1.655 million.
The headline number for initial claims was disappointing, yet the silver lining -- and the key takeaway -- is that the four-week moving average of 206,00 for this series remains close to a 50-year low.
Looking ahead, investors will receive the advance estimate for first quarter GDP and the final reading for the University of Michigan Index of Consumer Sentiment for April on Friday.
Nasdaq Composite +22.4% YTD
Russell 2000 +16.8% YTD
S&P 500 +16.7% YTD
Dow Jones Industrial Average +13.4% YTD
S&P 500 and Nasdaq Composite Set All-Time Closing Highs
23-Apr-19 16:15 ET
Dow +145.34 at 26656.39, Nasdaq +105.56 at 8120.81, S&P +25.71 at 2933.68
https://www.briefing.com/investor/markets/stock-market-update/2019/4/23/s-and-p-500-and-nasdaq-composite-set-alltime-closing-highs.htm
[BRIEFING.COM] The S&P 500 (+0.9%) and the Nasdaq Composite (+1.3%) both set all-time closing highs on Tuesday in a broad-based advance. Investor sentiment was buoyed by a batch of positive earnings reports from widely-held companies and positive economic data.
The Dow Jones Industrial Average gained 0.6%, and the Russell 2000 gained 1.6%.
From the onset, it didn't look like Tuesday would be a record-setting day despite the earnings beats from a diverse set of companies that included United Technologies (UTX 140.02, +3.11, +2.3%), Coca-Cola (KO 48.21, +0.81, +1.7%), Verizon (VZ 57.15, -1.22, -2.1%), Procter & Gamble (PG 103.16, -2.85, -2.7%), Lockheed Martin (LMT 331.10, +17.84, +5.7%), Twitter (TWTR 39.77, +5.38, +15.6%), and Hasbro (HAS 100.65, +12.54, +14.2%).
Overall market reaction was muted heading into the open. Buying interest quickly picked up, though, and momentum accelerated soon after the release of the New Home Sales report for March at 10:00 a.m. ET.
Today's advance was broad-based, led by the health care (+1.6%), consumer discretionary (+1.2%), and information technology (+1.1%) sectors. The lone exception was the consumer staples sector (-0.1%), which was held back by the underperformance of Procter & Gamble.
New home sales in March increased 4.5% m/m to a seasonally adjusted annual rate of 692,000 (Briefing.com consensus 646,000), which was the strongest pace since November 2017. Lower prices and lower mortgage rates contributed to the pickup in sales activity.
Solid data out of the housing sector maintained an upbeat outlook for the U.S. economy, which should continue to bode well for corporate earnings prospects. A fear of missing out on further gains helped lift the S&P 500 above its prior record close by noon, where it would trade for the rest of the day.
Separately, Walgreens Boots Alliance (WBA 53.22, -0.88, -1.6%) announced it will increase its minimum buying age for tobacco products to 21 on Sept. 1, 2019. Kohl's (KSS 75.48, +8.03, +11.9%) announced it will accept Amazon (AMZN 1923.77, +36.46, +1.9%) returns in all of its stores, starting in July. Qualcomm (QCOM 86.72, +4.75, +5.8%) was upgraded to Overweight from Equal-Weight at Morgan Stanley with a price target of $95.
U.S. Treasury yields remained lower on Tuesday. The 2-yr yield declined four basis points to 2.35%, and the 10-yr yield declined two basis points to 2.57%. The U.S. Dollar Index increased 0.3% to 97.59. WTI crude rose 1.1% to $66.33/bbl, nearing a six-month high.
Reviewing Tuesday's economic data, which included New Home Sales for March and the FHFA Housing Price Index for February:
New home sales in March increased 4.5% m/m to a seasonally adjusted annual rate of 692,000 (Briefing.com consensus 646,000), which was the strongest pace since November 2017. Sales were up 3.0% yr/yr.
The key takeaway from the report is that the solid sales activity was helped by a 9.8% decline in the median sales price and lower mortgage rates, which goes to show the pent-up potential for sales activity if the combination of lower prices and lower mortgage rates persists.
The FHFA Housing Price Index for February increased 0.3%, down from an unrevised January reading of 0.6%.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index on Wednesday.
Nasdaq Composite +22.4% YTD
Russell 2000 +17.5% YTD
S&P 500 +17.0% YTD
Dow Jones Industrial Average +14.3% YTD
S&P 500 Inches Higher amid Strength in Energy Stocks
22-Apr-19 16:20 ET
Dow -48.49 at 26511.05, Nasdaq +17.20 at 8015.25, S&P +2.94 at 2907.97
https://www.briefing.com/investor/markets/stock-market-update/2019/4/22/s-and-p-500-inches-higher-amid-strength-in-energy-stocks.htm
[BRIEFING.COM] The S&P 500 increased 0.1% on Monday, supported by strength in energy stocks amid a noticeable increase in oil prices ($65.65, +1.62, +2.5%). Trading volume was lighter than usual after the three-day holiday weekend (most of Europe remained closed for Easter Monday), which contributed to another tight-ranged session. The S&P 500 closed above the 2900 level and 1.1% from its all-time high.
The Nasdaq Composite increased 0.2%. The Dow Jones Industrial Average lost 0.2%, and the Russell 2000 lost 0.4%.
Oil prices rose after the U.S. decided to end its waivers for countries to import oil from Iran. The waivers will expire May 2, and the decision caused some concern about oil supply despite the move not being entirely surprising. WTI crude settled above $65 per barrel, hitting its highest level since Oct. 31, underpinning the outperformance of the S&P 500 energy sector (+2.1%).
The big move in the energy sector also helped offset losses from the S&P 500 real estate (-1.1%), materials (-0.7%), and industrial (-0.3%) sectors.
Kimberly-Clark (KMB 130.25, +6.70, +5.4%) and Halliburton (HAL 31.09, -0.04, -0.1%) were some of the more notable companies to report earnings on Monday. Shares of Kimberly-Clark climbed 5.4% after the company beat top and bottom-line estimates. Halliburton beat revenue estimates, but the stock was unable to rise alongside the broader energy space.
In other corporate news, Boeing (BA 375.17, -4.90, -1.3%) and Tesla (TSLA 262.75, -10.51, -3.9%) were subject to some negative attention on Monday.
The New York Times suggested Boeing's South Carolina factory, which produces its 787 Dreamliner, fostered a culture that valued "production speed over quality." Separately, a Chinese surveillance video depicted a parked Tesla vehicle appearing to catch fire and explode. TSLA was also downgraded to downgraded to Underperform from In-line at Evercore ISI.
U.S. Treasuries finished slightly lower in an equally tight-ranged session that included some yield-curve steepening. The 2-yr yield increased one basis point to 2.39%, and the 10-yr yield increased three basis points to 2.59%. The U.S. Dollar Index lost 0.2% to 97.29.
Reviewing Monday's economic data, which included Existing Home Sales for March:
Existing home sales decreased 4.9% month-over-month in March to a seasonally-adjusted annual rate of 5.21 million (Briefing.com consensus 5.37 million) from a downwardly revised 5.48 million (from 5.51 million) in February. Total sales were 5.4 % lower than the same period a year ago.
The key takeaway from the report is that rising prices, and a lack of homes at more affordable price points, continue to keep overall sales activity in check.
Looking ahead, investors will receive New Homes Sales for March and the FHFA Housing Price Index for February on Tuesday.
Nasdaq Composite +20.8% YTD
Russell 2000 +15.7% YTD
S&P 500 +16.0% YTD
Dow Jones Industrial Average +13.7% YTD
S&P 500 Closes Out the Week on Higher Note, Led by Industrials
18-Apr-19 16:20 ET
Dow +110.00 at 26559.54, Nasdaq +1.98 at 7998.05, S&P +4.58 at 2905.03
https://www.briefing.com/investor/markets/stock-market-update/2019/4/18/s-and-p-500-closes-out-the-week-on-higher-note-led-by-industrials.htm
[BRIEFING.COM] The S&P 500 increased 0.2% on Thursday to close out the holiday-shortened trading week. Leadership from the industrials sector (+1.1%) and a turnaround in the health care sector (+0.1%) contributed to the upside bias, as most sectors finished little changed.
The Nasdaq Composite finished flat, and the Russell 2000 lost 0.1%. The Dow Jones Industrial Average outperformed with a gain of 0.4%, helped in part by the positive reactions to earnings reports from American Express (AXP 113.67, +1.91, +1.7%) and Travelers (TRV 138.93, +3.06, +2.3%).
The industrials sector also benefited from a host of solid earnings reports, which included those from Union Pacific (UNP 176.66, +7.38, +4.4%), Honeywell (HON 169.06, +6.17, +3.8%), United Rentals (URI 136.00, +10.24, +8.1%), Danaher (DHR 126.77, +1.89, +1.5%), Dover (DOV 97.78, +0.98, +1.0%), and Snap-On (SNA 168.07, +10.23, +6.5%).
Upbeat results from the economically-sensitive sector, coupled with better-than-expected retail sales for March and a decline in weekly initial claims, provided investors with some assurance that the U.S. economy remains in good shape.
The health care sector increased just 0.1%, but the group had been down as much as 1.3% shortly after giving up its early advance. Yesterday's decline in the sector wiped out its yearly gain, and its resiliency to follow-through selling amid political concerns helped the broader market overcome early weakness.
In IPO news, Zoom Video Communications (ZM 62.00, +26.00, +72.2%) and Pinterest (PINS 24.40, +5.40, +28.4%) made their public debuts on Thursday. Zoom opened at $65.00 after pricing at $36.00, and Pinterest opened at $23.75 after pricing at $19.00.
U.S. Treasuries finished on a higher note, pushing yields lower across the curve. The 2-yr yield declined two basis points to 2.38%, and the 10-yr yield declined three basis points to 2.56%. The U.S. Dollar Index rose 0.5% to 97.46. WTI crude increased 0.4% to $64.03/bbl, overcoming some intraday weakness.
Reviewing Thursday's batch of economic data, which included Retail Sales for March, the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for April, Business Inventories for February, and the Conference Board's Leading Economic Index for March:
Total retail sales in March increased 1.6% (Briefing.com consensus +0.9%) after an unrevised 0.2% decline in February. Excluding autos, they were up 1.2% (Briefing.com consensus +0.7%) following an upwardly revised 0.2% decline (from -0.4%) in February.
The key takeaway from the report is that the sales strength was broad-based with nice gains seen across discretionary spending categories. This data will compute well in the calculation of the goods component for personal consumption expenditures in the Q1 GDP report.
Initial claims for the week ending April 13 decreased by 5,000 to 192,000 (Briefing.com consensus 208,000), which is the lowest level since September 6, 1969. Continuing claims for the week ending April 6 decreased by 63,000 to 1.653 million.
The key takeaway from the initial claims data (a leading indicator) remains unchanged: it shows employers are reluctant to let go of employees, either because they can't find qualified workers or because they see demand being strong enough to justify the size of their existing work force.
The Philadelphia Fed Index dipped to 8.5 in April (Briefing.com consensus 11.0) from 13.7 in March. The New Orders Index, however, surged to 15.7 from 1.9.
The key takeaway from the report was found in the diffusion index for future general activity, which fell to its lowest level (to 19.1 from 21.8) since February 2016, suggesting there is some fading optimism in future business activity.
Business inventories increased 0.3% in February (Briefing.com consensus +0.4%) following an upwardly revised 0.9% increase (from +0.8%) in January. Business sales increased 0.1% on the heels of an unrevised 0.3% increase in January.
The key takeaway from the report is that the inventory boost will be a positive input for Q1 GDP forecasts.
The Conference Board's Leading Economic Index increased 0.4% in March, as expected, following a downwardly revised 0.1% increase (from 0.2%) in February.
The key takeaway from the report is that there weren't any negative contributions from index components in March; however, the index is reflecting a slower pace of growth, having increased 0.4% for the six-month period ending March 2019 versus growth of 2.8% during the previous six months.
As a reminder, the stock market will be closed tomorrow for Good Friday. Investors will receive Existing Home Sales for March on Monday.
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Wall Street Edges Lower amid Pronounced Weakness in Health Care Stocks
17-Apr-19 16:25 ET
Dow -3.12 at 26449.54, Nasdaq -4.15 at 7996.07, S&P -6.61 at 2900.45
https://www.briefing.com/investor/markets/stock-market-update/2019/4/17/wall-street-edges-lower-amid-pronounced-weakness-in-health-care-stocks.htm
[BRIEFING.COM] The S&P 500 declined 0.2% on Wednesday in a mixed trading session. Pronounced weakness in the S&P 500 health care sector (-2.9%) counteracted positive economic data and earnings reports, thwarting an early attempt from the benchmark index to re-test its all-time high. The S&P 500 finished right at the 2900 level.
The Dow Jones Industrial Average finished flat, and the Nasdaq Composite lost 0.1%. The small-cap Russell 2000 underperformed with a loss of 1.0%.
Stocks began the day modestly higher following better-than-expected GDP data out of China and earnings beats from many widely-held companies. The overall response, however, was muted likely due to the sense that much of the good news had already been priced in. An afternoon report from the Wall Street Journal indicating that the U.S. and China plan to continue another round of trade talks at the end of the month also produced little reaction.
Health care stocks, meanwhile, continued to remain out of favor amid political pressure to curb rising health care costs, which is likely to continue throughout the 2020 presidential campaign trail. The sense that there would be an opportunity cost in remaining in the sector overshadowed a positive earnings report from Abbott Labs (ABT 72.88, -3.50, -4.6%).
Some corporate news out of the semiconductor industry and positive reactions to earnings reports from transportation companies, however, provided offsetting support for the broader market. The Philadelphia Semiconductor Index increased 1.6%, and the Dow Jones Transportation Average increased 1.0%.
Shares of Qualcomm (QCOM 79.08, +8.63, +12.3%) received follow-through buying interest after the company settled a licensing dispute with Apple (AAPL 203.13, +3.88, +2.0%) yesterday. Intel (INTC 58.56, +1.85, +3.3%) followed up with an announcement that it will drop out of the 5G smartphone modem business.
Strength in the semiconductor stocks, and Apple, helped the S&P 500 information technology sector (+0.6%) brush past weakness from IBM (IBM 139.11, -6.03, -4.2%), which fell on a revenue miss.
United Continental (UAL 89.24, +4.07, +4.8%), CSX Corp. (CSX 78.94, +3.05, +4.0%), and KC Southern (KSU 122.81, +4.82, +4.1%) were some of the transport companies that released solid earnings results. PepsiCo (PEP 127.01, +4.60, +3.8%), Netflix (NFLX 354.74, -4.72, -1.3%), and Morgan Stanley (MS 48.26, +1.24, +2.6%) also beat earnings estimates, but Netflix also guided Q2 EPS below consensus.
U.S. Treasuries finished little changed in another tight-ranged session. The 2-yr yield decreased one basis point to 2.40%, and the 10-yr yield was unchanged at 2.59%. The U.S. Dollar Index finished flat at 97.01. WTI crude lost 0.4% to $63.78/bbl.
Reviewing Wednesday's economic data, which included the Trade Balance Report for February, Wholesale Inventories for February, the weekly MBA Mortgage Applications Index, and the Fed's Beige Book for April:
The trade deficit narrowed to $49.4 billion in February (Briefing.com consensus -$54.0 billion) from -$51.1 billion in January, as exports were $2.3 billion more than January exports and imports were $0.6 billion more than January imports.
The key takeaway from the report is that exports and imports increased in February. That will help temper concerns about the U.S. economy being at risk of slipping into a recession in the near future.
Wholesale inventories increased 0.2% in February on top of a downwardly revised 1.2% increase (from 1.4%) in January. Wholesale sales were up 0.3% following an unrevised 0.5% increase in January.
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.
The MBA Mortgage Applications Index declined 3.5% following a 5.6% decrease in the prior week.
The Federal Reserve's April Beige Book described the expansion in overall economic activity as "slight-to-moderate." Most Districts saw activity comparable to what was reported in the March Beige Book.
Looking ahead, investors will receive the following economic data on Thursday: Retail Sales for March, the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for April, Business Inventories for February, and the Conference Board's Leading Economic Index for March.
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Wall Street Ekes Out Gains as Financial and Tech Stocks Offset Health Care Weakness
16-Apr-19 16:20 ET
Dow +67.89 at 26452.66, Nasdaq +24.21 at 8000.22, S&P +1.48 at 2907.06
https://www.briefing.com/investor/markets/stock-market-update/2019/4/16/wall-street-ekes-out-gains-as-financial-and-tech-stocks-offset-health-care-weakness.htm
[BRIEFING.COM] The S&P 500 increased 0.1% on Tuesday, as strong performances from the financial and semiconductor stocks offset pronounced weakness in the health care and real estate spaces. The benchmark index traded with modest gains throughout the day and briefly dipped into negative territory with 30 minutes left of trading where it found buying interest at the 2900 level.
The Dow Jones Industrial Average increased 0.3%, the Nasdaq Composite increased 0.3%, and the Russell 2000 increased 0.2%.
The S&P 500 financial sector (+1.4%) was the day's outright leader following earnings beats from Bank of America (BAC 29.88, +0.04, +0.1%), BlackRock (BLK 466.54, +14.68, +3.3%), and Progressive (PGR 77.26, +5.00, +6.9%). BAC had declined as much as 2.8% intraday after the company missed revenue estimates and warned of a slowdown in net interest income in FY19. The turnaround in shares helped strengthen the sector's performance.
The Philadelphia Semiconductor Index (+3.2%) was another area of strength during the day and many of its components helped lift the S&P 500 information technology sector (+0.5%).
The group received a late-session boost following news that Apple (AAPL 199.25, +0.02, unch) and Qualcomm (QCOM 70.45, +13.27, +23.2%) settled their royalty dispute for a currently undisclosed amount. Prior to the news, shares of Qualcomm were little changed and finished 23.2% higher after the news.
On the other hand, burgeoning concerns about legislative efforts to curb rising health care costs continued to heavily weigh on the S&P 500 health care sector (-2.0%). An increase in U.S. Treasury yields, meanwhile, weighed on the rate-sensitive real estate (-2.4%) and utilities (-1.4%) sectors.
UnitedHealth (UNH 220.96, -9.24, -4.0%) CEO David Wichmann fueled industry concerns when he warned investors that "Medicare for All" proposals would destabilize the health care system. The political overhang caused shares, and the sector to roll over, overshadowing upbeat earnings reports from UnitedHealth and Johnson & Johnson (JNJ 138.02, +1.50, +1.1%).
U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased two basis points to 2.41%, and the 10-yr yield increased four basis points to 2.59%. The U.S. Dollar Index increased 0.1% to 97.08. WTI crude rose 0.9% to $64.04/bbl.
Reviewing Tuesday's economic data, which included the Industrial Production report for March and the NAHB Housing Market Index for April:
Industrial Production decreased 0.1% in March (Briefing.com consensus 0.2%) after an unrevised 0.1% increase in February. The capacity utilization rate decreased to 78.8% (Briefing.com consensus 79.0%) from an upwardly revised 79.0% (from 78.2%) in February.
The key takeaway from the report is that it showed continued weakness in manufacturing output, which was unchanged after a revised 0.3% decrease (from -0.4%) in February. On a yr/yr basis, manufacturing output was down 1.1% in the first quarter.
The NAHB Housing Market Index for April increased to 63 (Briefing.com consensus 63) from 62 in March.
Looking ahead, investors will receive the Trade Balance Report for February, the Fed's Beige Book for April, Wholesale Inventories for February, and the weekly MBA Mortgage Applications Index on Wednesday.
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Wall Street Finishes Slightly Lower as Financial Stocks Pull Back
15-Apr-19 16:20 ET
Dow -27.53 at 26384.77, Nasdaq -8.15 at 7976.01, S&P -1.83 at 2905.58
https://www.briefing.com/investor/markets/stock-market-update/2019/4/15/wall-street-finishes-slightly-lower-as-financial-stocks-pull-back.htm
[BRIEFING.COM] The S&P 500 declined 0.1% on Monday, as shares of financial stocks pulled back following another round of bank earnings. Despite the modest decline, the S&P 500 managed to close above the 2900 level in front of several key earnings reports tomorrow.
The Dow Jones Industrial Average (-0.1%) and the Nasdaq Composite (-0.1%) also lost 0.1%. The Russell 2000 underperformed with a loss of 0.4%.
Goldman Sachs (GS 199.91, -7.93, -3.8%) and Citigroup (C 67.38, -0.04, -0.1%) beat earnings expectations, but first quarter revenue for both companies declined on a year-over-year basis. Goldman's revenue also came in slightly below expectations, and the quality of its EPS beat was questioned due to lower tax and compensation rates. The S&P 500 financial sector lost 0.6%.
The two stocks had climbed alongside the broader financial space on Friday in response to a strong earnings report from JPMorgan Chase (JPM 109.94, -1.27, -1.1%). The prior move higher coupled with underwhelming results fostered some profit taking, although shares of Citigroup managed to recoup most of their losses.
The market's overall decline was kept in check following a turnaround in shares of widely-held stocks within the communication services (+0.2%) and consumer discretionary (+0.2%) sectors. Relative strength from the consumer staples (+0.7%) and health care (+0.4%) sectors was an added measure of support for the broader market.
Shares of UnitedHealth (UNH 230.20, +6.98, +3.1%) gave the health care sector a boost after the stock fell 10.3% last week on industry concerns. On a related note, UnitedHealth and Johnson & Johnson (JNJ 136.52, +0.54, +0.4%) will release their earnings reports prior to Tuesday's open.
In M&A news, Waste Management (WM 104.26, +2.47, +2.4%) agreed to acquire Advanced Disposal (ADSW 31.99, +4.85, +17.9%) for $33.15/share, representing a 22% premium versus Friday's closing price and a total enterprise value of $4.9 billion. French-based Publicis Groupe (PUBGY) agreed to acquire Alliance Data's (ADS 164.04, -16.89, -9.3%) Epsilon business for $4.4 billion in cash.
U.S. Treasuries traded in a tight range on Monday. The 2-yr yield finished flat at 2.39%, and the 10-yr yield decreased one basis point to 2.55%. The U.S. Dollar Index finished flat at 96.94. WTI crude lost 0.7% to $63.45/bbl after Russia floated the possibility that it might boost production with OPEC to increase their market share.
Reviewing Monday's economic data, which included the Empire State Manufacturing Survey for April:
The Empire State Manufacturing Survey for April increased to 10.1 (Briefing.com consensus 9.0) from 3.7 in March with a pickup in new orders helping to drive things. The dividing line between expansion and contraction for this regional manufacturing survey is 0.0.
Looking ahead, investors will receive Industrial Production and Capacity Utilization for March and the NAHB Housing Market Index for April on Tuesday.
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Russell 2000 +17.1% YTD
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JPMorgan Chase, Walt Disney Help S&P 500 Close Above 2900
12-Apr-19 16:20 ET
Dow +269.25 at 26412.30, Nasdaq +36.80 at 7984.16, S&P +19.09 at 2907.41
https://www.briefing.com/investor/markets/stock-market-update/2019/4/12/jpmorgan-chase-walt-disney-help-s-and-p-500-close-above-2900.htm
[BRIEFING.COM] The S&P 500 gained 0.7% on Friday, as a strong earnings report from JPMorgan Chase (JPM 111.21, +4.98, +4.7%) and a buoyant response to Walt Disney's (DIS 130.06, +13.46, +11.5%) upcoming streaming service helped offset losses from the health care stocks. Friday's advance also helped the benchmark index close above the 2900 level for the first time since early October.
The Dow Jones Industrial Average gained 1.0%, the Nasdaq Composite gained 0.5%, and the Russell 2000 gained 0.4%.
JPMorgan kicked off the first quarter earnings-reporting season with record revenue and net income, fueling broad-based gains in the S&P 500 financial sector (+1.9%). Wells Fargo (WFC 46.49, -1.25, -2.6%) and PNC Financial Services (PNC 132.70, +3.98, +3.1%) also provided better-than-expected results, but Wells Fargo lowering its outlook for FY19 net interest income sent shares lower.
In addition to the positive results, optimism about the economic environment from JPMorgan CEO Jamie Dimon, and a rebound in Chinese March exports, helped boost investor sentiment.
Shares of Disney surged to an all-time high after the company impressed investors with the details of its Disney+ streaming service Thursday evening. DIS was resumed with an Overweight rating at JP Morgan with a price target of $137. The announcement and the overwhelmingly positive response contributed to a 4.5% decline in Netflix (NFLX 351.14, -16.51).
The S&P 500 energy sector (+0.2%) was another area of interest after Chevron (CVX 119.76, -6.23, -4.9%) announced plans to acquire Anadarko Petroleum (APC 61.78, +14.98, +32.0%) for $65 per share, or $33 billion, in cash and stock. The 39% premium from APC's Thursday closing price fueled gains in smaller energy companies, which helped offset weakness from Chevron.
Health care stocks, meanwhile, continued to fall out of favor. Continued uncertainty about the fate of the Affordable Care Act and increasing threats from lawmakers to curb rising drug costs weighed heavily on the space. The S&P 500 health care sector lost 1.0%.
U.S. Treasuries were under selling pressure, which drove yields noticeably higher. The 2-yr yield increased four basis points to 2.39%, and the 10-yr yield increased six basis points to 2.56%. The U.S. Dollar Index lost 0.2% to 96.96. WTI crude increased 0.4% to $63.91/bbl.
Reviewing Friday's economic data, which included Import and Export Prices for March and the preliminary University of Michigan Index of Consumer Sentiment for April:
Import prices increased 0.6% month-over-month in March after increasing an upwardly revised 1.0% (from 0.6%) in February. Excluding fuel, import prices declined 0.2% in March. Export prices rose 0.7% for the second straight month. Excluding agricultural exports, they were also up 0.7%.
The key takeaway from the report is that nonfuel import prices were down 0.8% for the 12 months ending March while non-agricultural export prices were up just 1.0%. In other words, there was no real inflation pressure from a broader standpoint.
The preliminary April reading for the University of Michigan Index of Consumer Sentiment hit 96.9 (Briefing.com consensus 97.6), down from the final reading of 98.4 for March.
The key takeaway from the report is that despite low inflation, consumers have increasingly voiced complaints about rising vehicle and home prices.
Looking ahead, investors will receive the Empire State Manufacturing Survey for April and Net Long-Term TIC Flows for February on Monday.
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Wall Street Finishes Little Changed in Front of Earnings Season
11-Apr-19 16:15 ET
Dow -14.11 at 26143.05, Nasdaq -16.88 at 7947.36, S&P +0.11 at 2888.32
https://www.briefing.com/investor/markets/stock-market-update/2019/4/11/wall-street-finishes-little-changed-in-front-of-earnings-season.htm
[BRIEFING.COM] The stock market finished little changed on Thursday in a tight-ranged trading session. The S&P 500 (unch) finished fractionally higher, as relative strength from financial and industrial stocks helped mitigate losses from shares of health care companies in front of earnings season.
The Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.2%, and the Russell 2000 lost 0.2%.
The S&P 500 seemed content trading in a wait-and-see mode before attempting to break above the 2900 level, which has been an area of resistance for the benchmark index. Despite the lack of market-moving catalysts, the market did receive some positive signals: weekly initial jobless claims hit their lowest level since 1969, and Fed Vice Chair Richard Clarida believes the economy is in a good place.
Similarly, there was no specific driver for the noticeable decline in the S&P 500 health care sector (-1.2%). The broad-based selling in the group could have been a move to reduce exposure from the year's worst-performing sector. Heavyweight UnitedHealth (UNH 235.42, -10.61, -4.3%) and many of the components within the iShares NASDAQ Biotechnology ETF (IBB 111.90, -1.94, -1.7%) led the space lower.
The financial sector (+0.6%), meanwhile, exhibited strength in front of earnings reports from JPMorgan Chase (JPM 106.23, +0.89, +0.8%) and Wells Fargo (WFC 47.74, -0.05, -0.1%) tomorrow.
Fastenal (FAST 68.48, +3.29, +5.1%) and many of the airline stocks contributed to the outperformance of the industrial sector (+0.9%). Fastenal provided better-than-expected earnings results, and airline stocks continued to rally on Delta Air Lines' (DAL 58.39, +0.53, +0.9%) upbeat earnings report from yesterday.
In other corporate news, Tesla (TSLA 268.42, -7.64, -2.8%) and Panasonic suspended plans to expand Tesla's Gigafactory in Nevada; Bed Bath & Beyond (BBBY 17.71, -1.70, -8.8%) disappointed investors with its earnings report; and Caesar Entertainment (CZR 9.40, +0.35, +3.9%) is reportedly interested in selling itself.
U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased four basis points to 2.35%, and the 10-yr yield increased three basis points to 2.50%. The U.S. Dollar Index increased 0.2% to 97.16. WTI crude fell 1.4% to $63.65/bbl.
Reviewing Thursday's economic data, which included the Producer Price Index for March and the weekly Initial and Continuing Claims report:
The Producer Price Index for final demand increased 0.6% in March (Briefing.com consensus +0.3%), bolstered predominately by a pickup in energy prices. The index for final demand, excluding food and energy, was up 0.3% (Briefing.com consensus +0.2%).
The key takeaway from the report is that producer prices were up noticeably in March, yet there won't be any alarming read through at this juncture for market participants who are cognizant that the Consumer Price Index for March showed a moderation in the year-over-year increase for core CPI.
Initial claims for the week ending April 6 decreased by 8,000 to 196,000 (Briefing.com consensus 215,000). Continuing claims for the week ending March 30 fell by 13,000 to 1.713 million.
The key takeaway from this leading-indicator report is that it clearly shows employers are reluctant to let go of employees, either because they can't find other qualified workers or because they see demand being strong enough to justify the size of their existing work force.
Looking ahead, investors will receive Import and Export Prices for March and the preliminary University of Michigan Index of Consumer Sentiment for April on Friday.
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Stocks Gain as Inflation Moderates, Central Banks Stay Put
10-Apr-19 16:25 ET
Dow +6.58 at 26157.16, Nasdaq +54.97 at 7964.24, S&P +10.01 at 2888.21
https://www.briefing.com/investor/markets/stock-market-update/2019/4/10/stocks-gain-as-inflation-moderates-central-banks-stay-put.htm
[BRIEFING.COM] The S&P 500 gained 0.4% on Wednesday, as moderating inflation and assurance from central banks to keep rates on hold provided the broader market some support. The Nasdaq Composite (+0.7%) and the Russell 2000 (+1.4%) both outperformed, while the Dow Jones Industrial Average (unch) finished little changed.
The European Central Bank's (ECB) rate decision and the minutes for the FOMC March meeting provided no surprises for the market. In short, both acknowledged risks to the economic outlook, the ECB said it will keep interest rates unchanged through at least the end of 2019, and the Fed remains content to operate in a wait-and-see mode.
The Consumer Price Index for March, meanwhile, showed the core rate of inflation moderate on a year-over-year basis to 2.0% from 2.1% in February. This moderation helped strengthen the Fed's stance to keep a patient mindset, which should further increase the appeal for risk assets.
Stocks drifted with modest gains throughout the day as the market digested the news. A turnaround from the S&P 500 financial sector (+0.3%) and an announcement from Treasury Secretary Steven Mnuchin that the U.S. and China have agreed to an enforcement mechanism helped solidify the positive bias.
The financial sector was down as much as 0.5% as CEOs from the nation's biggest banks participated in a tense Q&A session with House Financial Services Committee. The event was meant to update the committee on the state of the industry, but nothing new arose for the market as it understood that banks are in a much better capital position than they were ten years ago.
Leadership from heavily-weighted information technology sector (+0.7%) was a major contributor to the day's advance. On a related note, Apple (AAPL 200.62, +1.12, +0.6%) was downgraded to Reduce from Hold at HSBC, but the stock was able to brush off early weakness to finish higher.
In other corporate news, Delta Air Lines (DAL 57.86, +0.91, +1.6%) beat earnings estimates and increased its full-year revenue growth outlook. Shares of Lyft (LYFT 60.12, -7.32) dropped 10.9% amid news that Uber (UBER) is expected to disclose its IPO prospectus (S-1 filing) on Thursday.
U.S. Treasuries finished the day higher, helped by the notion that the Fed will stay put. The 2-yr yield decreased three basis points to 2.31%, and the 10-yr yield decreased two basis points to 2.48%. The U.S. Dollar Index declined 0.1% to 96.93. WTI crude rose 0.8% to $64.56/bbl amid reports that OPEC oil production fell to its lowest level in four years.
Reviewing Wednesday's economic data, which included the Consumer Price Index for March and the weekly MBA Mortgage Applications Index:
Total CPI increased 0.4% month-over-month in March (Briefing.com consensus +0.3%), which was driven mostly by a 3.5% increase in the energy index. Core CPI, which excludes food and energy, was up just 0.1% (Briefing.com consensus +0.2%).
The key takeaway from the report is that the core rate of inflation moderated on a year-over-year basis to 2.0% from 2.1% in February, which is a trend that should keep the Federal Reserve comfortable with its position of being on hold.
The weekly MBA Mortgage Applications Index decreased 5.6% following an 18.6% increase in the prior week.
Looking ahead, investors will receive the Producer Price Index for March and the weekly Initial and Continuing Claims report on Thursday.
Nasdaq Composite +20.0% YTD
Russell 2000 +17.3% YTD
S&P 500 +15.2% YTD
Dow Jones Industrial Average +12.1% YTD
S&P 500 Snaps Winning Streak in Broad-Based Decline
09-Apr-19 16:25 ET
Dow -190.44 at 26150.58, Nasdaq -44.61 at 7909.27, S&P -17.57 at 2878.20
https://www.briefing.com/investor/markets/stock-market-update/2019/4/9/s-and-p-500-snaps-winning-streak-in-broadbased-decline.htm
[BRIEFING.COM] The S&P 500 lost 0.6% on Tuesday, as negative macroeconomic headlines and a bit of corporate news fostered some broad-based profit taking. Tuesday's decline snapped an eight-session winning streak for the benchmark index.
The Dow Jones Industrial Average lost 0.7%, the Nasdaq Composite lost 0.6%, and the Russell 2000 lost 1.2%.
The stock market began the day with some discouraging news pertaining to trade and growth: (1) The White House proposed tariffs on $11 billion of EU products in response to the subsidies the EU provides Airbus and (2) the International Monetary Fund (IMF) lowered its world growth forecast for 2019 to 3.3% from the 3.5% growth it forecast in January.
Although the tariff amount was not substantial and the growth cut was not surprising, they did provide investors with excuses to take some profits. The broader market attempted to rebound, but the comeback effort was derailed after shares of Apple (AAPL 199.50, -0.60, -0.3%) rolled over into negative territory. AAPL had risen for nine consecutive days prior to today's decline.
The S&P 500 industrials (-1.4%) and financial (-0.9%) sectors were added weights for the market following some corporate developments.
Bank stocks were particularly weak after Bank of America (BAC 28.89, -0.28, -1.0%) announced it will increase its minimum wage to $17 per hour on May 1, followed by incremental increases to $20 per hour by 2021. The wage increase raised some concerns about other banks feeling pressured to do the same and its subsequent impact on their profit-margins. The SPDR S&P Bank ETF (KBE 43.13, -0.75) lost 1.7%.
American Airlines (AAL 33.31, -0.57, -1.7%) and Pentair (PNR 39.13, -6.13, -13.5%), meanwhile, both lowered their first quarter expectations with Pentair also slashing its fiscal 2019 outlook. AAL finished well off its session low (-3.8%), though, as the company only reduced the top end of its unit revenue growth to 1.0% from 2.0%.
U.S. Treasuries saw increased buying interest following the IMF growth cut for 2019. The 2-yr yield and the 10-yr yield decreased two basis points each to 2.34% and 2.50%, respectively. The U.S. Dollar Index finished flat at 97.01. WTI crude lost 0.5% to $64.06/bbl.
Reviewing Tuesday's economic data, which included the NFIB Small Business Optimism Index for March and the JOLTS - Job Openings report for February:
The NFIB Small Business Optimism Index for March ticked higher to 101.8 from the prior month's reading of 101.7.
The February Job Openings and Labor Turnover Survey showed that job openings decreased to 7.087 million from a revised 7.625 million (from 7.581 million) in January.
Looking ahead, investors will receive the Consumer Price Index for March, the minutes from the FOMC March meeting, the weekly MBA Mortgage Applications Index, and the Treasury Budget for March on Wednesday.
Nasdaq Composite +19.2% YTD
Russell 2000 +15.7% YTD
S&P 500 +14.8% YTD
Dow Jones Industrial Average +12.1% YTD
InvestmentHouse Weekend Market Summary:
https://news.investmenthouse.com/2019/04/the-daily-part-1-of-3-4-6-19.html
- The upside week continues through Friday with the small and midcaps taking the lead.
- Market rotation thus far remains beneficial, though software is at the lick log.
- Jobs recovery from a weak February, but the internal data does not show the same improvement.
- Economic data is not great, not bad, inflation mostly tame, but Fed hikes are still negatively impacting the economy.
- Other areas trying to move up into leadership: materials, energy, manufacturing, machinery, biotechs
- Indices approaching the prior highs, drawn toward resistance.
Jobs were good enough on the headline, and that was good enough for stocks to take already upside futures and run them higher on the session. Never mind the internals of the report were just not as strong as the pre-February (the flop month) numbers. Higher paying jobs were low in number (manufacturing lost 6K), fulltime jobs tanked 190K while part-time jumped +60K, participation dropped 2 BP, earnings growth dropped off sharply (0.1% versus 0.4% February), and the number of working fell 201,000. But the headline number beat (196K versus 175K expected), and that was all that mattered.
Impressive moves to end the week that was a very solid upside week.
SP500 13.35, 0.46%
NASDAQ 46.91, 0.59%
DJ30 40.36, 0.15%
SP400 0.73%
RUTX 0.96%
SOX 0.80%
NASDAQ 100 0.51%
VOLUME: NYSE +8%, NASDAQ +1%. Respectable rise, but both exchanges still below average. The only above average session on the week was Wednesday, and then only on NASDAQ, the session where stocks shot higher then reversed a lot of the gains. Thus, a rise but not backed by a ton of buyers. That is okay in this market, however, because there are no sellers. The real trick is when the indices reach or approach the next resistance levels and the rapidly approaching all-time highs.
ADVANCE/DECLINE: NYSE +2.5:1, NASDAQ +2.3:1. Respectable, aided of course by the small cap and midcap leadership.
The action for the week was very interesting. Every index rose, but they traded off day to day as to the strongest. SOX started strong and set the tone. DJ30 strong Monday and then Thursday when SOX took a day off. Friday saw RUTX and SP400 jump back to the front of the pack after lagging rather notably.
Rotation. It doesn't just make your tires last longer, it makes rallies last longer.
All indices logged new recovery highs on the week less RUTX. SOX put in a new all-time high. SP500 is 47 points off. Not bad moves as the indices are taking down resistance levels one at a time. The 2018 topping pattern is still in place, but the indices are working on it piece by piece, resistance level by resistance level.
The upside bias is strong in this one. When there is news that favors it, it rises. When there is no news, it does a decent job of rising. When there is bad news, such as the 3 month/10 year yield inversion, the market sells, holds support, then rebounds.
The inversion was perhaps the biggest, but not the only negative news. BA's issues, TSLA, mediocre to disappointing economic data.
Still, the allure of a trade deal, really being talked up by the administration and indeed this past week the Chinese vice premier, is strong. It was surprising to see the strength of the market Thursday on the positive comments about being 90% complete -- even though the last 10% are the same issues that pretty much started the dispute. The market is in a believe what it wants mode -- as it usually is when it rallies.
In the big picture, the economic data is not great but not bad. It is mediocre enough to keep the Fed at neutral. It is not as strong as the Administration wants, so now it is in a full court press for the Fed to cut rates. Two potential Fed appointees, Moore and Cain, both say a 50BP cut is appropriate. Perhaps it is; as I have stated many times before, the Fed hiked into a slowing economy. Just pausing hikes does not remove the impact -- still to be felt -- of those rate hikes. To get out of the slow patch expeditiously -- if at all -- seemingly necessitates the hikes to be removed. Of course, calling for a 50BP cut and on top of that more QE as the President was apparently doing Friday, is typically not the way to get it as it ties the Fed's hands. Nonetheless, this President has a way of getting things that appear out of reach. This drama will no doubt continue.
This combination of slower data, relatively tame inflation, trade deal possibilities, and talk of more Fed largesse provides the backdrop for a market with a continued upside bias pretty much regardless the story. Sure it can be knocked back some, but when that happens it simply puts in a normal consolidation for a bull market and resumes the move upside. Thus far that is exactly what is happening as the indices are drawn toward the old highs and it appears they want to take them on.
THE MARKET
CHARTS
SOX: New highs for SOX intraday and on Friday, closing. The first to make new highs and thus far showing little blowback from sellers. As discussed many times before, SOX is directionally very important to the overall market: where SOX goes the other indices tend to follow. With SOX at new highs, if it holds onto the gains, the other indices have its tracks to follow.
SP500: 7 days upside in a row, adding to that longest win streak in over a year. Well over 2800 and now it is countdown time for the August 2018 penultimate high (2916.50) and the September/October small twin peaks (2940.91) that set off the October through December selloff. Low volume as it approaches those highs just 24 and 48 points away. That makes it more difficult to break through major resistance, but of course you would expect SP500 to perhaps pause at those levels and test a bit, particularly if it continues directly to them on this already solid price move.
NASDAQ: After a Thursday pause, NASDAQ cracked just above the late July penultimate high (7933) and now is entering the August to early October consolidation and small double top similar to SP500's peak (8133.30; closed at 7938.69). As with SP500, volume is running light on this move whereas on the March run at least trade was bouncing around average. Low volume approaching new highs is problematic, but as with SP500, with a run such as this, a bit of a pullback as NASDAQ hits the later resistance levels is normal.
DJ30: The Dow is through the November peak with a nice Thursday move and a somewhat equivocal doji Friday. It is still below the January 2018 peak (26,616.71) and of course the September interim high and the October all-time high (26,952). Volume is rather pathetic. No, it is pathetic, coming in well below average the past 2 weeks. That said, many Dow stocks are performing quite well in very nice patterns.
SP400: After a steady though uninspired move most of the week, SP400 posted a solid Friday advance, clearing the late February recover high, the high that marked the first index to clear that October/December trading range.
RUTX: A market-leading Friday move as the small caps put bold letters on the end of a somewhat lethargic week. Broke through the 200 day SMA Friday, closing in on the February peaks.
LEADERSHIP
While some leading groups such as software continue to look overextended, machinery, materials, industrial metals are making some upside moves. Transports are not bad. Some 'old school' areas are trying to step up, and that does not look back for the economy.
FAANG: Overall came to life though not explosive. AAPL up on the week, finally moving through and up off the 200 day MA to a new recovery high. No volume. New recovery high for AMZN, also with no volume. FB enjoyed a strong week and a breakout to a new recovery high. NFLX continues its dormancy; up on the week but trailed off to end the week, holding the range. GOOG posted a solid move higher off the trendline, paused Friday.
Software: Struggled on the week with some sharp drops to the 50 day MA. Still quite weak and threatening breaks lower: WDAY, DATA, NOW. MSFT is still a leader, trending up the 10 day EMA, COUP not bad but in a 2 month consolidation still.
Machinery/Manufacturing: CMI off Friday but a solid break higher on the week. CAT still poised to break higher. UTX started higher Friday out of a short consolidation. MMM a week straight up. BA was up for the week but stalled at the 50 day SMA Friday.
Biotech/Drugs: Some very interesting moves shaping up. We bought some ARWR Friday. BLUE may be ready to make one of its torrid runs. ARQL looks good and others looking better.
Semiconductors: Still a major leadership group though not all rising. MCHP continued a strong move to a higher high. Ditto LRCX. Good short term tests from AVGO, RMBS. XLNX still slowly climbing up the 10 day EMA. SWKS trying to break higher though not finding volume.
Food/Restaurants. Still come good setups, e.g. DRI, PEP, CAKE. MDLZ at a high, attempting to consolidate for a new move. CMG is in a similar lateral short consolidation.
Materials: Improving off the lows. LPX broke up through the 200 day SMA. CX moving up through the 50 day MA. USCR moved through the 200 day on the week and is trying to set up for a new move. VMC is making a short test after a breakout.
Metals: Industrial metals are not bad. CLF trying a short double bottom. FCX breaking through the 200 day SMA.
Energy: With oil still moving higher, some oil stocks are finally showing life -- again. This group has given more false moves and head fakes than any other. That said, some very solid moves in good patterns, e.g. APC, CVX, DVN, XOM.
MARKET STATS
DJ30
Stats: +40.36 points (+0.15%) to close at 26424.99
Nasdaq
Stats: +46.91 points (+0.59%) to close at 7938.69
Volume: 2.15B (+0.47%)
Up Volume: 1.54B (+330M)
Down Volume: 591.99M (-327.65M)
A/D and Hi/Lo: Advancers led 2.29 to 1
Previous Session: Advancers led 1.31 to 1
New Highs: 104 (+37)
New Lows: 31 (-5)
S&P
Stats: +13.35 points (+0.46%) to close at 2892.74
NYSE Volume: 769.784M (+8.76%)
Up Volume: 572.725M (+64.373M)
Down Volume: 182.025M (-11.042M)
A/D and Hi/Lo: Advancers led 2.54 to 1
Previous Session: Advancers led 1.88 to 1
New Highs: 116 (+23)
New Lows: 8 (-2)
SENTIMENT
VIX: 12.82; -0.76
VXN: 16.17; -0.62
VXO: 12.23; -1.25
Put/Call Ratio (CBOE): 0.82; +0.01
Bulls and Bears:
After a pause, bulls starting back upside, now near the top of the range for 2019 yet again. Bears falling back again after consolidating for a few months.
Bulls: 53.4 versus 52.0 versus 53.9
Bears: 19.4 versus 20.6 versus 20.6
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.
Bulls: 53.4 versus 52.0
52.0 versus 53.9 versus 52.4 versus 52.9 versus 52.4 versus 51.9 versus 49.5 versus 48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9
Bears: 19.4 versus 20.6
20.6 versus 20.6 versus 21.4 versus 20.6 versus 20.4 versus 20.7 versus 21.5 versus 20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3
OTHER MARKETS
INTEREST RATES
The 3 month yield remains below the 10 year: Spread 7BP from to 9.4BP
The 2 year remains below 10 year: Spread back to 17 from 19BP
10 year: 2.508% versus 2.528%
3 month: 2.434% versus 2.434%
2 year: 2.339% versus 2.341%
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.
EUR/USD: 1.12224 versus 1.12444. Gave back some of the Wednesday bounce to the 10 day EMA.
Historical: 1.12 to 1.13 for the past 5 months as the pair trades in a range after the euro sold off from the early 2018 peaks.
USD/JPY: 111.655 versus 111.483. Breaking up through the 200 day SMA, giving it a run again after failing here in the first half of March.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
Plunged lower in December then a recovery to the 200 day SMA in March. Has struggled at that level below the Q4 2018 trading range. 114.60 is the top of the longer term range.
Oil: 53.08, +0.98. Breaking higher Friday from a short consolidation post- breaking over the 200 day MA Tuesday. Oil looks quite strong.
Gold: 1295.60, +1.30. After the peak in mid-February, gold is back to the upper trendline in the big triangle. Bounced once, now fading back to that level again to try for a double bottom.
MONDAY
Not a real slowdown in the economic data on the week. Factory Orders, CPI, FOMC minutes. More than that, earnings season is here. Plenty for the market to mull, but for now the market maintains a steady upside bias. Yes, it is tested by less than savory news such as the yield curve inversion selling just over a week ago, but the bids return. A similar circumstance occurred last earnings season when stocks would fall on results, hold onto support, then recover.
Rotation occurred the past week with late week some more 'old economy' stocks starting to perform or at least show good setups to try to make upside breaks. Energy, materials, machinery, manufacturing, food. This in addition to the semiconductor leadership. Indeed, it would not be surprising to see the software stocks struggle some more as money moves to some of these other areas.
Late week we were buying stocks such as UTX, FDX, CMI as they broke higher. AAPL as well -- some of these older big names in tech are performing. We will continue looking at those and also some energy and more biotechs to catch good moves as they start.
The prior highs are looming as both resistance and as a magnet. We want to play the upside move as long as it lasts and then see how the market reacts to the resistance.
S&P 500 Gains for Seventh Straight Session, Nears 2900 Level
05-Apr-19 16:20 ET
Dow +40.36 at 26424.99, Nasdaq +46.91 at 7938.69, S&P +13.35 at 2892.74
https://www.briefing.com/investor/markets/stock-market-update/2019/4/5/s-and-p-500-gains-for-seventh-straight-session-nears-2900-level.htm
[BRIEFING.COM] The S&P 500 gained 0.5% Friday in a broad-based advance that was supported by a Goldilocks Employment Situation Report for March. The benchmark index advanced for the seventh straight session, increased its weekly gain to 2.1%, and closed within ten points of the 2900 level.
The Dow Jones Industrial Average (+0.2%), the Nasdaq Composite (+0.6%), and the Russell 2000 (+1.0%) extended their weekly gains to 1.9%, 2.7%, and 2.8%, respectively.
The S&P 500 energy sector (+1.7%) led the advance as oil prices ($63.10/bbl, +0.86, +1.4%) rose on labor market strength in the U.S. and heightened geopolitical risk in Venezuela and Libya. Conversely, the materials sector (-0.1%) was the lone group that finished lower.
Stocks began the day modestly higher after the release of the employment report and proceeded to drift sideways throughout the day. The March report featured solid nonfarm payrolls growth of 196,000 (Briefing.com consensus 170,000) and no inflation pressure, as average hourly earnings growth decelerated to 3.2% yr/yr from 3.4% yr/yr in February.
In brief, this report accomplished three important things: (1) the yr/yr moderation in wage growth will keep the Fed sidelined (2) it exposed February's weak payrolls data to be an aberration and (3) it helped quiet recession concerns.
As for trade, nothing concrete came out of this week's high-level talks in Washington, although the tone remained constructive and hopeful about getting an agreement finalized. President Trump said it will be known probably in the next four weeks or so if a deal gets done.
Corporate news was light, although there were some notable analyst recommendations. Dow Inc (DOW 57.24, -2.47) lost 4.1% after JP Morgan initiated the stock with an Underweight rating; Boston Beer (SAM 268.33, -15.67) lost 5.5% after Goldman Sachs downgraded the stock to Sell from Neutral, citing expectations for slowing sales growth; and Intel (INTC 55.60, -0.32) dipped 0.6% after Wells Fargo cut its rating to Market Perform from Outperform.
U.S. Treasuries finished little changed, although they did see an uptick from early lows after the jobs report. The 2-yr yield increased one basis point to 2.34%, and the 10-yr yield decreased one basis point to 2.50%. The U.S. Dollar Index increased 0.1% to 97.39.
Reviewing Friday's economic data, which included the Employment Situation Report for March and the Consumer Credit report for February:
Nonfarm payrolls increased by 196,000 in March (Briefing.com consensus 170,000) while nonfarm private sector payrolls increased by 182,000 (Briefing.com consensus 160,000). Avg. hourly earnings rose just 0.1% (Briefing.com consensus +0.2%).
The key takeaway from the March Employment Situation Report is that it had that Goldilocks hue again of solid job growth and no inflation worries.
Total outstanding consumer credit increased by $15.2 billion in February (Briefing.com consensus $18.0 billion) after increasing an upwardly revised $17.7 billion (from $17.0 billion) in January.
Once again, credit growth was rooted in nonrevolving debt, like car loans and student loans, while revolving credit (credit cards) expanded at a more muted pace.
Looking ahead, investors will receive the Factory Orders Report for February on Monday.
Nasdaq Composite +19.6% YTD
Russell 2000 +17.4% YTD
S&P 500 +15.4% YTD
Dow Jones Industrial Average +13.3% YTD
S&P 500 Ekes Out New Closing High for the Year
04-Apr-19 16:15 ET
Dow +166.50 at 26384.63, Nasdaq -3.77 at 7891.78, S&P +5.99 at 2879.39
https://www.briefing.com/investor/markets/stock-market-update/2019/4/4/s-and-p-500-ekes-out-new-closing-high-for-the-year.htm
[BRIEFING.COM] The S&P 500 increased 0.2% on Thursday, wavering between small gains and losses as high-level trade talks continued in Washington. The benchmark index advanced for the sixth straight session, eking out a new closing high for the year.
The Dow Jones Industrial Average gained 0.6%, boosted by shares of Boeing (BA 395.86, +11.12, +2.9%) on reports of a successful test of the software fix for the 737 MAX plane, which could be implemented in the coming weeks. The small-cap Russell 2000 gained 0.4%, while the tech-sensitive Nasdaq Composite lost 0.1%.
The S&P 500 materials (+1.0%), energy (+0.9%), and consumer discretionary (+0.7%) sectors led the broader market higher. Conversely, the information technology (-0.4%), utilities (-0.4%), and real estate (-0.3%) sectors underperformed.
There was some optimism about a trade deal throughout the day in anticipation of President Trump's meeting with Chinese Vice Premier Liu He after the close. There was also some speculation that President Trump could soon announce a summit with President Xi, as negotiations have entered the late stages.
Tesla (TSLA 267.78, -24.03, -8.2%), meanwhile, disappointed investors after it reported a 31% decline in Q1 deliveries and said the results will negatively affect the company's Q1 net income. On a related note, a U.S. judge ordered the SEC and CEO Elon Musk to meet and settle their dispute over the next two weeks. The SEC had sought to hold Mr. Musk in contempt regarding an unchecked tweet pertaining to Tesla's operations.
In other corporate news, Facebook (FB 176.02, +2.48, +1.4%) was upgraded to Buy from Neutral at Guggenheim with a price target of $200; Micron (MU 42.89, -1.01, -2.3%) was downgraded to Underweight from Equal-Weight at Morgan Stanley with a price target of $32; and Constellation Brands (STZ 191.45, +11.76, +6.5%) pleased investors with its earnings results.
U.S. Treasuries finished mixed ahead of Friday's release of the Employment Situation report for March. The 2-yr yield increased one basis point to 2.33%, and the 10-yr yield decreased one basis point to 2.51%. The U.S. Dollar Index increased 0.2% to 97.26. WTI crude lost 0.3% to $62.24/bbl.
Reviewing Thursday's lone economic data, the weekly Initial and Continuing Claims report:
Initial claims for the week ending March 30 decreased by 10,000 to 202,000 (Briefing.com consensus 217,000) while continuing claims for the week ending March 23 fell by 38,000 to 1.717 million.
The key takeaway from the report is that it suggests employers are reluctant to let go of employees. That is a positive consideration in terms of the economic outlook since feelings of job security help fuel increased consumer spending activity.
Looking ahead, investors will receive the Employment Situation Report for March, and the Consumer Credit report for February on Friday.
Nasdaq Composite +18.9% YTD
Russell 2000 +16.2% YTD
S&P 500 +14.9% YTD
Dow Jones Industrial Average +13.1% YTD
Wall Street Closes Higher, Led by Rally in Semiconductors
03-Apr-19 16:25 ET
Dow +39.00 at 26218.13, Nasdaq +48.86 at 7897.54, S&P +6.16 at 2873.40
https://www.briefing.com/investor/markets/stock-market-update/2019/4/3/wall-street-closes-higher-led-by-rally-in-semiconductors.htm
[BRIEFING.COM] The S&P 500 advanced as much as 0.6% on Wednesday amid optimism about a U.S.-China trade deal and positive PMI non-manufacturing data out of China and Europe. The benchmark index fell into negative territory in afternoon action, however, succumbing to some selling interest after coming within 50 points of its all-time high. The S&P 500 managed to finish higher by 0.2%.
The Nasdaq Composite gained 0.6%, propped up by many components within the Philadelphia Semiconductor Index (+2.3%), which rallied on some positive industry indications. The Dow Jones Industrial Average gained 0.2%, and the Russell 2000 gained 0.5%.
The S&P 500 materials (+1.3%), information technology (+0.8%), and consumer discretionary (+0.7%) sectors outperformed the broader market. Conversely, the energy (-1.0%), consumer staples (-0.6%), and industrial (-0.3%) sectors underperformed.
Market participants responded favorably to a Financial Times report indicating the U.S. and China were nearing a final trade deal, although issues pertaining to enforcement mechanisms and forced technology transfers still need to be ironed out. Trade talks between high-ranking U.S. and Chinese officials resumed in Washington today.
Semiconductor stocks were strong all day following a Digitimes report suggesting Taiwan Semi (TSM 41.79, +0.52, +1.3%), which is the largest contract semiconductor foundry, is seeing a rebound in chip orders. Optimism that better economic activity could be on the horizon, and that a trade deal could be worked out soon, also fueled buying interest in this growth-oriented space that has leading-indicator status.
Advanced Micro Devices (AMD 29.02, +2.27, +8.5%) and Intel (INTC 55.48, +1.12, +2.1%) provided the group with some influential support after both were initiated with a Buy rating at Nomura/Instinet. AMD also benefited from Digitimes suggesting it will see a significant increase in sales in the second half of the year while Intel got an added boost from the news that it named a new CFO.
Shares of Facebook (FB 173.54, -0.66), on the other hand, came under pressure following a Bloomberg report regarding a privacy slip-up. The report indicated a cyber security firm discovered Facebook user information was "inadvertently posted publicly on Amazon.com Inc.'s cloud computing servers" in plain sight. FB shares lost 0.4% after being up as much as 2.2% prior to the report.
Dow component Caterpillar (CAT 139.26, -0.93, -0.7%), meanwhile, was downgraded to Hold from Buy at Deutsche Bank, which based its recommendation in part on its view that global synchronized growth has "collapsed" and that Europe is slowing more than expected.
U.S. Treasuries closed on a lower note, pushing yields higher in a curve-steepening trade. The 2-yr yield increased one basis point to 2.32%, and the 10-yr yield increased four basis points to 2.52%. The U.S. Dollar Index declined 0.3% to 97.11. WTI crude lost 0.3% to $62.42/bbl.
Reviewing Wednesday's economic data, which included the ISM Non-Manufacturing Index for March, the ADP Employment Change report for March, and the weekly MBA Mortgage Applications Index:
The ISM Non-Manufacturing Index (NMI) for March dropped to 56.1% (Briefing.com consensus 57.9%) from 59.7% for February. The dividing line between expansion and contraction is 50.0%. The March reading is the lowest level for the index since December 2017.
The key takeaway from the report is that every index component was at 50.0% or higher in March. The drop in March, then, suggests non-manufacturing sector activity increased, only at a slower pace than the prior month.
ADP Employment Change report for March showed an estimated 129,000 positions were added to private-sector payrolls (Briefing.com consensus 178,000) following an upwardly revised 197,000 (from 183,000) for February.
The weekly MBA Mortgage Applications Index surged 18.6% following an 8.9% increase in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.
Nasdaq Composite +19.0% YTD
Russell 2000 +15.8% YTD
S&P 500 +14.6% YTD
Dow Jones Industrial Average +12.4% YTD
Wall Street Closes Mixed, Walgreens Falls on Earnings Warning
02-Apr-19 16:25 ET
Dow -79.29 at 26179.13, Nasdaq +19.78 at 7848.68, S&P +0.05 at 2867.24
https://www.briefing.com/investor/markets/stock-market-update/2019/4/2/wall-street-closes-mixed-walgreens-falls-on-earnings-warning.htm
[BRIEFING.COM] The S&P 500 finished flat on Tuesday in a lackluster trading session. Price action was relatively muted for most of the day, as investors digested a 2.2% gain for the benchmark index over the prior three sessions.
The Dow Jones Industrial Average lost 0.3%, weighed down by Walgreens Boots Alliance (WBA 55.36, -8.13, -12.8%) after it issued disappointing earnings results and guidance. The Nasdaq Composite gained 0.3%, boosted by Facebook (FB 174.20, +5.50, +3.3%) after it received some positive commentary from Deutsche Bank regarding its e-commerce potential.
The S&P 500 consumer staples (-0.8%) and energy (-0.7%) sectors were Tuesday's outright laggards. Conversely, the real estate (+0.9%), communication services (+0.4%), and materials (+0.4%) sectors outperformed.
Walgreens said it expects FY19 adjusted EPS growth to be flat, versus prior guidance of 7-12% growth, citing several industry challenges. Its negative outlook undercut the consumer staples sector and many health care stocks. The S&P 500 health care sector decreased 0.2%.
Delta Air Lines (DAL 55.33, +3.15, +6.0%) for its part reported total first quarter unit revenue growth at 2%, the top end of prior guidance, and increased its first quarter EPS guidance. Its upbeat outlook fostered buying interest in other airline stocks, which provided offsetting support for the Dow Jones Transportation Average (-0.2%).
Elsewhere, Dow, Inc. (DOW 56.25, +2.75, +5.1%) made its market debut on the NYSE and was added to the Dow Jones Industrial Average, replacing DowDuPont (DWDP 36.49, -0.10, -0.3%) from which it was spun off. Lyft (LYFT 68.97, -0.04, -0.06%), meanwhile, languished for a good chunk of the day, and although it garnered some afternoon buying interest, finished fractionally lower.
U.S. Treasuries closed on a higher note, pushing yields slightly lower. The 2-yr yield decreased one basis point to 2.31%, and the 10-yr yield decreased two basis points to 2.48%. The U.S. Dollar Index increased 0.1% to 97.33. WTI crude rose 1.6% to $62.58/bbl, hitting a new five-month high.
Reviewing Tuesday's economic data, which included Durable Orders for February:
New orders for durable goods declined 1.6% in February (Briefing.com consensus -0.9%), pressured by a 4.8% drop in transportation equipment orders. Excluding transportation, new orders for durable goods were up 0.1% (Briefing.com consensus +0.2%).
The key takeaway from the report is that business spending was sluggish in February, evidenced by the 0.1% decline in nondefense capital goods orders excluding aircraft. Shipments of those same goods were flat. This is a line item that fits a slower growth outlook.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for March, the ADP Employment Change report for March, and the weekly MBA Mortgage Applications Index on Wednesday.
Nasdaq Composite +18.3% YTD
Russell 2000 +15.2% YTD
S&P 500 +14.4% YTD
Dow Jones Industrial Average +12.2% YTD
Second Quarter Begins on Upbeat Note
01-Apr-19 16:15 ET
Dow +329.74 at 26258.42, Nasdaq +99.59 at 7828.90, S&P +32.79 at 2867.19
https://www.briefing.com/investor/markets/stock-market-update/2019/4/1/second-quarter-begins-on-upbeat-note.htm
[BRIEFING.COM] The stock market followed Friday's strong close to the first quarter with an even stronger start to the second quarter. The S&P 500 climbed 1.2% to a fresh high for the year while the Dow Jones Industrial Average (+1.3%) and the Nasdaq Composite (+1.3%) outperformed.
The Monday rally was a long time in the making, considering the advance got going overnight in the futures market and continued into the afternoon. Equity futures jumped out of the gate after better than expected China's Manufacturing PMI (actual 50.5; expected 49.5; prior 49.2) and Non-Manufacturing PMI (actual 54.8; expected 54.5; prior 54.3) reinforced the idea that global economic activity is rebounding.
Markets across Asia rallied on Monday, as did equities across Europe, even though final March Manufacturing PMI readings from Germany (actual 44.1; expected 44.7; prior 44.7) and France (actual 49.7; expected 49.8; prior 49.8) decreased from their respective flash estimates.
A weaker than expected U.S. Retail Sales report for February (actual -0.2%; Briefing.com consensus 0.2%) could not stop the rally, partly because the January increase was revised up to 0.7% from 0.2% and partly because today's remaining batch of data was ahead of expectations with the ISM Manufacturing Index for March rising to 55.3 (Briefing.com consensus 54.1) from 54.2 in February.
The upbeat tone fostered a daylong rally in equities with high-beta groups like the Dow Jones Transportation Average (+2.3%) and the PHLX Semiconductor Index (+2.5%) pacing the advance. The Dow Jones Transportation Average jumped above its 200-day moving average (10504) and approached its February high amid gains in all 20 components. Norfolk Southern (NSC 193.54, +6.65, +3.6%) was at the forefront of the rally after being upgraded to Buy from Neutral at Bank of America/Merrill Lynch.
Meanwhile, the broader industrials sector gained 2.1%, but still finished behind financials (+2.4%). The economically-sensitive group benefitted from weakness in Treasuries, which sent the 10-yr yield higher by eight basis points to 2.50%. This helped expand the spread between the 3-month bill yield and the 10-yr note yield to 11 basis points from three basis points at the end of Friday's session.
On the commodity side, crude oil jumped 2.3% to a fresh 2019 high at $61.59/bbl with the 200-day moving average (61.66) looming just above. Copper futures rallied to a fresh high for the year in overnight trade, but an intraday pullback returned the red metal to unchanged at $2.93/lb.
While most stocks benefited from a buying spree on Monday, Lyft (LYFT 69.01, -9.28) did not. Shares of the ride-sharing company fell 11.9%, making for another day of uninspiring price action. Today's slide pressured the stock below $72.00—a level where it priced on Thursday evening before hitting the market at $87.24 on Friday.
News of impending price cuts at Amazon-owned (AMZN 1814.19, +33.44, +1.9%) Whole Foods weighed on Kroger (KR 24.48, -0.12, -0.5%) in afternoon trade.
Interestingly, the strong session was not accompanied by strong trading volume, as 837 million shares changed hands at the NYSE floor, shy of the 200-day moving average, which stands just below 913 million.
Today's economic data included February Retail Sales, March ISM Manufacturing Index, January Business Inventories, and February Construction Spending:
Retail sales declined 0.2% (Briefing.com consensus +0.2%) on the heels of an upwardly revised 0.7% increase (from +0.2%) in January. Excluding autos, retail sales declined 0.4% (Briefing.com consensus +0.3%) after increasing an upwardly revised 1.4% (from +0.9%) in January.
The key takeaway from the report is that it reflects a slowdown in retail spending activity in February, which was likely adversely affected by the polar vortex.
The ISM Manufacturing Index for March increased to 55.3% (Briefing.com consensus 54.1%) from 54.2% in February.A number above 50% is indicative of expansion in the manufacturing sector.
The key takeaway from the report is that activity accelerated from February, which is a positive step for quieting some of the recession concerns that have been simmering with the recent flattening/inversion of the yield curve.
Total construction spending increased 1.0% in February (Briefing.com consensus -0.3%) on the heels of an upwardly revised 2.5% increase (from 1.3%) in January.
The key takeaway from the report is that the February increase was fueled by increases in both private and public construction spending.
Business inventories increased 0.8% in January (Briefing.com consensus +0.5%) following an upwardly revised 0.8% increase (from +0.6%) in December. Business sales increased 0.3% on the heels of an upwardly revised 0.9% decline (from -1.0%) in December.
The key takeaway from the report is that the inventory boost will be a positive input for Q1 GDP forecasts.
Tomorrow's economic data will be limited to the 8:30 ET release of February Durable Orders (Briefing.com consensus -0.9%; prior 0.4%) and Durable Orders ex-transportation (Briefing.com consensus 0.2%; prior -0.1%).
Nasdaq Composite +18.0% YTD
Russell 2000 +15.4% YTD
S&P 500 +14.4% YTD
Dow Jones Industrial Average +12.6% YTD
S&P 500 Caps Its Best Quarter Since 2009
29-Mar-19 16:15 ET
Dow +211.22 at 25928.68, Nasdaq +60.16 at 7729.31, S&P +18.96 at 2834.40
https://www.briefing.com/investor/markets/stock-market-update/2019/3/29/s-and-p-500-caps-its-best-quarter-since-2009.htm
[BRIEFING.COM] The S&P 500 gained 0.7% on Friday, capping its best quarter since 2009 amid a risk-on sentiment and continued trade optimism. Friday's advance propped the S&P 500 to a gain of 13.1% this quarter.
The Dow Jones Industrial Average (+0.8%), the Nasdaq Composite (+0.8%), and the Russell 2000 (+0.3%) extended their quarterly gains to 11.2%, 16.5%, and 14.2%, respectively.
The S&P 500 health care (+1.2%), industrials (+1.0%), and information technology (+1.0%) sectors outperformed the broader market. Conversely, the energy (-0.2%) and real estate (-0.1%) sectors were the lone groups to finish with losses.
The market liked to hear that the U.S. and China held "constructive" trade talks in Beijing this week, according to Treasury Secretary Steven Mnuchin and the White House. Trade talks will continue next week in Washington with China's Vice Premier Liu He.
The market also liked to hear NEC Director Larry Kudlow saying he believes the Fed should cut rates by 50 basis points since there is no inflation and the U.S. economy is fundamentally healthy. Mr. Kudlow's comments came after Fed Governor Randal Quarles said further rate hikes may be necessary, as he remains optimistic about economic growth.
Lyft (LYFT 78.29, +6.29, +8.7%) was the stock of the day after the company made its highly-anticipated market debut on the Nasdaq, opening at $87.24 after its IPO priced at $72.00 per share.
In other key corporate news, several proxy firms came out in support for Celgene's (CELG 94.34, +6.89, +7.9%) proposed merger with Bristol-Myers (BMY 47.71, -0.13, -0.3%), prompting Starboard Value to withdraw its proxy solicitation. Starboard remains opposed to the deal, though.
Wells Fargo (WFC 48.32, -0.77, -1.6%) CEO Tim Sloan announced he is retiring from the company. The bank's general counsel, Allen Parker, will take over immediately as interim CEO.
U.S. Treasuries ended the week on a lower note, sending yields higher across the curve. The 2-yr yield increased four basis points to 2.27%, and the 10-yr yield increased three basis points to 2.41%. The U.S. Dollar Index increased 0.1% to 97.27.
Reviewing Friday's economic data, which included Personal Income for February, Personal Spending for January, the Core PCE Price Index for January, New Home Sales for February, and the revised University of Michigan Index of Consumer Sentiment for March:
Personal income increased 0.2% in February (Briefing.com consensus 0.3%) after decreasing 0.1% in January. Personal spending increased 0.1% in January (Briefing.com consensus 0.3%) after decreasing a revised 0.6% (from -0.5%) in December.
The PCE Price Index for January decreased 0.1% while the core PCE Price Index, which excludes food and energy, increased 0.1% (Briefing.com consensus 0.2%). On a year-over-year basis, the PCE Price Index is up 1.4%, down from 1.8% in December, and the core PCE Price Index is up 1.8%, down from 2.0% in December.
The key takeaway from the report is that the core PCE Price Index slipped below the Fed's longer-run inflation target of 2.0%, which can be used by the FOMC as a reason for maintaining its newfound patient stance.
New home sales increased 4.9% m/m in February to a seasonally adjusted annual rate of 667,000 (Briefing.com consensus 618,000) from an upwardly revised 636,000 (from 607,000) in January. On a y/y basis, new home sales were up 0.6%.
The key takeaway from the report is that a recent decrease in prices appears to have invited more sales activity.
The final University of Michigan Index of Consumer Sentiment for March increased to 98.4 (Briefing.com consensus 97.8) from 97.8 in the preliminary reading.
The key takeaway from the report is that a large share of households reported rising incomes and lower expected year-ahead inflation rates, leading to increased real income expectations.
The Chicago PMI increased to 58.7 in March from 64.7 in February.
Looking ahead, investors will receive Retail Sales for February, the ISM Manufacturing Index for March, Business Inventories for January, Construction Spending for February, and auto and truck sales throughout the day on Monday.
Nasdaq Composite +16.5% YTD
Russell 2000 +14.2% YTD
S&P 500 +13.1% YTD
Dow Jones Industrial Average +11.2% YTD
Stocks Drift Higher, on Pace for Historic Quarter
28-Mar-19 16:10 ET
Dow +91.87 at 25717.46, Nasdaq +25.79 at 7669.15, S&P +10.07 at 2815.44
https://www.briefing.com/investor/markets/stock-market-update/2019/3/28/stocks-drift-higher-on-pace-for-historic-quarter.htm
[BRIEFING.COM] The S&P 500 increased 0.4% on Thursday, led by shares of the recently-battered financial and industrial stocks. Stocks drifted higher as Treasuries stabilized, while investors continued to wait for further clarity on a U.S.-China trade resolution, earnings guidance, and U.S. economic growth prospects.
The Dow Jones Industrial Average gained 0.4%, the Nasdaq Composite gained 0.3%, and the Russell 2000 gained 0.8%.
The S&P 500 materials (+1.0%), financials (+0.8%), and industrial (+0.8%) sectors outperformed the broader market. Conversely, the utilities (-1.3%) and communication services (-0.5%) sectors were the lone groups to finish with losses.
A U.S. trade delegation, which included USTR Robert Lighthizer and Treasury Secretary Steven Mnuchin, arrived in Beijing for a two-day meeting on Thursday. Reuters reported Wednesday evening that Chinese negotiators made "unprecedented" proposals on a range of issues including forced technology transfers. Despite the progress, the market continues to wait for a substantive, final trade deal.
In earnings news, lululemon athletica (LULU 167.54, +20.74, +14.1%), PVH Corp (PVH 127.26, +16.37, +14.8%), and Accenture (ACN 175.12, +8.65, +5.2%) all beat top and bottom-line estimates and provided upbeat guidance, sending shares notably higher.
In M&A news, WABCO Holdings (WBC 131.48, -14.53, -10.0%) agreed to be acquired by ZF Friedrichshafen for $136.50/share, or over $7 billion, in cash.
Nielsen (NLSN 23.66, -2.97) was another story stock, dropping 11.2%, after The New York Post reported that Blackstone pulled out of the bidding process to acquire the company.
U.S. Treasuries edged lower, pushing yields higher. The 2-yr yield and the 10-yr yield increased two basis points each to 2.23% and 2.39%, respectively. The U.S. Dollar Index rose 0.5% to 97.24. WTI crude decreased 0.3% to $59.27/bbl.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report, the third estimate of Q4 GDP, and Pending Home Sales for February:
Initial claims for the week ending March 23 decreased by 5,000 to 211,000 (Briefing.com consensus 220,000) from the revised prior week level of 216,000 (from 221,000) while continuing claims for the week ending March 16 increased by 13,000 to 1.756 mln from the revised prior week level of 1.743 mln (from 1.750 mln).
The key takeaway from the report is that initial claims have approached the lower end of range that has been in effect over the past year while continuing claims hover near the middle of their range from the past year.
The third estimate for Q4 GDP showed a downward revision to 2.2% from 2.6% (Briefing.com consensus 2.5%) and a downward revision to the GDP Price Deflator to 1.7% from 1.8% (Briefing.com consensus 1.8%).
The key takeaway from the report is that even with the downward revision, real GDP increased 3.0% from the fourth quarter of 2017 to the fourth quarter of 2018, down slightly from the previous estimate of 3.1%. Measured from the 2017 annual level to the 2018 annual level, real GDP increased 2.9%.
Pending Home Sales decreased 0.1% in February (Briefing.com consensus 0.5%). Today's reading follows a revised increase of 4.3% in January (from 4.6%).
Looking ahead, investors will receive several economic reports on Friday, which will include Personal Spending for January, the Core PCE Price Index for January, Personal Income for February, New Home Sales for February, and the revised University of Michigan Index of Consumer Sentiment for March.
Nasdaq Composite +15.6% YTD
Russell 2000 +13.8% YTD
S&P 500 +12.3% YTD
Dow Jones Industrial Average +10.3% YTD
Stocks Lose Ground as Treasuries Move Higher
27-Mar-19 16:20 ET
Dow -32.14 at 25625.59, Nasdaq -48.15 at 7643.36, S&P -13.09 at 2805.37
https://www.briefing.com/investor/markets/stock-market-update/2019/3/27/stocks-lose-ground-as-treasuries-move-higher.htm
[BRIEFING.COM] The S&P 500 lost 0.5% on Wednesday, although it had been down as much as 1.1% on recurring concerns about slowing growth and a resilient U.S. Treasury market. The broader market spent the bulk of afternoon action in a steady rebound as Treasuries cooled off, but missing leadership from tech stocks limited the scope of the rebound attempt.
The Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.6%, and the Russell 2000 lost 0.4%.
Ten of the 11 S&P 500 sectors finished lower, led by health care (-0.8%) and energy (-0.7%). The industrial sector (+0.1%) was the lone group to finish higher.
After losing ground in mid-morning trade, the S&P 500 found itself back in the 2800 area, which has served as resistance since mid-October. Persistent reminders of slowing economic growth have sobered expectations for the market, providing more fuel for a flight-to-safety trade in U.S. Treasuries, which sent yields to fresh lows for the year.
Wednesday's reminders about slowing growth came from overseas:
European Central Bank President Mario Draghi indicated the ECB may maintain its highly accommodative policy for an even longer period
2019 growth expectations for Italy were cut to zero by a confederation of industrial employers
Switzerland’s KOF Institute lowered its expectations for 2019 Swiss GDP growth to 1.0% from 1.6%
The Reserve Bank of New Zealand issued a dovish statement, indicating the next move in rates is likely to be a cut
The 2-yr yield declined five basis points to 2.21%, and the 10-yr yield declined four basis points to 2.37%. The U.S. Dollar Index increased 0.2% to 96.89.
The lower yields, though, appear to be helping the U.S. housing market, which should offer a measure of support for the economy. Homebuilders KB Home (KBH 24.73, +0.65, +2.7%) and Lennar (LEN 51.67, +1.96, +3.9%) provided investors with an upbeat outlook for the sector that overshadowed underwhelming earnings results.
On a related note, the weekly MBA Mortgage Applications Index jumped 8.9% following a 1.6% increase in the prior week. This was the fifth increase in the last six weeks.
Southwest Airlines (LUV 49.83, +1.08, +2.2%), meanwhile, cut its Q1 revenue guidance to reflect the grounding of the Boeing (BA 374.21, +3.83, +1.0%) 737 MAX, a new contract with mechanics, and overall operational performance during the quarter. The company remained optimistic, though, and the positive response in its shares indicated the market agreed that headwinds will abate after the first quarter.
In M&A news, health care company WellCare (WCG 259.81, +28.54, +12.3%) agreed to be acquired by Centene (CNC 52.12, -2.73, -5.0%) for $305.39/share in cash and stock.
Reviewing Wednesday's economic data, which included the weekly MBA Mortgage Applications Index, the Trade Balance Report for January, and the Current Account Balance for the fourth quarter:
The weekly MBA Mortgage Applications Index jumped 8.9% following a 1.6% increase in the prior week.
The trade deficit narrowed to $51.1 bln in January (Briefing.com consensus -$57.5 bln) from a revised $59.9 bln (from $59.8 bln) in December. On a year-over-year basis, the goods and services deficit decreased 3.7% from the level observed in January 2018.
The key takeaway from the report is that the trade deficit narrowed after hitting its widest level in a decade in the previous reading.
The current account deficit for the fourth quarter totaled $134.4 billion (Briefing.com consensus -$126.6 billion). The third quarter deficit was revised to $126.6 billion from $124.8 billion.
Looking ahead, investors will receive several economic reports on Thursday, which will include the PCE Price Index for February, the Core PCE Price Index for January, the Chicago PMI for March, New Home Sales for February, and the revised University of Michigan Index for Consumer Sentiment for March.
Nasdaq Composite +15.2% YTD
Russell 2000 +12.9% YTD
S&P 500 +11.9% YTD
Dow Jones Industrial Average +9.9% YTD
Stocks Close Higher as Bond Yields Stabilize
26-Mar-19 16:20 ET
Dow +140.90 at 25657.73, Nasdaq +53.98 at 7691.51, S&P +20.10 at 2818.46
https://www.briefing.com/investor/markets/stock-market-update/2019/3/26/stocks-close-higher-as-bond-yields-stabilize-.htm
[BRIEFING.COM] The S&P 500 gained 0.7% on Tuesday, as an early uptick in U.S. Treasury yields and gains in most global equity markets helped foster some risk-on sentiment. It wasn't easy, though, as the benchmark index declined from a gain of 1.1% at its high to a gain of 0.2% at its low before rallying in the last 30 minutes of action.
The Dow Jones Industrial Average gained 0.6%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 1.0%.
All 11 S&P 500 sectors finished higher with gains ranging from 0.4% (consumer discretionary) to 1.5% (energy). Many energy stocks benefited from an increase in oil prices ($59.94/bbl, +$1.05, +1.8%).
Stocks jumped out of the gate as investors rallied to buy the recent dip in equities while bond yields edged up from this year's lows. The 2-yr yield and the 10-yr yield had been up as much as four basis points each from their unchanged marks, but spent most of intraday action in a steady retreat. The pullback in yields coincided with the pullback in equities.
The 2-yr yield closed one basis point higher at 2.26%, while the 10-yr yield declined one basis point to 2.41%. The U.S. Dollar Index increased 0.2% to 96.80.
Shares of Apple (AAPL 186.79, -1.95, -1.0%) were up as much as 2.2% but steadily declined throughout the day. The stock took a leg lower into negative territory after Bloomberg reported a U.S. trade judge recommended a ban on imports of some iPhone models due to Apple's infringement on a Qualcomm (QCOM 58.00, +1.36, +2.4%) patent. The judge's findings will be subject to a full review by the U.S. International Trade Commission.
Bed Bath & Beyond (BBBY 16.92, +3.05) was another story stock, surging 22.0%, after The Wall Street Journal reported that activist investors are preparing to launch a proxy fight to replace its entire 12-person board. Disappointing guidance from Carnival (CCL 51.71, -4.94), meanwhile, sent the stock lower by 8.7%.
In M&A news, Uber Technologies (UBER) announced it will acquire Middle East rival Careem Networks for $3.1 billion, consisting of $1.7 billion in convertible notes and $1.4 billion in cash. Uber plans to kick off its IPO next month.
Reviewing Tuesday's batch of economic data, which included Housing Starts and Building Permits for February, the Conference Board's Consumer Confidence Index for March, the FHFA Housing Price Index for January, and the S&P Case-Shiller Home Price Index for January:
Housing Starts decreased 8.7% m/m in February to a seasonally adjusted annual rate of 1.162 million units (Briefing.com consensus 1.210 million) from an upwardly revised 1.273 million (from 1.230 million) in January. Building permits decreased 1.6% m/m to 1.296 million (Briefing.com consensus 1.308 million) from a downwardly revised 1.317 million (from 1.345 million) in January.
The key takeaway from the report is that the yr/yr rate of decline accelerated, with starts now down 9.9% yr/yr while permits are down 2.0% yr/yr.
The Conference Board's Consumer Confidence Index decreased to 124.1 in March (Briefing.com consensus 132.0) from an unrevised 131.4 in February. The March decline represents the fifth decrease over the past six months.
The key takeaway from the report is that while consumers remain confident in the economy's ability to expand, the level of expectations has moderated.
The FHFA Housing Price Index for January increased 0.6% (Briefing.com consensus 0.3%), up from an unrevised December reading of 0.3%.
The Case-Shiller Home Price Index for January increased 3.6%, down from a revised reading of 4.1% in December (from 4.2%).
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index, the Trade Balance Report for January, and the Current Account Balance for the fourth quarter on Wednesday.
Nasdaq Composite +15.9% YTD
Russell 2000 +13.3% YTD
S&P 500 +12.4% YTD
Dow Jones Industrial Average +10.0% YTD
Wall Street Closes Little Changed as Bond Yields Drop
25-Mar-19 16:15 ET
Dow +14.51 at 25516.83, Nasdaq -5.13 at 7637.53, S&P -2.35 at 2798.36
https://www.briefing.com/investor/markets/stock-market-update/2019/3/25/wall-street-closes-little-changed-as-bond-yields-drop.htm
[BRIEFING.COM] The S&P 500 decreased 0.1% on Monday in a session that showed little conviction from buyers or sellers. Lingering concerns about global economic growth tempered buying interest and contributed to a further decline in U.S. Treasury yields.
The Nasdaq Composite also lost 0.1%. The Dow Jones Industrial Average and the Russell 2000 outperformed with gains of 0.1% and 0.5%, respectively.
The S&P 500 information technology (-0.4%) and financial (-0.4%) sectors dragged the broader market lower. Conversely, the consumer discretionary (+0.6%) and industrial (+0.2%) sectors outperformed.
Growth concerns were reinforced by another discouraging economic report from Germany. Germany's ifo Business Climate Index for March showed a continued deterioration of the manufacturing sector, which was notable, given Germany's status as a key export center.
U.S. Treasury yields steadily declined throughout the day on dwindling growth expectations. The 2-yr yield dropped seven basis points to 2.25%, and the 10-yr yield dropped four basis points to 2.42% after briefly touching 2.39% -- its lowest level since Dec. 2017. The U.S. Dollar Index lost 0.1% to 96.53.
Homebuilding stocks outperformed amid the continued drop in rates, providing strong support for the consumer discretionary sector. The SPDR S&P Homebuilders ETF (XHB 38.17, +0.49) advanced 1.3%. The Philadelphia Semiconductor Index (-1.3%), on the other hand, pulled back from recent gains, with many of its components weighing on the tech sector.
Apple (AAPL 188.74, -2.31, -1.2%) hosted a highly-anticipated service event, in which it introduced Apple TV Plus, Apple News Plus, Apple Arcade, and Apple Card. Apple did not mention a price for its TV video service. Apple News Plus, a magazine subscription service, will cost $9.99/month. Despite the event, shares of Apple underperformed throughout the day, losing 1.2%.
In M&A news, Thermo Fisher (TMO 268.80, +4.99, +1.9%) will expand its presence into the gene therapy field after announcing it will acquire Brammer Bio for approximately $1.7 billion in cash.
Investors did not receive any U.S. economic data.
Looking ahead, investors will receive several economic reports on Tuesday: Housing Starts and Building Permits for February, the FHFA Housing Price Index for January, the S&P Case-Shiller Home Price Index for January, and the Conference Board's Consumer Confidence Index for March.
Nasdaq Composite +15.1% YTD
Russell 2000 +12.2% YTD
S&P 500 +11.6% YTD
Dow Jones Industrial Average +9.4% YTD
InvestmentHouse - Yield Curve Inversion Fears Bring Out Sellers (Weekend Newsletter)
https://news.investmenthouse.com/2019/03/the-daily-part-1-of-3-3-23-19.html
MARKET SUMMARY
- Weak German PMI reports, weak Japanese output, yield curve inversion fears bring out the first serious sellers in a long time.
- After a solid break upside Thursday, SP500 and NASDAQ are sold back into the range.
- Small and midcaps threaten to break their uptrends.
- Friday was likely inversion panic, but was it even warranted?
- The market never peaks the first day of an inversion, so even if Friday was an yield curve inversion with meaning, the top is still a lot of upside moves away.
- Even if this wasn't an inversion to worry about, the move itself deserves respect, and some areas look very ready to sell.
Thursday night I said it looked as if the NASDAQ and SP500 test of the breakout over the top of the range was over. It was not. After a Thursday that saw stocks jump back up after a modest fade into the FOMC decision Wednesday that LOOKED like a successful NASDAQ and SP500 test of the trading range, stocks made a second rather important move: back down.
NASDAQ and SP500 reversed the Thursday gains and more, falling back into the upper reaches of the range. Not a horrible finish for those two indices, but NYSE volume jumped higher and breadth was impressive to the downside.
SP500 -54.17, -1.90%
NASDAQ -196.29, -2.50%
DJ30 -460.19, -2.50%
SP400 -2.81%
RUTX -3.62%
SOX -2.88%
NASDAQ 100 -2.23%
VOLUME: NYSE +21%, NASDAQ flat but above average. NYSE trade ramped as NYSE stocks sold across the board. Many times I have discussed the lack of sellers. Friday they showed up as fear of being late to get out on an inverted yield curve sparked selling. First, there is not that much evidence a 3 month/10 year inversion presages recession, and second, it is never the case the market peaks on the very day (Friday) the inversion occurs. Indeed, you can get smacked around pretty good playing it that way. Nonetheless, you have to respect the selling if nothing more than near term issues for stocks.
ADVANCE/DECLINE: NYSE -4.1:1, NASDAQ -4.9:1. Impressive downside as SP400 and RUTX broke below the 50 day MA's with RUTX closing below the early March low.
As the headline numbers and the internals show, it was a shellacking across the board with very few places unscathed.
Worse, it could be the old reversal of a breakout attempt. Both NASDAQ and SP500 had tested the initial breakout then rallied very nicely Thursday with the chips, old school tech, and FAANG providing a lot of firepower. Then whammo. Or Bang (from Col. Henry Blake in MASH).
The cause? Blame it on the yield curve. But it wasn't the yield curve, it was a deluge of headlines on website after website and the financial stations about a bond yield curve inversion. The New York Fed conducted its own study and said a 3 month treasury/10 year treasury inversion is a reliable recession indicator. To be fair, in 2007 that pair inverted first -- that is often the sequence of events -- before the 2 year/10 year or the 3 month/30 year inversion. The latter two are typically the signals that foretell a recession to come and thus a stock market selloff.
The timeline of such events is usually a 2 year/10 year or 3 month/30 year inversion occurs for more than just an intraday or short period, then a minimum of a few months passes before the market actually tops. In some smaller number of cases, it can be almost a year before the top. That is a REALLY wide spread, right?
So, what was Friday about? The inevitable result of a yield curve 'inversion?' First, as noted, 2 yr/10 yr or 3 month/30 year inversion is the typical historical measure. Is it different this time? Has the New York Fed discovered another never fail cornbread recipe to predict a recession? Dubious. Second, the day of an inversion, even if you consider this one a reliable indicator, is not the day the market rolls over.
No, what Friday appeared to be was a lot of people and more particularly headline reading algorithms that saw the plethora of stories on an inverted curve and their programming was such that they were to sell if that many negative headlines hit.
Thus, while Friday was not good by any stretch, not good at all, and while Friday can certainly lead to some more near term downside given the reversals, It is highly, highly unlikely Friday marked the start of a recession that warrants an immediate stock market selloff into a bear market.
There could be more selling given the weak close, BUT this is very likely a near term overreaction to everyone and their brother reading headlines about an inverted curve and subsequent recession and quite frankly panicking to get out ahead of the weekend, fearing something worse over the weekend -- like what? The bond market is closed over the weekend. If it inverts more then there is something strange going on.
After the panic selling runs its course we see where the indices are and what stocks held support. While Friday was not pretty, stocks were due a pullback after a solid 1.5 to 2 week move. This was a bit more than most wanted and it was not pleasant seeing NASDAQ and SP500 reverse on volume a Thursday break higher, but even so the indices have a bit more room to give for this to run its course and find some decent support.
Now, you cannot ignore Friday. Reversals of breaks higher -- accompanied by volume -- are serious matters. It is just this one was too pat, too much right on the heels of 'inverted curve!' proclamations. It was panic fire, a kneejerk response to the sudden onslaught of inverted curve stories that are not looking at the indicators that are considered an inverted curve. Even so you cannot ignore it.
Thus, we were taking positions off the table that even remotely played with the stop point. It was disappointing to see the solid Thursday moves in stocks such as AMAT, AMKR, WDC, NFLX come under immediate fire -- never great.
Early week it is then a question of watching if stocks can hold near support after the Friday yield curve paranoia, if they can. GOOG, CMG, AMZN, AAPL, MSFT, INTC, V and more all enjoyed solid advances and can withstand a session of somewhat reckless fear selling. Saner heads will have to prevail Monday after a chance to digest just what a 3 month/10 year inversion on Friday post-FOMC meant.
THE MARKET
CHARTS
To view, click on the following links:
http://investmenthouse1.com/ihmedia/f/charts/sp500.jpg
http://investmenthouse1.com/ihmedia/f/charts/NASDAQ.jpg
http://investmenthouse1.com/ihmedia/f/charts/DJ30.jpg
http://investmenthouse1.com/ihmedia/f/charts/RUTX.jpg
http://investmenthouse1.com/ihmedia/f/charts/SP400.jpg
http://investmenthouse1.com/ihmedia/f/charts/SOX.jpg
The big news was in NASDAQ and SP500 with their reversals of the Thursday new break upside after a short test of prior resistance.
Equally important, however, are the travails of the small and midcap indices. Travails at the resistance highs, yes, but when you take a look at the RUTX chart, if it tests to logical support that puts it at the middle level of testing I discussed several weeks back: either a short test to form a right shoulder to inverted head and shoulders patterns, or a dip to the bottom of the resistance range, or, gulp, a test all the way back to the December low.
SP400, RUTX: Tied to the domestic economy, after that fade in early March where SP400 gave up the breakout over the top of the resistance range, these two indices never caught back up to the large cap indices. At first it was just some rotation into the large cap indices from the leading midcaps. As more data hit and showed a weaker economy, however, they struggled. When the Fed came out in full dove plumage, money started to flee, and flee it did Friday.
RUTX broke below the March low, closing at the session low. Perhaps it puts together an ABDC consolidation of the December/February run, coming back to the bottom of the Oct/Dec trading range. That is about another 35 points for RUTX. Down 56 points Friday, so just a casual drop, right? Not really, but it is a logical test to very near the 38% Fibonacci retracement.
For SP400, it bounced early March off the 61% Fibonacci retracement of the rally from late January to February. Friday it closed just over that level, so that may not be in the cards. It perhaps wants a 78% retracement near 1821.
NASDAQ: Broke to a higher recovery high Friday on quite good volume. Friday it was sold and volume remained strong, well above average, but at least at levels hit Thursday on the upside -- suggesting that the selling was somewhat kneejerk with the inversion fears, BUT a strong move higher was met immediately with a strong move right back down. Monday we see if the big names that have performed so well pick right back up after a one-day issue.
SP500: Similar price action to NASDAQ though NSYE volume did not ramp higher Thursday. It did ram higher Friday, moving above average as the large caps and smaller caps sold. Definitely some distribution, i.e. dumping of shares where the sellers finally showed up. Now that it is back in the range, the immediate future is whether it shakes off Friday and rebounds out of the range OR it needs to test back farther, to the 200 day SMA (a very minor test) or deeper toward the bottom of the trading range (2635ish) similar to what was discussed with RUTX.
SOX: A break higher Thursday as well, moving to a new recovery high and into the resistance range from earlier 2018, but Friday the chips were down as well, giving up much of the move, holding up decently over the 10 day EMA. As with NASDAQ, from here it depends upon if it can move right back up.
DJ30: Could be a bit of a double top taking shape from the late February high as easily as a right shoulder to an inverted head and shoulders. Higher volume, again above average volume, as the Dow fell away from the bottom of the Oct/Dec trading range. Very important test this week as the 50 day MA's and 200 day SMA are converging just over 25,000. If that doesn't hold, then you rea looking at 24,500 to 24.000ish.
LEADERSHIP
Thursday saw some really solid upside moves, Friday saw many given back, not all, but it definitely was not a great session.
FAANG: After a nice move Thursday that added to other solid gains, Friday they were sold back. Some. AAPL faded to the 200 day SMA it just broke. GOOG surged to a higher recovery high on the week then faded Friday toward the 10 day EMA on some pretty solid, above average volume. AMZN is at least finally testing, heading back toward the 200 day SMA after breaking through it Monday. NFLX was disappointing after its surge Wednesday into Thursday, falling back to the 20 day EMA on slightly rising but still below average trade. FB is still trying to hang in and consolidate in a 7 week range.
Semiconductors: What was a great week tarnished a bit Friday. Some are still solid, e.g. AVGO, working in a lateral pennant. AMD, AMAT, NVDA, recent leaders, struggled. MU reported great results and surged Thursday to sell back a good chunk Friday. Important group that needs to recover quickly on the week if the rally is going to hold from here.
Software: A group that bounced Thursday, showing some life, but from patterns that had stalled out into lateral moves alone the highs. Friday they were getting sold on higher trade, threatening to break their trends: NOW, TEAM, DATA, FIVN, HUBS.
Machinery/Manufacturing: Not great moves. CAT broke lower from the 50 day EMA, unable to break the 200 day SMA. ETN broke hard toward the 200 day. UTX hanging in nicely, CMI was down but still not bad overall.
Metals: STLD broke lower from a consolidation. SCHN reversed a good Thursday move. AKS hanging in a lateral consolidation. CLF broke sharply lower.
Personal products: Of course, these stocks were fine Friday, holding patterns. CLX, CL, PG.
MARKET STATS
DJ30
Stats: -460.19 points (-1.77%) to close at 25502.32
Nasdaq
Stats: -196.29 points (-2.50%) to close at 7642.67
Volume: 2.5B (0%)
Up Volume: 391.81M (-1.328B)
Down Volume: 2.1B (+1.333B)
A/D and Hi/Lo: Decliners led 4.93 to 1
Previous Session: Advancers led 1.51 to 1
New Highs: 67 (-55)
New Lows: 89 (+48)
S&P
Stats: -54.17 points (-1.90%) to close at 2800.71
NYSE Volume: 1.047B (+20.55%)
Up Volume: 144.199M (-423.929M)
Down Volume: 899.315M (+611.112M)
A/D and Hi/Lo: Decliners led 4.13 to 1
Previous Session: Advancers led 2.52 to 1
New Highs: 149 (-18)
New Lows: 54 (+31)
SENTIMENT
VIX: 16.48; +2.85
VXN: 19.83; +3.24
VXO: 17.26; +2.86
Put/Call Ratio (CBOE): 0.89; +0.12
Bulls and Bears:
Knew there would be a bounce in bullish sentiment. Interestingly, more of a relative decline in bears then the rise in bulls. Did its jobs on the crossover though that was quite some time back.
Bulls: 53.9 versus 52.4
Bears: 20.6 versus 21.4
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.
Bulls: 53.9 versus 52.4
52.4 versus 52.9 versus 52.4 versus 51.9 versus 49.5 versus 48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2
Bears: 20.6 versus 21.4
21.4 versus 20.6 versus 20.4 versus 20.7 versus 21.5 versus 20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8
OTHER MARKETS
Bonds: 2.538% versus 2.524% 10 year. After the surge upside Wednesday post-FOMC, TLT gapped to a doji, still just below the early January high.
3 month: 2.459%
2 year: 2.319%
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.
2.524% versus 2.616% versus 2.601% versus 2.591% versus 2.628% versus 2.625% versus 2.60% versus 2.641% versus 2.632% versus 2.641% versus 2.693% versus 2.715% versus 2.724% versus 2.759% versus 2.717% versus 2.673% versus 2.636% versus 2.672% versus 2.654% versus 2.695% versus 2.641% versus 2.641% versus 2.664% versus 2.654% versus 2.706% versus 2.686%
EUR/USD: 1.13009 versus 1.13713. After tapping the 200 day SMA from below on Wednesday post-FOMC, the euro has flopped lower.
Historical: 1.13713 versus 1.14314 versus 1.13526 versus 1.13359 versus 1.13248 versus 1.13070 versus 1.13271 versus 1.12895 versus 1.12592 versus 1.12344 versus 1.1191 versus 1.13123 versus 1.13050 versus 1.13344 versus 1.13650 versus 1.13725 versus 1.13790 versus 1.1391 versus 1.13598 versus 1.13332 versus 1.13363 versus 1.14490 versus 1.13544 versus 1.12922 versus 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350
USD/JPY: 109.92 versus 110.720. Dollar is falling against the yen, breaking sharply below the 50 day MA. Failed at the attempt to move over the 200 day SMA.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
110.72 versus 110.673 versus 111.374 versus 111.432 versus 111.470 versus 111.715 versus 111.314 versus 111.428 versus 111.165 versus 111.482 versus 111.624 versus 111.845 versus 111.856 versus 111.921 versus 111.433 versus 110.873 versus 110.53 versus 110.979 versus 110.670 versus 110.664 versus 110.786 versus 110.848 versus 110.469 versus 110.462 versus 110.945 versus 110.523 versus 110.488 versus 109.754
Oil: 59.04, -0.94. Holding up well, closing at the 10 day EMA after a weaker Friday. Still trending slowly up the 10 day EMA and eyeing the 200 day SMA overhead.
Gold: 1312.30, +5.00. Not surging, but definitely holding over the 50 day MA's.
MONDAY
Monday the upside starts from scratch. Well, not quite. The large cap growth indices are still in solid enough position, it is just that Friday sellers showed up for the first time in quite a while. NASDAQ, SP500 and SOX have to find footing at near support and rebound.
As noted before, Friday could have simply been an overreaction to the multitudinous stories regarding a yield curve inversion. A run to the door because, despite the upside move, there is still quite a bit of skepticism the market cannot continue farther.
Also as noted, the first day of an inversion is not the start of the selling. The market peak comes 3, 4, 6 even longer after the signal. And as for signals, the 3 month/10 year is not the pairing most indicative despite what the NY Fed claims. The 2 yr/10 year or 3 month/30 year are the keys. That said, the 2/10 is just 22BP from each other. Not much room for maneuvering.
The large cap growth that led the recent recovery and semiconductors look to be key to a near term hold and recovery for the larger growth stocks. Software stocks have held gains but have been very quiet for a few weeks; they fell rather aggressively Friday, indicating more downside to come. If they go what group will replace them? Not financials as they tank again.
The market is at one of those gut check points for the near term. Will the indices shake off the inversion worry and continue the upside, will they test back to midpoint or the bottom of the October/December consolidation range, or will they fully correct to the December low?
Those questions always arise when the market falters on some volume and at important levels. Those questions have to be asked, and because the Friday sharp selling came with a reversal of a solid move the session before, the move takes on more significance as it not only negated the prior move, it overran it.
Therefore we have to look at both sides of the fence. Look at some of the big name leaders we were waiting to test to get some new or more positions, e.g. AMZN. We also have to look for some downside. Entered STLD Friday as it broke lower. SPY downside could deliver some gain, and we are looking at software stocks to see if we can get the entries and positions right to make some money on any drop they show. If they go, they could go big and rather fast. Then the indices show if they can hold a support level and rebound.
Have a great weekend!
Wall Street Gives up Weekly Gains amid Growth Concerns
22-Mar-19 16:15 ET
Dow -460.19 at 25502.32, Nasdaq -196.29 at 7642.66, S&P -54.17 at 2800.71
https://www.briefing.com/investor/markets/stock-market-update/2019/3/22/wall-street-gives-up-weekly-gains-amid-growth-concerns.htm
[BRIEFING.COM] The S&P 500 dropped 1.9% on Friday, as weak manufacturing data out of Europe added to worries about the pace of global economic activity. Growth concerns were reflected by another drop in U.S. Treasury yields, the underperformance of the cyclical sectors, and a pullback in oil prices ($59.01/bbl, -$0.94, -1.6%). Friday's decline sent the S&P 500 back to the 2800 level.
The Dow Jones Industrial Average lost 1.8% and the Nasdaq Composite lost 2.5%. The domestically-oriented Russell 2000 lost 3.6%, pressured by concerns that global economic weakness will catch up to the U.S. sooner rather than later.
Ten of the 11 S&P 500 sectors finished lower, led by materials (-3.0%), financials (-2.8%), and energy (-2.6%). Conversely, the utilities sector (+0.7%) was the lone group to finish higher.
Germany's Manufacturing PMI fell to 44.7 from 47.6 in February, serving as a reminder that output in a major export center remains weak. France's Manufacturing PMI (actual 49.8; prior 51.5) fell below 50.0, which indicated that the country's manufacturing sector was also in contraction.
The weak data sent investors flocking to safe-haven bonds, which drove the yield on the 10-yr German bund (-0.011%) into negative territory for the first time since 2016. The lower yields in Europe likely contributed to increased buying interest in U.S. Treasuries, which helped drive yields even lower.
The 2-yr yield dropped eight basis points to 2.32%, and the 10-yr yield dropped eight basis points to 2.46%. Strikingly, the spread between the 3-month yield (2.45%) and the 10-yr yield briefly inverted for the first since 2017. Like Treasuries, the dollar benefited from the flight to safety, lifting the U.S. Dollar Index 0.2% to 96.65.
In earnings news, Dow component Nike (NKE 82.19, -5.82, -6.6%) didn't help ease growth concerns after it reported underwhelming growth in North American sales. Nike did beat earnings estimates, though. Cintas (CTAS 194.55, -13.57, -6.5%) for its part missed revenue expectations.
Reviewing Friday's economic data, which included Existing Home Sales for February, Wholesale Inventories for January, and the Treasury Budget for February:
Existing home sales increased 11.8% month-over-month in February to a seasonally-adjusted annual rate of 5.51 million (Briefing.com consensus 5.10 million) from a downwardly revised 4.93 million (from 4.94 million) in January. Total sales were 1.8% lower than the same period a year ago.
The key takeaway from the report is that while sales rebounded sharply on a month-over-month basis, they are still tracking below levels seen one year ago.
Wholesale inventories increased 1.2% in January on top of a 1.1% increase in December. Wholesale sales were up 0.5% following an upwardly revised 0.9% decrease (from -1.0%) in December.
The key takeaway from the report is that inventory growth continued outpacing sales growth, which should keep pressure on prices.
The Treasury Budget for February showed a deficit of $233.98 billion versus a deficit of $215.24 billion for the same period one year ago. The Treasury Budget is not seasonally adjusted, so the February deficit cannot be compared to the $8.7 billion surplus for January.
The fiscal year-to-date deficit is $544.23 billion versus a deficit of $390.96 billion for the same period ago. The budget deficit over the last 12 months is $932.27 billion.
Investors will not receive any notable economic reports on Monday.
Nasdaq Composite +15.2% YTD
Russell 2000 +11.7% YTD
S&P 500 +11.7% YTD
Dow Jones Industrial Average +9.3% YTD
Gains in Apple, Micron Lead Wall Street Higher
21-Mar-19 16:20 ET
Dow +216.84 at 25962.51, Nasdaq +109.99 at 7838.95, S&P +30.65 at 2854.88
https://www.briefing.com/investor/markets/stock-market-update/2019/3/21/gains-in-apple-micron-lead-wall-street-higher.htm
[BRIEFING.COM] The S&P 500 gained 1.1% on Thursday, bolstered by the notion of a dovish Fed and persistently low U.S. Treasury yields. Leadership from the S&P 500 information technology sector (+2.5%), driven by gains in Apple (AAPL 195.09, +6.93, +3.7%) and Micron (MU 43.99, +3.86, +9.6%), also helped carry buying momentum throughout the day. The S&P 500 closed at its highest level this year.
The Dow Jones Industrial Average gained 0.8%, the Nasdaq Composite gained 1.4%, and the Russell 2000 gained 1.3%.
Ten of the 11 S&P 500 sectors finished higher, led by information technology (+2.5%), real estate (+1.8%), and consumer discretionary (+1.3%). Conversely, the financial sector lost 0.3%, pressured by concerns that the recent compression in spreads will lead to weak net interest margins for lenders.
Apple reclaimed its title as the world's most valuable company after Needham upgraded the stock to Strong Buy from Buy and raised its price target to $225. Needham's upgrade was the latest from a host of positive analyst coverage this month that has helped lift the stock 12.7% in March, including Thursday's 3.7% gain.
Micron suggested a bottom could be close with an improvement likely coming at the back half of the year. That call helped investors overlook its disappointing fiscal Q3 guidance and helped spur buying interest within the Philadelphia Semiconductor Index (+3.5%).
In other earnings news, Conagra Brands (CAG 25.82, +2.92, +12.8%) and Darden Restaurants (DRI 116.11, +7.46, +6.9%) were some of the biggest gainers in the S&P 500 following their earnings reports.
Shares of Biogen (BIIB 226.88, -93.71), on the other hand, plunged 29.2% after the company said it will discontinue its Phase 3 trials of aducanumab for Alzheimer's.
Separately, Levi Strauss (LEVI 22.41, +5.41, +31.8%) became the biggest IPO in 2019 Thursday, opening at $22.22 after pricing its IPO at $17.
U.S. Treasuries closed roughly unchanged after declining noticeably following Wednesday's FOMC policy decision. The 2-yr yield and the 10-yr yield remained at 2.40% and 2.54%, respectively, although the 10-yr yield kissed 2.50% at its best level in morning action. The U.S. Dollar Index rose 0.7% to 96.41, driven by the idea that the U.S. remains the best place to invest. WTI crude lost 0.4% to $59.95/bbl.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for March, and the the Conference Board's Leading Economic Index for February:
Initial claims for the week ending March 16 decreased by 9,000 to 221,000 (Briefing.com consensus 223,000) while continuing claims for the week ending March 9 dropped by 27,000 to 1.750 million.
The key takeaway from the report is that it covers the period in which the survey for the March employment situation report was conducted, so with the low level of initial claims, expectations will pick up that March nonfarm payrolls will be up by a solid amount.
The Philadelphia Fed Index jumped to 13.7 in March (Briefing.com consensus 6.0) from -4.1 in February.
The key takeaway from the report is that it was accented by a pickup in new orders and a moderation in price pressures, which is the type of combination that has convinced the Fed to be patient before making any policy rate changes.
The Conference Board's Leading Economic Index increased 0.2% in February, as expected, following an unchanged reading for January. This is the first increase in the index since September 2018, and it was supported by gains in all the financial components and consumer expectations for business conditions.
The key takeaway from the report is that the strengths among the leading indicators have become much less widespread, with only six of the ten components making positive contributions.
Looking ahead, investors will receive Existing Home Sales for February, Wholesale Inventories for January, and the Treasury Budget for February on Friday.
Nasdaq Composite +18.1% YTD
Russell 2000 +15.9% YTD
S&P 500 +13.9% YTD
Dow Jones Industrial Average +11.3% YTD
InvestmentHouse - Economic Data Slips After Showing Improvement (Weekend Newsletter)
https://news.investmenthouse.com/2019/03/the-daily-part-1-of-3-3-16-19.html
MARKET SUMMARY
- More advances on expiration push SP500, NASDAQ over the top of the range -- barely.
- SOX posts a strong week, DJ30 lags but would be over resistance but for BA.
- Small and midcaps lag due to rotation to the big names.
- Economic data slips after showing improvement. Soft patch starting to firm overall, however.
- No Fed, no headache. Market preparing to do the improbable and try for new highs.
- After a very good week, before any more breakouts there is likely some kind of profit taking test.
Much was made by Bob Pisani of SP500 cracking over the top of the October/December range, though he did not call it that, just citing resistance at 2815ish. He failed to note NASDAQ did the same Friday. He said that break of resistance pretty much assures the indices keep rising. I am paraphrasing of course, but I have listened to Mr. Pisani for over a decade so this is nothing new. When you are around as long as he has been at the NYSE it means something -- usually that you are a useful patsy for those pushing their book. And as you know, EVERYONE on financial stations pushes their book. Yours truly is the exception, of course. Take what the market gives, right?
But I digress.
It was a good session and a solid upside week rising off a support test.
SP500 14.00, 0.50%
NASDAQ 57.62, 0.76%
DJ30 138.93, 0.54%
SP400 0.18%
RUTX 0.25%
SOX 2.90%
NASDAQ 100 0.88%
VOLUME: NYSE +199%, NASDAQ +58%. Ah, quad witching expiration. Throw the volume figures into the garbage for the day, but note that volume on the week was not bad.
ADVANCE/DECLINE: NYSE 1.4:1, NASDAQ 1.5:1. Very large cap oriented.
Breaking through resistance is always a good indication. In this market of algo-driven trades, however, breakouts and breakdowns through resistance and support have a way of nastily reversing as milestones are used as triggers for profit taking in the form of either selling or buying.
Just look at SP400. It was the first to break the October/December barrier (sounds like something from 'The Right Stuff' or 'Star Trek'-- breaking the sound barrier or the energy barrier), yet it fizzled after an excellent rally, fading back to the 50 day EMA. It held there and bounced a bit, but it has yet to recapture its prior market-leading panache.
Of course SP400 did not break down; it was likely just rotated out of leadership and is resting while NASDAQ, FAANG, and the chips returned to more prominence. The point, however, is: a break of resistance is good, but it does not assure immediate further benefits.
Consider NASDAQ and SP500 both put in one of their top weeks of 2019 just to get to the Friday close. Indices typically do not make completely linear moves, and after good runs to and through resistance they tend to test sooner than later. Perhaps the two continue upside near term then test from strength, coming back to the old resistance to test. That is always an upside plus as the index can get the profit taking out of its system after a good run and use the old resistance as support to bounce the next move upside. Didn't happen for SP400, but again, that was likely due to rotation.
SOX also put in a great week. It is not near taking out the spring to summer 2018 highs, but it did surge past the February high. From the 200 day SMA to a higher recovery high bumping at the lower 2018 resistance in a week. That is a serious move and likely needs some kind of rest in the coming week or so before it can try for a new high.
That said, even with the FAANG resurgence and continued strength from the 'old tech' names (e.g. MSFT, CSCO, INTC), NASDAQ 100 failed to take out the Oct/Dec range on the close. Perhaps a minor detail, but in a large cap dominated move on the week, that is notable.
Also, don't forget to look at things from the other side of the fence. Take a look at QID, SDS and some other index inverse ETF's. SDS perhaps is setting up something of a short double bottom that would suggest some kind of short bounce, meaning SP500 would fade after such a good run. QID broke to a lower low but is at the August/October lows -- trending lower for sure, but at a point where it would bounce to test the downtrend.
Again, this is not saying the indices collapse. There is no indication of sellers at all at this juncture. When the Fed exited the back door and left a card to call it when inflation surged, Brexit was completed, the US and China signed a trade deal, the US economic data was not so equivocal, mass hysteria ensued, dogs and cats started sleeping together . . . stocks started up and have not looked back. As the old commercial showing the family getting everything it could ever want for Christmas after leaving Santa a plate of cheese, don't underestimate the power of a compliant Fed. Powell, for all the talk and pragmatism, has put on his Janet Yellen Halloween mask and slipped out the side door. BUT, damn it, he is NOT bowing to Trump. He says.
What it does say is there is upside bias. There is rotation back into groups such as FAANG that lay dormant for many weeks. Chips renewed their leadership. Growth, outside of perhaps RUTX small caps, is back in vogue.
Even so, near term after such good runs there may be some more rotation with techs testing back from good moves while DJ30, SP400, RUTX play catch up. That is the healthy, virtuous rotation that sees money stay in the market and new money coming in to keep the upward bias overall.
ECONOMICS/NEWS
The economic data Friday flipped back to disappointing. After some improving data the first part of the week suggested the economic soft patch could be passing, the new data said not so fast.
New York Empire PMI, March: 2.7 vs 10.0 expected vs 8.8 February. A 22 month low.
Industrial Production, Feb: 0.1 vs 0.4 expected vs -0.4 January (from -0.6)
Capacity Utilization, Feb: 78.2 vs 78.5 expected vs 78.4 prior (from 78.2)
Back to backsliding. I guess that is 'good news' in a bad news is still good news Fed environment.
TSLA: Introduced the Model Y to yawns. The question heard most was 'why?' Get it? TSLA dropped stone-like from a pretty good week up to then.
FB: Lost its Chief Production Officer and the director of WhatsApp in one day. Also being probed by US AG's for its use of user data.
GOOG: It is also being looked at for possible suits by state AG's.
The question: how did your personal information morph into the property of companies whose advertisements say they are just there to provide a convenience to you to interact and a tool to help your life be better (search) and make a profit providing that service?
Yes, yes, if you put that information out there you are opening yourself to having everyone see it. But, as the fine print of the 'do you agree to our terms or else not use our service' says, the data then becomes the provider's to do with as it wants. That is an adhesion contract that the courts have historically time and again broken as against public policy. If you have no bargaining power and no alternative, that triggers the scrutiny. The old movie and recording contracts (Tom Petty broke the music industry's stranglehold over the artists), labor contracts, etc. all were broken due to the unequal bargaining power. As FB and GOOG are or are near virtual monopolies in their industry, they ARE going to get this scrutiny.
CHARTS
SP500, NASDAQ: As noted, both put in strong weeks and closed just over the Oct/Dec range tops. Solid action, a bit extended. After a strong-ish expiration session we are looking for some kind of test next week either after a bit more upside or starting Monday. Not a rollover from anything shown thus far, just a normal post-new high pause.
DJ30: A good Friday putting an upside emphasis on a week that saw the index miss out on a really good move due to the BA issues. It would be right there with SP500 and NASDAQ but for that drag.
SOX: Cleared the February recovery high, just below the first resistance from the March through summer trading range. Chips were resurgent.
SP400: Bounced off the 50 day EMA Monday then slid laterally the rest of the week, unable to break higher again, stalling at the 200 day SMA Friday on the high and fading.
RUTX: Same as SP400, bouncing off support Monday then a lateral move through Friday, well, well off the February high up at the 200 day SMA. For now money is not moving into the small and midcaps. Not leaving, just not moving in.
NASDAQ 100: A strong week after the prior Friday gap to the 50 day EMA and reversal. Rallied to the top of the Oct/Dec range and stopped just below that point Friday. Solid, solid move as the FAANG had some bite again, but as it is below resistance perhaps GOOG, AMZN, AAPL, MSFT, CSCO take a breather after excellent weeks to the upside -- AND provide us with new entries after they take that breather.
MARKET STATS
DJ30
Stats: +138.93 points (+0.54%) to close at 25848.87
Nasdaq
Stats: +57.62 points (+0.76%) to close at 7688.53
Volume: 3.45B (+58.26%)
Up Volume: 2.2B (+1.18B)
Down Volume: 1.2B (+70M)
A/D and Hi/Lo: Advancers led 1.54 to 1
Previous Session: Decliners led 1.33 to 1
New Highs: 116 (+33)
New Lows: 44 (+2)
S&P
Stats: +14.00 points (+0.50%) to close at 2822.48
NYSE Volume: 2.72B (+199.19%)
Up Volume: 1.574B (+1.194B)
Down Volume: 1.104B (+604.89M)
A/D and Hi/Lo: Advancers led 1.41 to 1
Previous Session: Decliners led 1.13 to 1
New Highs: 137 (+34)
New Lows: 24 (+3)
SENTIMENT
VIX: 12.88; -0.62
VXN: 15.12; -0.53
VXO: 12.14; -1.26
Put/Call Ratio (CBOE): 0.85; -0.06
Bulls and Bears:
The pullback from the prior week stalled the bulls' advance a bit while bears moved back over 21 after a 2 week hiatus below that level. Not major change in the trends: bulls are moving back up, bears sliding again, and this past week's action will further those trends.
Bulls: 52.4 versus 52.9
Bears: 21.4 versus 20.6
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.
Bulls: 52.4 versus 52.9
52.9 versus 52.4 versus 51.9 versus 49.5 versus 48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2
Bears: 21.4 versus 20.6
20.6 versus 20.4 versus 20.7 versus 21.5 versus 20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8
OTHER MARKETS
Bonds: 2.591% versus 2.628%. TLT held flat but the 10 year went wild with an upside rally.
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.
2.628% versus 2.625% versus 2.60% versus 2.641% versus 2.632% versus 2.641% versus 2.693% versus 2.715% versus 2.724% versus 2.759% versus 2.717% versus 2.673% versus 2.636% versus 2.672% versus 2.654% versus 2.695% versus 2.641% versus 2.641% versus 2.664% versus 2.654% versus 2.706% versus 2.686%
EUR/USD: 1.13248 versus 1.13070. Euro rallied to the 50 day MA and stopped there Thursday and Friday. Still in that long lateral trading range.
Historical: 1.13070 versus 1.13271 versus 1.12895 versus 1.12592 versus 1.12344 versus 1.1191 versus 1.13123 versus 1.13050 versus 1.13344 versus 1.13650 versus 1.13725 versus 1.13790 versus 1.1391 versus 1.13598 versus 1.13332 versus 1.13363 versus 1.14490 versus 1.13544 versus 1.12922 versus 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350
USD/JPY: 111.470 versus 111.715. Three weeks trading laterally around the 200 day SMA after rising to that resistance to end February. Still trending upside, but the next break higher or lower from this key level is, well, key.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
111.715 versus 111.314 versus 111.428 versus 111.165 versus 111.482 versus 111.624 versus 111.845 versus 111.856 versus 111.921 versus 111.433 versus 110.873 versus 110.53 versus 110.979 versus 110.670 versus 110.664 versus 110.786 versus 110.848 versus 110.469 versus 110.462 versus 110.945 versus 110.523 versus 110.488 versus 109.754
Oil: 58.52, -0.09. Broke higher from the range Wednesday, then stalled there into Friday. Still trending up toward the 200 day SMA at 62.50ish.
Gold: 1302.90, +7.80. Gold dumped to end February, bounced back over the 50 day MA midweek, but is struggling on the rebound. Actually, it is good gold struggles and fades some. It has a near term, 6 week head and shoulders, and some more downside would not hurt as it suggests tamer inflation, better economics.
MONDAY
Good move on the week, some key intersections with resistance. The market has not yet resolved the trading range inflection point, but it certainly is making the case for a more bullish outcome. No selling at the highs, just profit taking. More solid patterns. Dormant groups (e.g. FAANG) coming back into play. Semiconductors continuing their leadership role after a week or so hiatus. That certainly bodes well from an upside perspective.
That does not mean post-expiration week rally there is some profit taking. Indices up for a week, many stocks up for a week or more, some approaching resistance, some just feeling gravity after very good moves. After perhaps some more upside, perhaps not, if there is some likely profit taking, we plan using that to position for some new upside buys.
Indeed, there are still a LOT of stocks in good position to move higher after a week's market gains. Many did move upside on Friday, so they may very well have some post-expiration weakness. That works as well because we can use a bit of a pullback on the plays we have to set up some better entries. Chips still look good with many solid setups, some software as well.
We also have some lower priced stocks to choose from this weekend. With GOOG, AAPL, ISRG, NFLX, NVDA, MSFT, etc., most can only use options. Thus, with some good setups in some smaller names, e.g. IPI, GOGO, we have some names to look at. We likely won't marry them or even have deep feelings for them. It is okay to use a stock, get what you want, then dump it. This is the one area that is totally acceptable.
Also have some mid-range stocks such as AMAT, FIVN, HUYA that we could be coaxed into longer term relationships. We are very open: if they perform, we keep them. If they don't, we bag them fast. Keeps the relationships neat.
In any event, the upside bias remains, a bit of a giveback early week is okay for the new plays, and if the recent leaders want to give back a bit more and set up again for new buys a la V did, even better.
Have a great weekend!
S&P 500 Sets New Closing High in 2019
15-Mar-19 16:25 ET
Dow +138.93 at 25848.87, Nasdaq +57.62 at 7688.52, S&P +14.00 at 2822.48
https://www.briefing.com/investor/markets/stock-market-update/2019/3/15/s-and-p-500-sets-new-closing-high-in-2019.htm
[BRIEFING.COM] The S&P 500 gained 0.5% on this quadruple-witching expiration Friday, supported by reported progress in U.S.-China trade talks and the outperformance of semiconductor stocks. Friday's advance capped an impressive 2.9% weekly gain in the benchmark index and established a new closing high for 2019.
The Dow Jones Industrial Average (+0.5%), the Nasdaq Composite (+0.8%), and the Russell 2000 (+0.3%) extended their weekly gains to 1.6%, 3.8%, and 2.1%, respectively.
The S&P 500 information technology sector (+1.2%) was the session's outright leader, followed by the consumer discretionary sector (+0.7%). Conversely, the real estate (-0.4%), industrials (-0.3%), and energy (-0.1%) sectors were the lone groups to finish with losses.
Stocks began the session on a higher note, helped by a Chinese report that the U.S. and China have made "concrete progress" in talks about the text of a trade agreement. Separately, talk that China is considering using monetary tools to further help the economy, and Japan explicitly saying it will keep interest rates low for an extended period, aided investor sentiment. The Bank of Japan left its interest key policy rate unchanged at -0.1%, as expected.
The semiconductor space rallied around Broadcom (AVGO 290.29, +22.09, +8.2%) providing a better-than-feared earnings report and calling for the industry to hit a bottom in the second quarter. The Philadelphia Semiconductor Index jumped 2.9% Friday and 5.6% this week. Many of its components helped drive the outperformance of the tech sector and the Nasdaq.
Shares of Boeing (BA 378.99, +5.69, +1.5%) found some reprieve after AFP News Agency tweeted Boeing is going to roll out a software upgrade for its 737 MAX in ten days. Boeing responded, telling Reuters that its timeline for the software update has not changed and is expected to be rolled out in the coming weeks.
The initial news helped lift the stock into positive territory after it was down as much as 1.9% in the morning. Its turnaround helped propel the broader market, and Dow, into higher ground.
On the other hand, Facebook (FB 165.98, -4.19, -2.5%), Adobe Systems (ADBE 257.09, -10.60, -4.0%), and Tesla (TSLA 275.43, -14.53, -5.0%) were some notable laggards Friday.
Facebook announced the departure of its chief product officer; Adobe underwhelmed investors with its earnings report; and Tesla underwhelmed many analysts with its Model Y, which it unveiled Thursday evening.
U.S. Treasuries closed the session on a higher note, pushing yields lower across the curve. The 2-yr yield declined one basis point to 2.44%, and the 10-yr yield declined four basis points to 2.59%. The U.S. Dollar Index declined 0.2% to 96.60. WTI crude lost 0.3% to $58.39/bbl.
Reviewing Friday's batch of economic data:
Industrial production increased just 0.1% in February (Briefing.com consensus +0.4%) on the heels of an upwardly revised 0.4% decline (from -0.6%) in January. The capacity utilization rate dipped to 78.2% (Briefing.com consensus 78.5%) from an upwardly revised 78.3% (from 78.2%) in January.
The key takeaway from the report is that manufacturing output remained weak, declining 0.4%, which was the second consecutive monthly decline.
The preliminary March reading for the University of Michigan Index of Consumer Sentiment checked in at 97.8 (Briefing.com consensus 94.9), up from the final reading of 93.8 for February.
The key takeaway from the report is that real income expectations, which account for inflation, increased in households across lower, middle, and upper incomes. That favorable outlook is supportive for consumer spending activity.
The January Job Openings and Labor Turnover Survey showed that job openings increased to 7.581 million from a revised 7.479 million (from 7.355 million) in December.
The Empire State Manufacturing Survey for March fell to 3.7 (Briefing.com consensus 10.0) from the prior month's unrevised reading of 8.8.
Looking ahead, investors will receive the NAHB Housing Market Index for March on Monday.
Nasdaq Composite +15.9% YTD
Russell 2000 +15.2% YTD
S&P 500 +12.6% YTD
Dow Jones Industrial Average +10.8% YTD
Wall Street Takes a Breather
14-Mar-19 16:25 ET
Dow +7.05 at 25709.94, Nasdaq -12.50 at 7630.90, S&P -2.44 at 2808.48
https://www.briefing.com/investor/markets/stock-market-update/2019/3/14/wall-street-takes-a-breather-.htm
[BRIEFING.COM] The S&P 500 lost 0.1% on Thursday in a tight-ranged trading session. The session featured several economic releases and a good bit of company-specific news, but the market seemed content to take a breather after the strong gains it registered to begin the week.
The Nasdaq Composite lost 0.2%, and the Russell 2000 lost 0.4%. The Dow Jones Industrial Average finished flat.
The S&P 500 materials (-0.8%) and communication services (-0.4%) sectors underperformed the broader market. Conversely, the heavily-weighted financials (+0.4%) and information technology (+0.2%) sectors outperformed.
Investors received some updates that reinforced concerns about a global economic slowdown. U.S. new home sales for January and China's industrial production report both came in softer than expected. In addition, Germany's Ifo Institute lowered its 2019 growth forecast for the German economy to 0.6% from 1.1%.
Adding to the negative macro sentiment was a Bloomberg report stating that a summit between President Trump and President Xi is apt to be pushed back to late April, if it happens at all.
The stock market held its ground, though, teetering between small gains and losses for most of the session. A batch of corporate news seemed to garner more attention.
Widely-held shares of Facebook (FB 170.17, -3.20, -1.9%), Boeing (BA 373.30, -3.84, -1.0%), and Johnson & Johnson (JNJ 138.02, -1.39, -1.0%) weighed on the broader market following negative press pertaining to familiar issues with the companies.
A New York Times report indicated that Facebook is under criminal investigation for some of its data deals that it arranged with tech companies. In Boeing's case, it continued to be weighed down by concerns surrounding the forced grounding of its 737 MAX 8 and 9 planes. Johnson & Johnson for its part was ordered to pay $29 million to a woman with cancer who used the company's baby powder.
On the other hand, more positive analyst coverage on Apple (AAPL 183.73, +2.02, +1.1%) underpinned the stock's outperformance, which extended its weekly gain to 6.3%. Cowen initiated coverage of Apple with an Outperform rating.
General Electric (GE 10.30, +0.28) jumped 2.8% despite the company issuing a 2019 earnings warning. The stock had been down more than 2.0% prior to the open, but shares rallied after CEO Larry Culp reassured investors with an encouraging 2020 and 2021 outlook.
Separately, the UK Parliament rejected a second Brexit referendum but voted in favor of extending the Brexit deadline until June 30 at the latest. The delay still needs to be approved by all 27 member states of the European Union.
U.S. Treasuries finished on a lower note, pushing yields higher across the curve. The 2-yr yield increased one basis point to 2.45%, and the 10-yr yield increased two basis points to 2.63%. The U.S. Dollar Index rose 0.2% to 96.78. WTI crude rose 0.5% to $58.58/bbl.
Reviewing Thursday's economic data, which included New Home Sales for January, the weekly Initial and Continuing Claims report, and Import and Export Prices for February:
New home sales decreased 6.9% month-over-month in January to a seasonally adjusted annual rate of 607,000 (Briefing.com consensus 623,000) from an upwardly revised 652,000 (from 621,000) in December. On a year-over-year basis, new home sales were down 4.1%.
The key takeaway from the report is that new home sales activity continues to be soft despite moderating price pressures.
Initial claims for the week ending March 9 increased by 6,000 to 229,000 (Briefing.com consensus 225,000) while continuing claims for the week ending March 2 increased by 18,000 to 1.776 million.
The key takeaway from the report is that there were no wide swings to disrupt the view that employers are generally reluctant to cut staff due to tight labor market conditions.
Import prices and export prices were both up 0.6% month-over-month in February. Excluding fuel, import prices were flat. Excluding agriculture, export prices were up 0.7%.
The key takeaway from the report is that the year-over-year readings reveal no inflation pressure. Nonfuel import prices were down 0.6%, versus a 2.0% increase for the 12 months ending February 2018, while non-agricultural export prices were up just 0.3%, versus a 3.4% increase for the 12 months ending February 2018.
Looking ahead, investors will receive the following economic reports on Friday: the Empire State Manufacturing Survey for March, Industrial Production and Capacity Utilization for February, the preliminary University of Michigan Index of Consumer Sentiment for March, the JOLTS - Job Openings report for January, and Net Long-Term TIC Flows for January.
Russell 2000 +14.9% YTD
Nasdaq Composite +15.0% YTD
S&P 500 +12.0% YTD
Dow Jones Industrial Average +10.2% YTD
S&P 500 Breaks Above 2800; President Trump Grounds Boeing's 737 Max Aircraft
13-Mar-19 16:25 ET
Dow +148.23 at 25702.89, Nasdaq +52.37 at 7643.40, S&P +19.40 at 2810.92
https://www.briefing.com/investor/markets/stock-market-update/2019/3/13/s-and-p-500-breaks-above-2800-president-trump-grounds-boeings-737-max-aircraft.htm
[BRIEFING.COM] The S&P 500 gained 0.7% on Wednesday, although it lost some steam following President Trump's executive order to ground Boeing's (BA 377.14, +1.73, +0.5%) 737 Max aircraft. Still, a break above the 2800 level for the S&P 500, along with a weakening dollar, helped the market steer past public scrutiny of Boeing.
The Dow Jones Industrial Average gained 0.6%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 0.4%.
All 11 S&P 500 sectors finished higher with gains ranging from 0.2% (utilities) to 1.1% (health care).
President Trump's executive order came after Canada decided to close its airspace to the 737 MAX earlier in the day. Canada's decision wiped out an early 1.7% gain in shares of Boeing, while President Trump's decision sent BA down as much as 4.4%. Boeing, however, ultimately rebounded and ended the day higher by 0.5%.
Despite the negative publicity surrounding Boeing, the ability for the S&P 500 to break above the 2800 level to begin the day encouraged follow-through buying interest. The benchmark index took out its November high (2815.15) intraday but finished just below that level.
A notable move lower in the U.S. Dollar Index (96.52, -0.42, -0.4%) was another area of support for the broader market. Investors seemed to like the idea that a weakening dollar, should it persist, could provide some earnings-based relief for multinational companies. Gains in the yen, euro, and British pound against the dollar contributed to its weakness.
The British pound climbed even higher against the dollar after the UK Parliament voted to reject a no-deal Brexit. Parliament will debate an extension request on Thursday. Market reaction to Wednesday's vote was muted.
The U.S. Treasury market was also quiet on Wednesday. The 2-yr yield and the 10-yr yield finished unchanged at 2.44% and 2.61%, respectively. WTI crude rose 2.3% to $58.27/bbl following some bullish inventory data out of the Energy Information Administration.
Reviewing Wednesday's economic data, which included the Producer Price Index for February, Durable Orders for January, Construction Spending for January, and the weekly MBA Mortgage Applications Index:
The Producer Price Index for February was nearly irrelevant given the soft Consumer Price Index for February seen yesterday. Be that as it may, it is worth noting that the index for final demand increased 0.1% (Briefing.com consensus +0.2%) while the index for final demand, excluding food and energy, also increased 0.1% (Briefing.com consensus +0.2%).
The key takeaway from the report is that year-over-year inflation trends tipped lower for the index for final demand (1.9% versus 2.0% for the months ending in January) and the index for final demand, excluding food and energy (2.5% versus 2.6% for the 12 months ending in January). That tipping action will keep the Fed tipped toward a patient mindset.
The Durable Goods Orders report for January showed a 0.4% increase in new orders (Briefing.com consensus -0.6%) and a 0.1% decline, excluding transportation (Briefing.com consensus +0.1%).
The key takeaway from the report is that it was constructive for the business investment outlook and Q1 GDP forecasts, evidenced by the 0.8% increase in orders for nondefense capital goods, excluding aircraft, and the 0.8% increase in shipments for that same metric.
Total construction spending declined 0.6% in December (Briefing.com consensus -0.3%) after increasing 0.8% in November.
The key takeaway from the report is that total construction spending growth, marred by a 5.7% year-over-year decline in residential spending, is weak at 0.3% year-over-year.
The weekly MBA Mortgage Applications Index increased 2.3% after declining 2.5% in the prior week.
Looking ahead, investors will receive New Home Sales for January, Import and Export Prices for February, and the weekly Initial and Continuing Claims report on Thursday.
Russell 2000 +15.4% YTD
Nasdaq Composite +15.2% YTD
S&P 500 +12.1% YTD
Dow Jones Industrial Average +10.2% YTD
Investors Buy the Dip, Tech Stocks Outperform
11-Mar-19 16:25 ET
Dow +200.64 at 25650.88, Nasdaq +149.62 at 7557.78, S&P +40.23 at 2783.26
https://www.briefing.com/investor/markets/stock-market-update/2019/3/11/investors-buy-the-dip-tech-stocks-outperform.htm
[BRIEFING.COM] The S&P 500 gained 1.5% on Monday in a buy-the-dip trade following the market's decline from last week. Underpinning the broad-based advance was some reassurance from Fed Chair Jerome Powell, the outperformance of mega-cap and semiconductor stocks, and the market's resilience in the face of an early 13.5% decline in shares of Boeing (BA 399.89, -22.65, -5.4%).
The Nasdaq Composite gained 2.0%, and the Russell 2000 gained 1.8%. The Dow Jones Industrial Average overcame an early loss of 1.0% to finish higher by 0.8%, closing at session highs along with the other major indices.
All 11 S&P 500 sectors finished higher with gains ranging from 0.7% (utilities) to 2.2% (information technology).
Fed Chair Powell set the tone after he reiterated the Fed's patient stance in an interview with 60 Minutes on Sunday. Granted, this wasn't "new" information, but his comments seemingly helped soothe a market fearful about slowing growth.
An Ethiopian Airlines crash over the weekend that involved one of Boeing's new 737 MAX-8 planes set a different tone for the Dow and its most heavily-weighted component.
The initial news of the crash didn't hinder buying interest in the broader market, though; moreover, Boeing staged a huge intraday rebound as investors flocked to pick up the stock at sharply lower prices. That rebound, which left the stock down 5.4% for the day, helped the broader market extend its reach into positive territory. On a related note, the FAA said shortly before the closing bell that it will issue a Continued Airworthiness Notification to the International Community for Boeing 737 MAX operators.
Separately, today's rebound drove both the S&P 500 and Nasdaq Composite back above their 200-day moving averages, which was regarded as a positive technical move.
The semiconductor space was an area of notable strength after NVIDIA (NVDA 161.14, +10.50, +7.0%) announced a deal to acquire Mellanox Technologies (MLNX 117.89, +8.51, +7.8%) for $6.9 billion, or $125.00 per share, in cash. The Philadelphia Semiconductor Index jumped 2.4%, and many of its semiconductor components helped drive the outperformance of the information technology sector and the Nasdaq.
The FAANG trade was back in play, too, with shares of Apple (AAPL 178.90, +5.99) increasing 3.5% after the stock was upgraded to 'Buy' from 'Neutral' at Bank of America/Merrill Lynch. Facebook (FB 172.07, +2.47) also received an upgrade to 'Buy' from 'Neutral' at Nomura but it underperformed the widely-held group with a gain of 1.5%.
U.S. Treasuries closed on a lower note, pushing yields higher across the curve. The 2-yr yield increased three basis points to 2.47%, and the 10-yr yield increased two basis points to 2.64%. The U.S. Dollar Index declined 0.1% to 97.18.
WTI crude rose 1.2% to $56.80/bbl amid plans from Saudi Arabia to cut oil exports in April and its expectations that OPEC+ will not change its output policy at the next meeting.
Reviewing Monday's economic data, which included Retail Sales for January and Business Inventories for December:
In January, retail sales increased 0.2% (Briefing.com consensus -0.1%). Excluding autos, they rose 0.9% (Briefing.com consensus +0.2%). The headline strength in January, however, was offset some by downward revisions to the prior month that indicated retail sales fell 1.6% in December (prior -1.2%) and declined 2.1% excluding autos (prior -1.8%).
The key takeaway from the report is that core retail sales, which exclude auto, gasoline station, building materials, and food services and drinking places sales, increased a solid 1.1%. That component factors into the goods component for personal consumption expenditures, so it will likely prompt some upgrades to Q1 GDP forecasts.
Total business inventories increased 0.6% in December, as expected by the Briefing.com consensus estimate, following an upwardly revised unchanged reading (from -0.1%) for November. Total business sales fell 1.0% after declining a downwardly revised 0.6% (from -0.3%) in November.
The key takeaway from the report is that business sales declined as inventories increased. That distinction, if it persists, will diminish pricing power.
Looking ahead, investor will receive the NFIB Small Business Optimism Index for February and the Consumer Price Index for February on Tuesday.
Russell 2000 +14.9% YTD
Nasdaq Composite +13.9% YTD
S&P 500 +13.9% YTD
Dow Jones Industrial Average +10.0% YTD
InvestmentHouse - Triple Threat Hits Stocks Friday (Weekend Newsletter)
https://news.investmenthouse.com/2019/03/the-daily-part-1-of-3-3-9-19.html
- Triple threat hits stocks Friday.
- Indices sell to the 50 day EMA as expected, show some support there as expected.
- China exports dive 20%, jobs produce just 20K, Xi/Trump trade summit put off by Chinese.
- Everyone focusing on the DJ20 and its decline as a negative, but perhaps DJ20 is just making the test and pattern before the other indices.
- Money leaves equities in 2019 as fast as the start of 2008.
- Despite the issues, the recent leaders still show excellent patterns.
A triumvirate, threesome, trio -- take your pick -- of negatives hit the market Friday. There may be more than my top 3, but my attention span is not what it used to be. Let's face it, there is not a lot of things that are just that trustworthy to really grab your attention. Friday, was a bit different; these items were noteworthy.
The market was already weak and looked primed to test the 50 day EMA. The news gave the indices the push. When the final bell rang Friday, yes the market was down for the fifth straight session, but the indices did a credible job of testing the 50 day EMA and rebounding modestly off that support. That is as expected -- the 50 day EMA was logical first support to test and try to hold. Thus far it is holding, and after 5 downside days stocks likely try to bounce, also as we expected. If they don't, the sellers are starting to really overwhelm the bids.
That will be the story line for the coming week. As outlined last week, we anticipate some support at the 50 day EMA, and that means some type of bounce or lateral move. In reality, I don't expect much more than an attempt at moving higher that ultimately leads to a deeper test to the bottom of the range/50 day SMA (as both are more or less coincident for the indices).
That, of course, leaves the quandary of whether to buy some really good looking names as the bounce up off this thus far 5-session pullback or just use it to let some downside plays set up on a bit of a recovery before they drop lower.
Our plan is to play some of those good-looking patterns such as those outlined in Thursday's report, initially for bounce play with smaller sized positions. In the event the simply continues back upside, okay, we will add positions when the opportunity arises, playing the return to the upside as it expands from there. If the plays put in some good sessions up to the recent highs from late February, early March, but then show some reversal or stalling signs (e.g. gapping above those highs and reversing, runs higher that reverse to tombstone doji), we take the gain. During the bounce we look at stocks and indices that have good potential downside setups forming and thus have some downside plays ready in the event the action stalls out and turns lower once more.
There are some really great upside patterns from recently strong stocks where the short pullback as tested good new breaks higher. Those certainly look promising to lead back upside, but looking at the index patterns, while the pullback to the 50 day EMA is a logical bounce point, it just appears the patterns beg for a bit more of a pullback to the bottom of the October/December range to be really positioned to try a more serious move higher, one that can contend again for new highs.
That scenario, of course, does not involve a test of the December low, something that still could happen as easily as not based upon similar historical market moves. That possibility is still out there of course, but the 50 day EMA test right now is the first part of any scenario, up or down, and we will counterpunch the moves, taking smaller positions and being satisfied with singles and doubles, taking what the market gives, while the market decides what levels it wants to test and use as support.
SP500 -5.86, -0.21%
NASDAQ -13.32, -0.18%
DJ30 -22.99, -0.09%
SP400 -0.28%
RUTX -0.11%
SOX -0.07%
NASDAQ 100 -0.16%
VOLUME: NYSE -11%, NASDAQ -8%. Volume tailed off well below average on NYSE and put in the first below average session on NASDAQ in over a week. On a test of a rather key level and a rebound to cut the losses, that is not necessarily showing the buyers were jumping back in hard.
ADVANCE/DECLINE: NYSE -1.2:1, NASDAQ -1.2:1. The down then up session mitigated the downside breadth that has no doubt been stronger with the pullback. Stronger than what it was as the market rebound slowed the prior two weeks, but not overwhelmingly negative.
Back to the threesome.
First, Chinese exports imploded at -20.4% versus -6% expected. On top of that, a brokerage in China downgraded Chinese stocks to 'sell.' Of course, that means the Chinese government and thus the communists want to tamp down the rally.
Second, US jobs showed just +20K in a number obviously buffeted by seasonality and the government shutdown. What a perfect scenario for those starting to worry about the Fed stepping back in anytime soon.
Jobs: 20K vs 173K exp vs 311K Feb (from 304K); Jan: 227K vs 222K
LOTS of noise in this report: weather, government shutdown.
Unemployment: 3.8% vs 3.8% exp vs 4.0%
Wages: +0.4%, +3.4% year/year (highest since 4/2009).
Workweek: 34.4 vs 34.5 exp vs 34.5 prior
Participation: 63.2% vs 63.2% prior
300K less people were unemployed, going back to work after the shutdown.
390K were unemployed due to bad weather, a huge number.
U6: 7.3% VS 8.1% PRIOR
Demographics: 35 to 44 unemployment fell to lowest in 12 years. Meanwhile, for 25-54, that includes millennials, the participation rate remained at the post-recession highs. The millennials are not working. Small businesses all share the same complaint: the millennials have wholly unrealistic expectations and prefer not to work and collect benefits than work and get paid less than the value of their inflated self-worth. Have you seen the survey where 40%ish would not give up their iPhone for the home of their dreams -- they could have any other pone, just not an iPhone.
Construction: -31K
Leisure and Hospitality: 0K
Manufacturing: -4K (prior: 21K from 13K)
Prof/Business: +42K
Healthcare: +21K
Wholesale trade: +11K
Third, the Trump/Xi summit at the end of March was put off by China. Word is China is afraid Trump will scuttle the whole deal as most of the concessions, we are told, are on the US side.
What is the effect? Frankly, companies are leaving China as soon as they find another place to make their goods. The delay simply buys more time for them to move. I personally am tired of buying poor quality goods made in China -- why not by poor quality goods from another country? Ha.
AMZN: Suddenly stopped buying from suppliers for the 'fulfilled by Amazon' products. The Amazon Market business is $250B, twice the size of the Amazon website fulfilled. There is true panic among the suppliers who have mountains of inventory acquired to meet the monthly Amazon purchases. Turning against those who built AMZN into a monopoly of sorts? Fascinating.
THE MARKET
CHARTS
A bit of a twist on the normal review as we look at the transports.
DJ20: A lot of print about the worst days for the transports since 2007 -- or something like that -- but when you look at the pattern you have to ask: are the transports actually leading as they decline? I know, I know -- wow, how provocative, how insightful you are thinking.
But I jest not. Lo, what pattern is forming as DJ20 tests the 50 day SMA (versus the 50 day EMA for the other indices)? DJ20 is not diving lower. It has sold in a steady, orderly fashion the past two weeks, Friday tapping the 50 day SMA on the low and bouncing, closing with a nice doji with tail. It is just over the late October low. Indeed, it is in a very credible spot to form the bottom of the right shoulder to an inverted head and shoulders pattern spanning October to present.
That is EXACTLY the pattern I have discussed the past two weeks that the other stock indices could form with a very ordinary yet scary -- to most at least -- test of the rather insane rise from the December low.
Right now, the other indices are at the 50 day EMA, the first support in the pullback. They are showing relative strength to DJ20, but you could also say they are lagging the DJ20 in that it has already made the run, tapped the top of the Oct/Dec range, and made an orderly drop to support. We will see if they are really just ahead of the game by how they rebound off the 50 day EMA.
Indeed, all the indices look pretty solid at the 50 day EMA, particularly DJ30 as the 50 day EMA has merged with the 200 day SMA; pretty solid support.
Same situation with SOX: the 50 day EMA has risen to the 200 day SMA at 1300 -- a price point of support from October, August, June.
Both of these indices have a lot of support at that level. That suggests they bounce. If they break it, that suggests a drop that is significantly lower.
For now, given a weeklong decline after a week of lateral movement, landing on a key level, the indices can surely bounce for a couple of sessions. They can bounce more than that as well. It all depends upon whether the big buyers see this as the point to buy or they let the indices fall to the bottom of the October/December range or even -- perish the thought -- to the December low.
A drop to the bottom of the Oct/Dec range would be perfect. It would se up a nice right shoulder to an inverted head and shoulders, a pattern that has launched super moves for years during this bull run. That is of course what we prefer. That does not mean the market does so and can resume the upside from here.
Where is the money?
That the market has multiple options from this point is a predicament. Of course, you always have to watch the market and move with it as it shows strong moves.
What is also important is the money flow. Where is the money moving?
Shockingly, 2019 has seen $60B move out of equities. Ten weeks or $6B/week. The only other time this happened was the first 10 weeks of 2008, a banner year for stocks -- to the downside.
You can view money leaving as the crowd exiting just in time to clear the landscape for a rally. But, money has to finish moving out and then it starts to flow back in. That sets the bottom. Money certainly does not appear to be fleeing GOOG, FB, INTC, ISRG, ROKU, BA, CMG, UTX, CMI -- there are many holding up very well, hardly showing any cash outflows.
Money flowing out in such large amounts is without a doubt a caution flag. All the same, the leaders will tell the tale, and how stocks such as those above will indeed tell the tale of the next market move.
Thus, while we remain skeptical of the ability to hold support here and yield a rally that pushes to higher highs, you have to look at the patterns and acknowledge they are downright solid in many cases. Accordingly, we will prepare for a meaningful rebound from those stocks while we also prepare for further downside.
We lightened up on many positions through the past two weeks as patterns struggled, preparing for a test of the 50 day EMA and then a break. We will see if that is upside or downside and react accordingly. Oh, and watch the transports and whether they bounce or turn this test into more selling.
MARKET STATS
DJ30
Stats: -22.99 points (-0.09%) to close at 25450.24
Nasdaq
Stats: -13.32 points (-0.18%) to close at 7408.14
Volume: 2.26B (-8.13%)
Up Volume: 1.02B (+230.74M)
Down Volume: 1.2B (-440M)
A/D and Hi/Lo: Decliners led 1.21 to 1
Previous Session: Decliners led 2.14 to 1
New Highs: 39 (+6)
New Lows: 57 (-11)
S&P
Stats: -5.86 points (-0.21%) to close at 2743.07
NYSE Volume: 814.395M (-11.30%)
Up Volume: 337.393M (+80.395M)
Down Volume: 461.287M (-186.783M)
A/D and Hi/Lo: Decliners led 1.22 to 1
Previous Session: Decliners led 2.29 to 1
New Highs: 45 (-26)
New Lows: 51 (-1)
SENTIMENT
VIX: 16.05; -0.54
VXN: 19.12; -0.47
VXO: 16.12; -0.98
Put/Call Ratio (CBOE): 0.97; -0.15
Bulls and Bears:
Bulls higher again, moving up into a selloff. Surely they will be lower the following week. The issue, however, is the surge after crossing the bears in late 2018. Confidence is pretty high despite the reported lack of confidence. Advisors remain bullish, talking their book, even as money is pulled from equities.
Bulls: 52.9 versus 52.4
Bears: 20.6 versus 20.4
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.
Bulls: 52.9 versus 52.4
52.4 versus 51.9 versus 49.5 versus 48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 20.6 versus 20.4
20.4 versus 20.7 versus 21.5 versus 20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.632% versus 2.641%. Bonds up five straight sessions as stocks sell five straight sessions. Bounced off the dive to the 200 day SMA, now nearing the February highs.
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.
2.641% versus 2.693% versus 2.715% versus 2.724% versus 2.759% versus 2.717% versus 2.673% versus 2.636% versus 2.672% versus 2.654% versus 2.695% versus 2.641% versus 2.641% versus 2.664% versus 2.654% versus 2.706% versus 2.686% versus 2.672% versus 2.634% versus 2.657% versus 2.695% versus 2.702% versus 2.725% versus 2.684% versus 2.64% versus 2.679% versus 2.710.5
EUR/USD: 1.12344 versus 1.11910. Euro dropped below the range on the Thursday ECB actions, rebounding modestly Friday.
Historical: 1.1191 versus 1.13123 versus 1.13050 versus 1.13344 versus 1.13650 versus 1.13725 versus 1.13790 versus 1.1391 versus 1.13598 versus 1.13332 versus 1.13363 versus 1.14490 versus 1.13544 versus 1.12922 versus 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350 versus 1.14554 versus 1.14478 versus 1.14924 versus 1.14351 versus 1.14285 versus 1.1407 versus 1.13134 versus 1.13830 versus 1.13652 versus 1.13636 versus 1.13919
USD/JPY: 111.165 versus 111.483. Dollar faded to test the 50 day EMA on the Friday low after a lateral move over the 200 day. Still a rather modest fade.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
111.482 versus 111.624 versus 111.845 versus 111.856 versus 111.921 versus 111.433 versus 110.873 versus 110.53 versus 110.979 versus 110.670 versus 110.664 versus 110.786 versus 110.848 versus 110.469 versus 110.462 versus 110.945 versus 110.523 versus 110.488 versus 109.754 versus 109.793 versus 109.803 versus 109.777 versus 109.987 versus 109.53 versus 108.85 versus 108.96 versus 109.364 versus 109.180 versus 109.545 versus 109.757 versus 109.58 versus 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959
Oil: 56.07, -0.59. Still in a tight lateral move the of the past three weeks.
Gold: 1299.30, +13.20. Bouncing back after the late February flop and lateral move this month. Still below the 50 day MA. Bearish pattern has formed after that higher high mid-February.
Stocks Fall on Weak Jobs Growth, but Close Near Highs
08-Mar-19 16:20 ET
Dow -22.99 at 25450.24, Nasdaq -13.32 at 7408.16, S&P -5.86 at 2743.03
https://www.briefing.com/investor/markets/stock-market-update/2019/3/8/stocks-fall-on-weak-jobs-growth-but-close-near-highs.htm
[BRIEFING.COM] The S&P 500 declined as much as 1.0% on Friday, as disappointing growth in U.S. jobs contributed to global growth concerns and profit-taking interest. However, renewed buying interest in the afternoon helped the benchmark index trim its loss to 0.2% and close at session highs.
The Dow Jones Industrial Average (-0.1%), the Nasdaq Composite (-0.2%), and the Russell 2000 (-0.1%) also finished near session highs after being down as much as 0.9%, 1.2%, and 0.9%, respectively.
The S&P 500 energy (-2.0%) and consumer discretionary (-0.7%) sectors underperformed the broader market. Conversely, the utilities (+0.4%), materials (+0.2%), real estate (+0.1%), and consumer staples (+0.1%) sectors outperformed.
It had been broad-based retreat for most of the day with all 11 S&P 500 sectors trading lower following a mixed February Employment Situation Report. The ability to hold above morning lows, though, encouraged some buying interest, and the acceleration of the rebound likely added a short-covering element into the picture.
February nonfarm payroll growth was surprisingly weak, coming in at just 20,000 (Briefing.com consensus 173,000). NEC Director Larry Kudlow, among many others, believed the payroll figure was an outlier.
The positive spin is that average hourly earnings grew 0.4%, which pushed up the year-over-year wage growth rate to 3.4% -- the highest since April 2009, and unemployment fell to 3.8% from 4.0%. Still, the big miss on payrolls stoked concerns that it was a sign of developing softness in the labor market.
At the same time, weak trade data out of China, where February exports declined 20.7% year-over-year, and some pessimism about the prospects for a U.S.-China trade deal helped contribute to early-morning weakness.
In earnings news, Costco (COST 227.82, +11.03, +5.1%) and Big Lots (BIG 36.18, +4.34, +13.6%) sported notable gains after both beat earnings estimates. National Beverage (FIZZ 58.27, -10.00), meanwhile, dropped 14.7% after it missed top and bottom-line estimates.
U.S. Treasuries edged higher, pushing yields lower. The 2-yr yield declined two basis points to 2.44%, and the 10-yr yield declined one basis point to 2.63%. The U.S. Dollar Index declined 0.3% to 97.36. WTI crude lost 0.8% to $56.14/bbl.
Reviewing Friday's economic data, which included the February Employment Situation Report and the Housing Starts and Building Permits Report for January:
The February Employment Situation Report muddied what had been a pretty clear labor market picture. The headline that will jump out at everyone is that nonfarm payrolls increased by only 20,000 in February, well below expectations and far off recent readings running above 200,000. Average hourly earnings, meanwhile, increased 0.4%, which left the year-over-year wage figure up 3.4%. That's good news, as it is a positive underpinning for consumer spending.
The key takeaway from the report is that the weak payrolls figure will drive thoughts of either there being a shortage of skilled labor that could drive up wages or that it is a sign of a softening job market. In other words, the key takeaway is that it is going to create uncertainty that is going to hang over the market.
Housing starts increased 18.6% month-over-month in January to a seasonally adjusted annual rate of 1.230 million units (Briefing.com consensus 1.180 million) and permits rose 1.4% month-over-month to 1.345 million (Briefing.com consensus 1.280 million).
The key takeaway from the report, however, is that starts were down 7.8% year-over-year and permits were down 1.5% year-over-year. Accordingly, the strong January figures belie an otherwise torpid new residential construction market.
Looking ahead, investors will receive Retail Sales for January and Business Inventories for December on Monday.
Russell 2000 +12.9% YTD
Nasdaq Composite +11.7% YTD
S&P 500 +9.4% YTD
Dow Jones Industrial Average +9.1% YTD
Stocks Fall Following ECB's Dovish-Minded Stance
07-Mar-19 16:25 ET
Dow -200.23 at 25473.23, Nasdaq -84.46 at 7421.48, S&P -22.52 at 2748.89
https://www.briefing.com/investor/markets/stock-market-update/2019/3/7/stocks-fall-following-ecbs-dovishminded-stance.htm
[BRIEFING.COM] The S&P 500 lost 0.8% on Thursday, as a negative economic outlook from the European Central Bank (ECB) helped fuel growth concerns and profit-taking interest. Thursday's risk-off mindset was made apparent by the underperformance of cyclical sectors and the flight-to-safety trade in the U.S. Treasury market where the 10-yr yield dropped six basis points to 2.64%.
The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 1.1%, and the Russell 2000 lost 0.9%. A technical violation of the S&P 500's and Nasdaq Composite's 200-day moving averages also contributed to some selling interest; both closed below that key technical level.
10 of the 11 S&P 500 sectors finished lower with consumer discretionary (-1.4%), financials (-1.1%), and information technology (-0.9%) leading the retreat. Conversely, the utilities sector (+0.3%) was the lone group to finish higher.
The European Central Bank issued a dovish-minded policy stance, which was an acknowledgement of the slowing growth in the eurozone.
The ECB left its key interest rates unchanged, but it also (1) pushed out its guidance for rates to stay at their present level at least through the end of 2019, versus prior guidance of at least through the summer of 2019; and (2) reintroduced a targeted long-term refinancing operation (TLTRO) that will begin in September 2019 and continue through March 2021.
At the same time, the ECB cut its real GDP growth forecast for 2019 to 1.1% from the 1.7% growth forecast it provided as recently as December.
The timing served as a reinforcement of the concern that the global economy is weakening and that the U.S. market has gotten ahead of itself pricing in a more upbeat growth outlook that isn't being corroborated with falling earnings estimates.
Earnings growth for multinational companies will remain at risk from a strengthening dollar. Pronounced weakness in the euro following the ECB decision (-1.1% to 1.1183 against the dollar) drove a 0.8% gain in the U.S. Dollar Index (97.70, +0.82).
Kroger (KR 25.61, -2.83, -10.0%) and Burlington Stores (BURL 147.28, -19.90, -11.9%) were among the more notable companies Thursday that issued downside earnings guidance.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report, revised fourth quarter Unit Labor Costs and Productivity, and the Consumer Credit report for January:
Initial claims for the week ending March 2 were low at 223,000 (Briefing.com consensus 224,000), as expected, while continuing claims for the week ending February 23 fell by 50,000 to 1.755 million.
The key takeaway from the report is that the low level of initial claims is consistent with prior readings that have been consistent with the understanding that labor market conditions remain tight.
Nonfarm business sector labor productivity increased 1.9% (Briefing.com consensus 1.7%) in the fourth quarter. Unit labor costs increased 2.0% (Briefing.com consensus 1.5%).
The key takeaway from the report is that the annual average productivity from 2017 to 2018 was a lowly 1.3%, which is below the long-term rate of 2.1% from 1947 to 2018.
Total outstanding consumer credit increased by $17.0 billion in January (Briefing.com consensus $17.0 billion) after increasing a revised $15.4 billion (from $16.5 billion) in December.
Once again, credit growth was rooted in nonrevolving debt, like car loans and student loans, while revolving credit (credit cards) expanded at a more muted pace.
Looking ahead, investors will receive the Employment Situation Report for February and the Housing Starts and Building Permits Report for January on Friday.
Russell 2000 +13.0% YTD
Nasdaq Composite +11.9% YTD
S&P 500 +9.7% YTD
Dow Jones Industrial Average +9.2% YTD
S&P 500 Declines for Third Straight Session
06-Mar-19 16:25 ET
Dow -133.17 at 25673.46, Nasdaq -70.44 at 7505.94, S&P -18.20 at 2771.41
https://www.briefing.com/investor/markets/stock-market-update/2019/3/6/s-and-p-500-declines-for-third-straight-session.htm
[BRIEFING.COM] The S&P 500 lost 0.7% on Wednesday, pulling back for the third straight session after a strong start to the year. With few catalysts to justify further gains, stocks succumbed to some profit taking with shares of energy, health care, and semiconductor companies leading the retreat.
The Dow Jones Industrial Average lost 0.5%, and the Nasdaq Composite lost 0.9%. The Russell 2000 underperformed with a steep loss of 2.0%.
The S&P 500 health care (-1.5%) and energy (-1.3%) sectors were Wednesday's laggards, weighed down by some industry-specific overhangs. Conversely, the materials (+0.2%), utilities (unch), and communication services (unch) sectors outperformed.
Congressional wrangling to rein in drug prices, and health care costs in general, continued to dampen buying interest in health care stocks. Separately, a drop in oil prices following some bearish inventory data released on Wednesday, coupled with the cautious commentary on oil prices from Goldman Sachs on Tuesday, and general growth concerns, continued to foster a risk-off sentiment in energy stocks.
On a related note, the OECD cutting its global GDP growth forecast for 2019 to 3.3% from 3.5%, New York Fed President Jon Williams (FOMC voter) suggesting a "new normal" of slow growth on the order of 2% will keep the Fed patient, and the Fed's Beige Book, which reported slight-to-moderate growth for 10 of the 12 Fed districts, contributed to the slowdown narrative that drove some profit taking.
Semiconductor stocks underperformed in today's trade, dragging on the heavily-weighted S&P 500 information technology sector (-0.6%). Micron (MU 37.93, -2.06, -5.2%) was a notable laggard after Cleveland Research lowered its revenue estimates citing increased pricing headwinds, inventory risk and soft demand.
The Philadelphia Semiconductor Index lost 1.7%, although the group was already up 17.5% this year heading into the session.
General Electric (GE 9.11, -0.78) dropped 7.9%, extending losses from Tuesday that resulted from the company's negative outlook for industrial free cash flow in 2019. A disparaging view on the stock's prospects from highly-respected JPMorgan analyst Stephen Tusa, who said his $6 price target looks generous, weighed heavily.
On the other hand, shares of Dollar Tree (DLTR 100.35, +4.88, +5.1%) and Abercrombie & Fitch (ANF 25.70, +4.35, +20.4%) outperformed after the companies pleased investors with their earnings reports.
U.S. Treasuries saw increased buying interest, sending yields lower across the curve. The 2-yr yield declined four basis points to 2.51%, and the 10-yr yield declined three basis points to 2.69%. The U.S. Dollar Index finished flat at 96.86. WTI crude lost 0.5% to $56.25/bbl.
Reviewing Wednesday's economic data, which included the Trade Balance Report for December, ADP Employment Change for February, the Fed's Beige Book for March, and the weekly MBA Mortgage Applications Index:
For December, the trade deficit widened to $59.8 billion (Briefing.com consensus -$57.8 billion) from a downwardly revised $50.3 billion (from -$49.3 billion) in November. The December deficit is the widest since October 2008 when the world was in the throes of the worst financial crisis since the Great Depression.
The key takeaway from the report is that it will fuel the Trump Administration's fire to correct the trade imbalance with assertive policy actions.
The ADP National Employment Report showed an increase of 183,000 in February (Briefing.com consensus 175,000), and the January reading was revised to 300,000 (from 213,000).
The Federal Reserve's Beige Book for March noted that ten Fed Districts reported slight-to-moderate growth while Philadelphia and St. Louis reported flat economic conditions. Consumer spending activity was described as mixed. Lower retail and auto sales were attributed to harsh winter weather and a higher cost of credit. Overall manufacturing activity increased while activity in the nonfinancial services sector increased at a modest-to-moderate pace.
The weekly MBA Mortgage Applications Index decreased 2.5% following a 5.3% increase in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, revised fourth quarter unit labor costs and nonfarm productivity, and the Consumer Credit report for January on Thursday.
Russell 2000 +14.0% YTD
Nasdaq Composite +13.1% YTD
S&P 500 +10.6% YTD
Dow Jones Industrial Average +10.1% YTD
Stocks Drift Lower, Economic Data and Retail Earnings Keep Losses in Check
05-Mar-19 16:25 ET
Dow -13.02 at 25806.63, Nasdaq -1.21 at 7576.38, S&P -3.16 at 2789.61
https://www.briefing.com/investor/markets/stock-market-update/2019/3/5/stocks-drift-lower-economic-data-and-retail-earnings-keep-losses-in-check.htm
[BRIEFING.COM] The S&P 500 lost 0.1% on Tuesday in a session that saw little conviction from buyers or sellers. Encouraging economic data and solid earnings reports from Target (TGT 76.00, +3.33, +4.6%) and Kohl's (KSS 71.33, +4.86, +7.3%) provided some support for the market.
The Dow Jones Industrial Average lost 0.1%, and the Nasdaq Composite finished flat. The Russell 2000, meanwhile, underperformed with a loss of 0.5%.
The S&P 500 industrials (-0.6%) and materials (-0.3%) sectors underperformed the broader market. Conversely, the communication services (+0.7%), real estate (+0.3%), and consumer discretionary (+0.2%) sectors were the lone groups to finish with gains.
Stocks opened roughly flat amid lingering concerns about the U.S. striking, and enforcing, a meaningful trade deal with China. On a related note, China lowered its 2019 GDP growth forecast to 6.0%-6.5% from 6.5%, and announced some tax cuts in a bid to contend with a "tough economic battle ahead."
The S&P 500 dropped 0.4% in early action but selling efforts were tempered following the release of the stronger-than-expected New Home Sales report for December and the ISM Non-Manufacturing Index for February.
The more recent ISM Non-Manufacturing Index, which included a sizable increase for the New Orders component, helped dampen the recession narrative that has picked up amid a mixed slate of economic data.
At the same time, better-than-expected earnings results and guidance from Target and Kohl's helped keep investors at ease. Their solid results helped spur gains in the SPDR S&P Retail ETF (XRT 45.65, +0.37, +0.8%) and the S&P 500 consumer discretionary sector (+0.2%).
General Electric (GE 9.89, -0.49) for its part lost 4.7% after CEO Larry Culp said the company's industrial free cash flow will be negative in 2019.
There was also some M&A speculation within the insurance industry. Aon (AON 157.25, -13.38, -7.8%) confirmed it is in the early stages of considering an all-share business combination with Willis Towers Watson (WLTW 182.04, +8.99, +5.2%).
The U.S. Treasury market was relatively muted on Tuesday. The 2-yr yield increased one basis point to 2.55%, and the 10-yr yield was unchanged at 2.72%. The U.S. Dollar Index increased 0.2% to 96.84. WTI crude was unchanged at $56.54/bbl.
Reviewing Tuesday's economic data, which included the ISM Non-Manufacturing Index for February, New Home Sales for December, and the Treasury Budget for January:
The ISM Non-Manufacturing Index increased to 59.7 in February (Briefing.com consensus 57.2) from 56.7 in January. The dividing line between expansion and contraction is 50.0, so the increase in February reflects an acceleration in business activity in the non-manufacturing sector.
The key takeaway from the report is that it featured a sizable increase for the New Orders component, which is a positive marker that will help push out the recession narrative for the U.S. economy since the non-manufacturing sector accounts for a much larger chunk of economic activity than the manufacturing sector does.
New home sales increased 3.7% month-over-month to a seasonally adjusted annual rate of 621,000 (Briefing.com consensus 572,000) from a downwardly revised 599,000 (from 657,000) in November.
The key takeaway from the report is that the improvement in new home sales coincided with a drop in both median and average selling prices. Another important takeaway is that lower-priced homes (less than $400,000) accounted for a much smaller percentage of total homes sold than in November, underscoring the point that there are supply constraints at more affordable price points.
The Treasury Budget for January showed a surplus of $8.7 billion versus a surplus of $49.2 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the January surplus cannot be compared to the $13.5 billion deficit for December.
The fiscal year-to-date deficit is $310.5 billion versus a deficit of $175.7 billion for the same period a year ago. The budget deficit over the last 12 months is $913.5 billion.
Looking ahead, investors will receive the ADP Employment Change for February, the weekly MBA Mortgage Applications Index, the Trade Balance Report for December, and the Fed's Beige Book for March on Wednesday.
Russell 2000 +16.3% YTD
Nasdaq Composite +14.2% YTD
S&P 500 +11.3% YTD
Dow Jones Industrial Average +10.6% YTD
S&P 500 Retests November High but Pulls Back Below 2800
04-Mar-19 16:25 ET
Dow -206.67 at 25819.65, Nasdaq -17.79 at 7577.59, S&P -10.88 at 2792.77
https://www.briefing.com/investor/markets/stock-market-update/2019/3/4/s-and-p-500-retests-november-high-but-pulls-back-below-2800-.htm
[BRIEFING.COM] The S&P 500 advanced as much as 0.5% following a report that the U.S. and China are nearing a trade deal. The benchmark index was then down as much as 1.3% following an inability to sustain a retest of its November high. Renewed buying interest, however, propelled an afternoon rebound effort, leaving the S&P 500 with a loss of 0.4%.
The Dow Jones Industrial Average (-0.8%), the Nasdaq Composite (-0.2%), and the Russell 2000 (-0.9%) also finished off their session lows.
The S&P 500 health care sector (-1.3%) was Monday's outsized laggard, weighed down by broad-based weakness as worries about regulatory efforts to curtail health care costs undercut many stocks. Biotech issues, which have been among the best performers this year, were a notable laggard as well on Monday, falling prone to profit-taking efforts. On a related note, Biogen (BIIB 327.26, -6.84, -2.0%) announced a deal to acquire Nightstar Therapeutics (NITE 25.18, +10.02, +66.1%) for approximately $877 million, or $25.50/share, in cash.
Conversely, the materials (+0.4%), real estate (+0.4%), utilities (+0.2%), and energy (+0.2%) sectors outperformed.
The Wall Street Journal reported that Beijing is offering to lower tariffs on U.S. farm, chemical, and other products in exchange for the U.S. taking off the new tariffs it has imposed on Chinese imports. There was some dismay, however, over a separate report that a trade deal might not contain an effective remedy to resolve structural trade issues.
Nevertheless, the mere prospect of a U.S.-China trade deal lifted the S&P 500 to its November high in the opening minutes of trading. The inability to hold gains or make a further move higher on the news, however, was attributed to the notion that a potential trade deal was largely priced in.
The subsequent pullback included some technical drivers, too. The retest of the November high sparked some reflex selling interest that ultimately sent the S&P 500 below the 2800 level. The quick descent was likely exacerbated by weak-handed holders of long positions (i.e. performance chasers) who felt trapped and anxious about getting involved in the market rally too late.
An afternoon wave of buyers tempered selling from getting too out of hand, though. The S&P 500 sectors pared losses, allowing the benchmark index to close at its afternoon highs but still under the 2800 level.
The Children's Place (PLCE 84.42, -9.78, -10.3%) was a story stock of note after the company disappointed investors with its fourth quarter results and its first quarter/full year guidance. The company partly attributed its outlook to the effects of direct competitor Gymboree being liquidated.
U.S. Treasuries edged higher, pushing yields lower across the curve. The 2-yr yield declined one basis point to 2.54%, and the 10-yr yield declined three basis points to 2.72%. The U.S. Dollar Index increased 0.1% to 96.61. WTI crude increased 1.3% to $56.53/bbl.
Reviewing Monday's lone economic report:
Total construction spending declined 0.6% in December (Briefing.com consensus -0.3%) after increasing 0.8% in November.
The key takeaway from the report is that residential construction spending was soft in December, although the market effectively knew that already based on the data seen in the Q4 GDP report.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for February, New Home Sales for December, and the Treasury Budget for January on Tuesday.
Russell 2000 +16.8% YTD
Nasdaq Composite +14.2% YTD
S&P 500 +11.4% YTD
Dow Jones Industrial Average +10.7% YTD
InvestmentHouse - US Economic Data Remains On and Off (Weekend Newsletter)
https://news.investmenthouse.com/2019/03/the-daily-part-1-of-3-3-2-19.html
- A week that tested resistance, faded, held support, then started back upside.
- Friday new money flowed in for the new month.
- US economic data remains on and off, but still expanding.
- China economics hurt then help stocks while a possible 'remarkable, historic' trade deal is hyped.
- Indices show no sellers and indeed more stocks are setting up very decent upside patterns.
- Indices now set to take on the range tops again.
It would appear that new money did not wait for the new week. March began Friday, and after a high-volume stagnant end to February, March blew in some solid index gains. After some rather tepid US economic data -- yet again -- many see the Fed's easy money policy as appropriate, or that China's on again/off again economic data ('on' Friday with better manufacturing data after Thursday's extraordinarily weak import/export data) trumped the weaker US data. Or perhaps Larry Kudlow's extolling the possibility of a "remarkable, historic" trade deal had something to do with it. Or, it was just time for new money to hit the market on a new month.
Whatever the cause or synergistic melding of events, stocks gapped higher, held the gap -- at least after a morning dive back to near flat -- and closed with some rather decent gains.
SP500 19.20, 0.69%
NASDAQ 62.82, 0.83%
DJ30 110.32, 0.43%
SP400 0.79%
RUTX 0.89%
SOX 0.96%
NASDAQ 100 0.76%
VOLUME: NYSE -25%, NASDAQ -6.5%. Volume faded big time on NYSE after that end of month spike, but trade was still above average. Ditto NASDAQ.
ADVANCE/DECLINE: NYSE +1.8:1, NASDAQ +1.9:1. Very so-so breadth versus the move.
As far as the indices, there was not anything really new accomplished Friday. Last week the indices bumped resistance (or in SP400's case, continued the break) then faded modestly. Friday's new money injected new life, but as noted, did not break that resistance. Constructive action all week as the indices and stocks tested back to near support.
No breakouts Friday for the indices perhaps, but they tapped resistance, faded to near support, then got right back at it. Indeed, stocks such as GOOG broke out over some resistance and AMZN actually showed some life on much better volume after four weeks of dormancy. Many other stocks continue to move well or set up as well across many sectors and industries: software, chips, drugs, energy, healthcare -- there is enough support to fuel a continued move and of course the breakout from the October/December range.
Economics/News
The US data was about as on and off as the Chinese data, though the US reports still show an economy that is growing while Chinese data shows an economy that was/is teetering and desperately craving the stimulus the Chinese government started pumping again the past few months.
Thursday GDP was lower than Q3 (no surprise) but was stronger than expected. As I noted in discussing the data, the internals were very positive, e.g. private R&D grew at an all-time record pace. That bodes very well for future activity. Disposable incomes grew. The data perhaps was not as pleasing for the here and now, but it suggests the seeds for continued and sustained expansion are being planted by what the new US socialist/communist party calls the accursed, capitalist, free enterprise private sector.
Friday saw disappointing spending and income data.
December income jumped 1.0%, easily topping expectations at 0.3% and November's 0.3%. January, however, fell -0.1 when +0.3% was expected.
December spending dropped 0.5% from +0.6% in November, the largest decrease in 9 years. That jumped the savings rate to over 7%, and that had most pundits shaking their heads, noting the data must be wrong.
No, it was not a great economic story for the day. Hey, at least bonds are selling and interest rates are rising, taking a lot of the flat out of the yield curve. That suggests the back and forth in the economic data is just a hangover from the Fed's tightening into a slowdown. It suggests that if the Fed doesn't turn back to tightening mode just yet and the government doesn't go as completely nuts as the new communists -- oh I guess they want to be called socialists -- in our government want in terms of taxes, regulation, etc., then the US economy will resume its expansion.
Look at the midcaps and small caps: after lagging the move, they both surpassed their large cap brethren and SP400 already broke over the top of its October/December range. Those indices are domestically tied, harbingers if you will, of the domestic economy. That they rallied to market leadership after languishing in market . . . laggardship (?) . . . also indicates the Fed stopped perhaps just in time to prevent a recession. For now.
Even so, we did not buy a ton Friday. We bought GOOG on its breakout. We took some gain on ZS after banking gain earlier in the week on ULTA, V, MU, CRON -- stocks are still moving. After last week's test and the Friday bounce we will see if the bids continue to push in. After testing resistance, fading modestly and orderly, then starting to rebound off near support, we will see if the real bids come back in and start moving the good patterns up and defy the odds and break the indices upside out of their pre-selloff ranges.
THE MARKET
CHARTS
All but SP400 bumped at or near the top of the range, faded to near support, then posted decent moves Friday. Not breakouts, just coming back up after the initial probe at resistance. Fairly constructive, and now we see if the indices can turn something upside out of the action. The indices look as if they are going to take a shot at the resistance before testing more.
SP400: Extended its break over the top of the OCT/DEC range through Monday then faded to test the range top. Friday a decent bounce but the move was not all that inspiring.
NASDAQ: Bumped the November peak Monday, the mid-high in the range tops, faded to the 200 day SMA, gapped upside Friday. Closed just over the November high, thus putting in a new closing high for the recovery. A little help from GOOG and some other mega-caps helped. Still, it was no major move in itself, though the work on the week was, as noted before, was constructive.
RUTX: Tapped the top of the range Monday, faded to the 10 day EMA, then back up Friday. Very solid test and Friday bounce. Promising.
SP500: Nice tap at the top of the range, fade to the 10 day EMA, and gap upside Friday. Not bad, aided by many drug stocks. If the financials would join then SP500 has a shot at the breakout.
DJ30: Very similar, but a very tight range as well. Holding the 10 day EMA and right at the range tops. No breakout yet, but as noted many times, no sellers running in to sell it or any of the other indices.
SOX: Came within striking distance of the top of the March/September range then faded to test. Orderly, holding near support, gapping upside Friday. Chips started to lead finally and are still in that mode.
LEADERSHIP
Semiconductors: Most tested last week with the rest of the market, leaving pretty good possibilities for the coming week. LRCX still in a nice test. COHR, VSH, AMD, BRKS, TSM -- many nice pullbacks. Even NVDA. XLNX continued upside in its own world.
Software: Most leaders pulled back including software, but to a much lesser degree. Then, as leaders do, they started upside ahead of the rest. TEAM jumped again Thursday and Friday. ZS exploded higher on earnings, though it was dormant until Friday. NOW started upside midweek. NEWR solid. VMW jumped on earnings. PANW testing nicely after earnings gapped it higher.
FAANG: Dormant for a month, there are a few signs of life. GOOG started upside with a breakout. AMZN showed a move up from a month of a flat range. AAPL still in its four week lateral range. NFLX was down on the week, but holding the 20 day EMA. FB spent a third week at the 20 day EMA.
Drugs: Some recovering nicely, others continue working. PFE is starting to show good upside volume in a decent pattern. MRK continued climbing the 10 day as LLY really surged on the week.
Financial: V, MA enjoyed a good week. JPM, C still in 7 week lateral moves, and BAC has also turned laterally.
Energy: Back and forth moves continued. SWN broke higher Friday and is interesting. SPN still in a very nice test, but still not moving up. APA is interesting. XOM is over the 200 day SMA as is CVX, the latter with a strong Friday move.
MISC: CMG looks ready to move again. ROKU posted a great move for us.
MARKET STATS
DJ30
Stats: +110.32 points (+0.43%) to close at 26026.32
Nasdaq
Stats: +62.82 points (+0.83%) to close at 7595.35
Volume: 2.49B (-6.39%)
Up Volume: 1.61B (+330M)
Down Volume: 857.81M (-482.19M)
A/D and Hi/Lo: Advancers led 1.86 to 1
Previous Session: Decliners led 1.4 to 1
New Highs: 108 (+33)
New Lows: 30 (-5)
S&P
Stats: +19.20 points (+0.69%) to close at 2803.69
NYSE Volume: 948.485M (-24.82%)
Up Volume: 587.177M (-4.389B)
Down Volume: 341.199M (-402.682M)
A/D and Hi/Lo: Advancers led 1.82 to 1
Previous Session: Decliners led 1.19 to 1
New Highs: 134 (+5)
New Lows: 13 (-2)
SENTIMENT
VIX: 13.57; -1.21
VXN: 16.12; -1.05
VXO: 12.88; -1.63
Put/Call Ratio (CBOE): 0.91; -0.05
Bulls and Bears:
Bulls continue their recovery, bears continue their decline after they merged in late 2018.
Bulls: 52.4 versus 51.9
Bears: 20.4 versus 20.7
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.
Bulls: 52.4 versus 51.9
51.9 versus 49.5 versus 48.6 versus 45.8 versus 45.4 versus 34.8 versus 29.9 versus 39.3 versus 45.4 versus 46.7 versus 38.3 versus 39.6 versus 42.9 versus 42.5 versus 50.5 versus 51.9 versus 56.3 versus 61.8 versus 60.6 versus 59.0 versus 57.7 versus 60.1 versus 59.6 versus 57.7 versus 57.3 versus 54.9 versus 54.5 versus 54.9 versus 55.3 versus 52.4 versus 47.1 versus 47.6 versus 52.0 versus 55.5 versus 52.9 versus 50.0 versus 49.1 versus 46.6 versus 43.1 versus 43.6 versus 48.0 versus 43.6 versus 42.2 versus 49.5 versus 55.5 versus 54.9 versus 48.6 versus 48.1 versus 48.5 versus 41.9 versus 54.4 versus 66.00
Bears: 20.4 versus 20.7
20.7 versus 21.5 versus 20.6 versus 20.6 versus 21.3 versus 29.4 versus 34.6 versus 21.4 versus 20.4 versus 21.50 versus 20.6 versus 19.8 versus 19.0 versus 19.8 versus 19.8 versus 19.0 versus 18.3 versus 18.5 versus 18.6 versus 18.3 versus 18.1 versus 18.3 versus 18.1 versus 18.3 versus 18.3 versus 18.6 versus 18.8 versus 18.6 versus 18.5 versus 18.5 versus 18.6 versus 18.4 versus 17.6 versus 17.8 versus 17.7 versus 19.2 versus 19.2 versus 19.4 versus 19.4 versus 20.6 versus 20.8 versus 19.6 versus 19.8 versus 18.6 versus 17.5 versus 16.8 versus 15.7 versus 15.5 versus 14.4 versus 14.6 versus 14.4 versus 15.5 versus 12.6 versus 12.8 versus 12.7 versus 13.5 versus 15.2 versus 15.1 versus 15.2 versus 15.1 versus 15.1 versus 15.4 versus 15.4 versus 14.4 versus 14.4 versus 15.1 versus 15.2 versus 15.1 versus 17.0 versus 17.1 versus 19.0 versus 20.2
OTHER MARKETS
Bonds: 2.759% versus 2.717%. Bonds continue to fall with yields continuing to rise, helping steepen the curve.
Historical: the last sub-2% rate was in November 2016 (1.867%). Last trade over 3% was November 2018.
2.717% versus 2.673% versus 2.636% versus 2.672% versus 2.654% versus 2.695% versus 2.641% versus 2.641% versus 2.664% versus 2.654% versus 2.706% versus 2.686% versus 2.672% versus 2.634% versus 2.657% versus 2.695% versus 2.702% versus 2.725% versus 2.684% versus 2.64% versus 2.679% versus 2.710.5
EUR/USD: 1.13650 versus 1.13725. Still in the 5 month lateral trading range.
Historical: 1.13725 versus 1.13790 versus 1.1391 versus 1.13598 versus 1.13332 versus 1.13363 versus 1.14490 versus 1.13544 versus 1.12922 versus 1.12955 versus 1.12616 versus 1.3323 versus 1.12816 versus 1.13218 versus 1.13396 versus 1.13645 versus 1.1396 versus 1.14350 versus 1.14554 versus 1.14478 versus 1.14924 versus 1.14351 versus 1.14285 versus 1.1407 versus 1.13134 versus 1.13830 versus 1.13652 versus 1.13636 versus 1.13919
USD/JPY: 111.921 versus 111.433. Dollar breaking higher over the 200 day SMA after a very strong Thursday took it to that level.
Historical: Last below 109 in June 2018 then tumbled to 107 in early January 2019. 114.51 is the recent high from October 2018.
111.433 versus 110.873 versus 110.53 versus 110.979 versus 110.670 versus 110.664 versus 110.786 versus 110.848 versus 110.469 versus 110.462 versus 110.945 versus 110.523 versus 110.488 versus 109.754 versus 109.793 versus 109.803 versus 109.777 versus 109.987 versus 109.53 versus 108.85 versus 108.96 versus 109.364 versus 109.180 versus 109.545 versus 109.757 versus 109.58 versus 109.651 versus 109.773 versus 109.133 versus 108.912 versus 108.551 versus 108.340 versus 108.563 versus 108.332 versus 107.959
Oil: 55.80, -1.42. Oil continues working laterally over 55, but it also continues the slow trend higher off the December low.
Gold: 1299.20, -16.90. Gold plunges to the 50 day MA as this inflation measure falls sharply along with bonds.
MONDAY
The stage is set. The indices tested the top of the range -- on top of a 20%ish rally from the December low -- faded just a few sessions, then started a rebound Friday as new money for a new month flowed in. The market remains at the inflection point and will either breakout or move back down to varying degrees.
For now, no sellers have emerged. Indeed, many sectors are producing some good patterns and some good moves upside. The bias for now with the patterns and the ongoing move is obviously upside. Without sellers it is hard for the market to fall. The buyers can slack off, pull their bids and wait for a better entry, but that is not selling. That is just a pause to set up more upside. Thus far, that is what last week looks like.
With that picture we have several more very solid upside plays at various levels of their moves. All are in position to make us good money. Thus, if the indices can continue the Friday move we will look at more positions and see if they can force an index breakout.
Have a great weekend!
S&P 500, Nasdaq Finish with Weekly Gains
01-Mar-19 16:25 ET
Dow +110.32 at 26026.32, Nasdaq +62.82 at 7595.38, S&P +19.20 at 2803.65
https://www.briefing.com/investor/markets/stock-market-update/2019/3/1/s-and-p-500-nasdaq-finish-with-weekly-gains.htm
[BRIEFING.COM] The S&P 500 increased 0.7% on Friday, led by shares of energy and health care companies; meanwhile investors remained optimistic about a U.S.-China trade deal. Friday's gains lifted the benchmark index into positive territory for the week, advancing 0.4%.
The Nasdaq Composite (+0.8%) extended its weekly gain to 0.9%. The Dow Jones Industrial Average (+0.4%) and the Russell 2000 (+0.9%) finished flat for the week.
The S&P 500 energy (+1.8%), health care (+1.4%), and consumer discretionary (+0.9%) sectors outperformed. Conversely, the consumer staples (-0.2%), materials (-0.2%), and real estate (-0.1%) sectors were the lone groups to finish with losses.
Stocks jumped out of the gate, propelled by a Bloomberg report that the U.S. and China are working on a document that lays out the provisions of a trade deal and that such a document could be ready to be signed by Presidents Trump and Xi as early as mid-March. Some new inflows on the first trading day of the month likely also contributed to the positive bias.
The major averages, however, lost steam and fell to session lows following the release of the ISM Manufacturing and Consumer Sentiment reports for February. The reports weren't "bad," but both came in below expectations and provided an excuse to sell an overbought market.
Selling was short-lived, though, as has been the case all year. The S&P 500 sectors staged a steady rebound during the afternoon, allowing the benchmark index to close near session highs and above the 2800 level.
Positive earnings reports from retailers Gap (GPS 29.51, +4.11, +16.2%) and Foot Locker (FL 63.07, +3.55, +6.0%) helped spur gains in the consumer discretionary sector (+0.9%). GAP also announced it will spin off Old Navy as a separate company.
Conversely, Walgreens Boots Alliance (WBA 66.61, -4.58, -6.4%) underperformed after Robert W. Baird cut its price target to $67 from $70. Baird maintained a 'neutral' rating on the stock.
Tesla (TSLA 294.79, -25.09) was a story stock, losing 7.8%, after CEO Elon Musk conceded that the company will not be profitable during the first quarter. The Tesla team also said it will shift sales worldwide to online only. The transition will reduce costs in order to lower the prices of its vehicles, including the Model 3.
U.S. Treasuries closed out the week on a lower note, sending yields higher across the curve. The 2-yr yield increased five basis points to 2.55%, and the 10-yr yield increased four basis points to 2.76%. The U.S. Dollar Index increased 0.3% to 96.46. WTI crude lost 2.5% to $55.81/bbl.
Reviewing Friday's economic data:
Personal income increased 1.0% in December (Briefing.com consensus +0.3%) and declined 0.1% in January (Briefing.com consensus +0.3%). Personal spending declined 0.5% in December (Briefing.com consensus -0.2%). The personal savings rate in December surged to 7.6% from 6.1% in November.
The PCE Price Index for December was up 0.1% while the core PCE Price Index, which excludes food and energy, increased 0.2% (Briefing.com consensus +0.1%). That left the those indexes up 1.7% and 1.9%, respectively, year-over-year and below the Fed's longer-run inflation target.
The key takeaway from the report is that there is a fair amount of signaling noise that will likely prompt the market to dismiss it and encourage the Fed to stick by a wait-and-see mindset, buying more time for the stock market to exist without fear of a Fed rate hike.
The ISM Manufacturing Index weakened to 54.2 in February (Briefing.com consensus 56.0) from 56.6 in January.
The dividing line between expansion and contraction is 50.0, so the key takeaway from the February number is that it should be interpreted as a slowdown, and not a decline, in the pace of manufacturing expansion.
According to the ISM, the relationship between the index and the overall economy indicates the February reading corresponds to a 3.3% increase in real GDP on an annualized basis.
The final reading for the University of Michigan's Index of Consumer Sentiment for February was 93.8 (Briefing.com consensus 95.6). That was down from the preliminary reading of 95.5, but up from the final reading of 91.2 for January.
The key takeaway from the report is that it conveyed the finding that no improvement in real income expectations was observed among households in the bottom two-thirds of the income distribution. That perspective, should it persist, or ultimately come to fruition, would be a drag on consumer spending activity.
Looking ahead, investors will receive Construction Spending for December and auto and truck sales on Monday.
Russell 2000 +17.9% YTD
Nasdaq Composite +14.5% YTD
S&P 500 +11.8% YTD
Dow Jones Industrial Average +11.6% YTD