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InvestmentHouse - Has the Market Character Changed? (Weekend Newsletter)
https://news.investmenthouse.com/2019/01/the-daily-part-1-of-3-1-5-19.html
- Powell becomes stock whisperer by simply saying 'I'm listening.'
- Chinese RRR cut, confirmation of a US/China trade meeting warmed up stocks even before Powell.
- Boffo jobs report heralded as proof of a strong economy making ISM, PMI's, and other weakening data meaningless. Sure. Yeah right.
- As goes the first week of January? Massive downside, massive upside. Looking forward to that . . .
- Earnings are fast approaching. Before the bounce Friday it certainly looked as if investor expectations were too low.
- Some say the market character just changed. We will see this week.
The Dr. Jekyll/Mr. Hyde market displayed its extremes this week. After a pause in the relief move rolled over hard Thursday on the AAPL warning with DJ30 losing 660 points -- Mr. Hyde -- Friday saw Dr. Jekyll return with massive upside, the Dow rising 747 points. What looked to be a rollover and end to the relief bounce started late December rejected the selling and is trying to embark upon another upside leg. All of the indices scored massive gains from over 3% to well over 4%.
SP500 84.05, 3.43%
NASDAQ 275.36, 4.26%
Dj30 746.94, 3.29%
SP400 3.23%
RUTX 3.75%
SOX 4.37%
NASDAQ 100 4.48%
VOLUME: NYSE +15%, NASDAQ -2%. NYSE trade moved back above average for the first time in 5 sessions and it was not much above average. NASDAQ trade fell back below average: its downside volume Thursday was the highest trade since before Christmas. Thus, the impressive upside moves was not accompanied by convincing volume and indeed declining volume, indicating not the same buying conviction as on NYSE.
ADVANCE/DECLINE: NYSE +9.9:1, NASDAQ 6.2:1.
Now you will hear it was jobs, it was Powell, it was trade. Futures were sharply higher even before jobs or Powell. It was said the market was up because China and the US are having a trade meeting Monday, you know, the one they said three weeks ago they were going to have. Apparently just recycling a headline ahead of the event is enough for a good news hungry market.
The market was already primed to rebound. This even with jobs much, much stronger than expected. You would think that would spook stocks fearing a Fed hiking rates. It did, a bit, as futures sold back from their highs on the report. It was strong, but in examining the numbers, remember that jobs are lagging -- they trail the rest of the economy, continuing to rise as the economy has already started to falter. EXACTLY what is going on now.
Jobs: 312K vs 176K exp vs 176 Nov (from 155K). October 274K from 237K.
3 month average: 254,000
Unemployment: 3.9% vs 3.7% as 400K reentered workforce.
Earnings: 0.4%, 3.2% year/year to 27.49 (+0.11)
Workweek: 34.5 vs 34.4
Participation: 63.1 vs 62.9 prior
Healthcare: 50K
Restaurants/Bars: 41K
Construction: 38K
Great earnings growth, a strong participation jump, strong revisions. Again, however, you have to look at the leading economy such as ISM, regional PMI's -- they are slowing even as the Fed considers more hikes.
Powell then whispered sweet nothings to the market in a press conference with his predecessors Yellen and Bernanke. They all back-slapped one another on jobs well done, but it was up to Powell to tap dance for the markets, and he did the job I assume he wanted to do. All it took was borrowing a phrase from the television show 'Frasier,' the Harvard-educated radio psychologist whose catch-line was 'I'm listening.'
I'm listening . . . I said, I am listening
Who do you trust more?
Powell assured investors the Fed is "prepared to adjust policy quickly and flexibly," that there "is no preset path for policy." Then he topped it off with the assurance the Fed is "listening carefully to the market" and would adjust balance sheet normalization "if needed" and if it becomes a market and economic issue.
At that point it was clear the premarket and early gains were just the preliminaries. The party started and stocks surged to the close.
But can you believe Powell? When listening to Cleveland Fed president Mester earlier in the day, the utter lack of understanding of economic reality versus economic theory is astounding and indeed, given the Fed controls our money, disheartening and indeed frightening.
Mester said the outlook was for 1 to 2 hikes in 2019, but if inflation did not rise the Fed could stop. Laughable for many reasons.
First, the Fed just lowered its view of 2019 growth to 2.3% at its last meeting. How is that an overheating economy? It has always been the view by the misguided Phillips Curve followers that the US economy can easily grow 3% with no inflation, no need for slowing. So why is the Fed trying to prevent overheating (in its own words) when it is lowering its GDP forecast? It believes that economic strength causes inflation. Could it be that what I warned would happened during the Obama years has happened, i.e. that we were 'dumbed-down' to believe that 2% to 2.5% GDP growth was 'great?' Exactly the case. After 10 years with no 3% average GDP growth for the first time since the Great Depression a new generation was taught that 2% growth was 'sustainable' and that above that threatened inflation. That has filtered all the way up to the Federal Reserve.
Second, Mester's premise is focused on the wrong data. Just as the 1929 Fed, the Greenspan Fed, and others, the Fed thinks inflation lurks behind every job, every economic success story, every wage increase. After years of declining wage growth the US citizen actually sees some wage gains. Hike rates! Whispers of Greenspan's 'wage-led' inflation warnings are uttered. Wages don't cause inflation. What causes inflation is slowing output with constant or rising demand. Thus, while Mester and her compadres hike rates to avoid inflation showing up, they fail to take into account that slowing supply with steady or rising demand due to LAGGING jobs and wage hikes leads to inflation. The Fed should be ENCOURAGING economic growth to prevent inflation, not hiking rates to 'prevent' it. The Fed is taking a normal slowdown in an expansion and turning it into a major slowdown with rate hikes. That CAUSES inflation as outlined above. Then it RAISES rates more to try and curb the inflation it caused. Madness. Madness that we sanction and allow to repeat time and time again, generation to generation.
So, with that mindset, while Powell placated the markets and secured a rally when the market was rolling over, you have to wonder when the Fed screws up again.
THE MARKET
CHARTS
After certainly looking like a rollover Thursday on rising volume, stocks rejected the selloff and surged back above pre-Thursday highs. That looks to have renewed the relief move for a second leg though NASDAQ volume trailed off well below average, not commensurate with the price gains.
SP500, DJ30: Both indices reversed ugly Thursday selling, gapping upside and rallying to the 20 day EMA on the close. That puts them at higher recovery highs with some better NYSE volume. Good enough for a continued move upside in the relief move, at least for now.
NASDAQ: Same action as the other large cap indices, gapping and rallying to close near the session highs and right at the 20 day EMA. A higher recovery high here as well, but short on volume. Not that key for a relief move, however, and NASDAQ may have just put itself in position to rally to 7,000 (closed at 6739).
SOX: Gapped higher, rallied as well, making it to the October and November lows, the bottom of the prior range. Key point for SOX as it is below its January high, having taken a pounding on the AAPL warning.
SP400: Sharp move higher from the pause. SP400 never really sold off that hard and Friday burst through the 10 day EMA and near the 20 day EMA. The pattern setting up is one you have to watch on rebounds: the ABCD down pattern. This is where a bounce puts in a higher low and a higher high but all within the confines of the prior selloff. Like its cousin the ABCD upside pattern, it can catch the unwary going heavy long just as it prepares to roll back over.
RUTX: Similar to SP400 but a bit stronger pattern upside. Rallied to the 20 day EMA and has more room to run. You still have to be wary of the potential ABCD downside setup down the road a bit.
LEADERSHP
Consumer Products: Did not all share in the move higher, at least with not the same vigor. CLX doji below the 10 day EMA. PG did move up 2%, threatening the downside play. CL up modestly but still below the 10 day EMA.
FAANG: After the AAPL bomb lower it recovered some. GOOG looks interesting as it breaks up through the 50 day MA. NFLX gapped over the 50 day MA. AMZN continued up to the 50 day MA and we took some gain at our target. FB is up some, still below the 50 day MA.
Software: Mostly higher as it is a stronger group. WDAY surged 6%. SPLK 7% and through the 200 day SMA. TEAM was a laggard, barely higher. PANW up but not impressive. CRM broke higher through the 200 day SMA. Some good stocks in great patterns moving, others trying to move.
Machinery: Some good breaks higher mimicking the NYSE indices. CMI up through the 20 day EMA. TEX so-so as was EMR. CAT up to the 50 day EMA on a 5+% move. Up but not that enticing.
Transports: Bounced from the Thursday flogging but did not change their patterns that much, e.g. DAL.
Retail: After posting good moves when the rest of the market was not, some were quiet, e.g., JWN, M, TGT. Others moved well, e.g. ROST, TJX.
Drugs: Some movement up off the Thursday selling. PFE bounced some while LLY, MRK bounced up off the 50 day MA.
Financial: Even with the Fed saying it would be patient, the banks continued their 2 week move higher: C, BAC, JPM. GS moving up over the 20 day EMA as it too continues its move.
MARKET STATS
DJ30
Stats: +746.94 points (+3.29%) to close at 23433.16
Nasdaq
Stats: +275.35 points (+4.26%) to close at 6738.86
Volume: 2.59B (-1.52%)
Up Volume: 2.33B (+1.525B)
Down Volume: 239.16M (-1.571B)
A/D and Hi/Lo: Advancers led 6.23 to 1
Previous Session: Decliners led 2.27 to 1
New Highs: 10 (-2)
New Lows: 35 (-21)
S&P
Stats: +84.05 points (+3.43%) to close at 2531.94
NYSE Volume: 1.098B (+15.34%)
Up Volume: 1.051B (+740.581M)
Down Volume: 43.485M (-588.643M)
A/D and Hi/Lo: Advancers led 9.9 to 1
Previous Session: Decliners led 1.4 to 1
New Highs: 6 (-6)
New Lows: 11 (-29)
SENTIMENT
VIX: 21.38; -4.07
VXN: 28.57; -3.61
VXO: 24.38; -3.88
Put/Call Ratio (CBOE): 0.91; -0.40
Bulls and Bears:
Now THAT is a move. Both bulls and bears. Yes, a crossover in just about record time. Is this now indicating a bottom in stocks? Yes and no. It is an indicator that takes time for the rally to occur. That said, stocks have bounced -- modestly -- paused, and arguably in position to continue the bounce. This indicator, however, is more of a longer term indicator. As such, it suggests more than a bounce. Interesting, but need more good patterns to support a bounce; that can happen over time, and as indicated this is not an immediate, Pavlovian market response. Regardless, this was an impressive move.
Bulls: 29.9 versus 39.3
Bears: 34.6 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: 29.9 versus 39.3
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: 34.6 versus 21.4
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: 2.668% versus 2.552%. After the strong Tuesday through Thursday break higher, bonds gapped lower to test the 10 day EMA with a doji. Yields actually rose even as Powell indicated the Fed would be patient with hikes.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.552% versus 2.643% versus 2.686% versus 2.716% versus 2.774% versus 2.811% versus 2.736% versus 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus 3.074% versus 3.056% versus 3.065% versus 3.116% versus 3.127% versus 3.147% versus 3.186% versus 3.239% versus 3.228% versus 3.222% versus 3.201% versus 3.22% versus 3.146%
EUR/USD: 1.13980 versus 1.13957. Still working laterally at the 50 day MA even with the violent moves higher and lower on the week.
Historical: 1.13957 versus 1.13343 versus 1.14450 versus 1.14425 versus 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049 versus 1.13604 versus 1.1376 versus 1.13244 versus 1.13657 versus 1.1404 versus 1.1376 versus 1.13970 versus 1.13360 versus 1.13199 versus 1.13934 versus 1.13682 versus 1.12973 versus 1.13325 versus 1.13380 versus 1.13829 versus 1.13818 versus 1.14484
USD/JPY: 108.517 versus 107.713. Dollar trying to recover the massive Wednesday drop. Slow move.
Historical: Last below 109 in June 2018: 107.173 versus 107.515 versus 109.687 versus 110.273 versus 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382 versus 113.634 versus 113.634 versus 113.385 versus 113.022 versus 112.66 versus 112.71 versus 112.813 versus 113.581 versus 113.474 versus 113.402 versus 113.559 versus 113.781 versus 113.510 versus 112.972 versus 113.007 versus 113.077 versus 112.617 versus 112.831 versus 113.585 versus 113.576.
Oil: 47.96, +0.87. Oil continued its modest recovery, making it to the 20 day EMA.
Gold: 1285.80, -9.00. A strong 3 weeks but Friday after a gap higher gold reversed for a loss. Still held the 10 day EMA so still trending higher, but this coming week will tell more of the story.
MONDAY
The data feed slows some, but don't get too complacent: earnings are not far ahead and you have to wonder if expectations are lowered a bit too much. Of course, if stocks continue upside as they have on this bounce that primes them for disappointment after a strong move. We will have to see how this plays out, this renewed relief move.
While NYSE volume was up a bit, NASDAQ trade fell well below average -- not that big a deal for a bounce, but if wanting something stronger, not so great.
For now we continue playing a bounce. When a selloff is rejected as this one was, you play the upside move. That means plays such as FFIV, PG, QID would have to be closed down. We did not on Friday because the move was so violent you typically get some retracement. Further, with the lower volume on NASDAQ, it is no lock the market continues higher: in an arena of dueling algorithms the swings are large and sudden. Could be the market heads back lower once the Powell statements are seen as nothing new, just placating the market. At least some are saying Powell could have changed the market's character for now. The Fed wields so much power it could affect such a change.
There are some strong moves that can give us some plays upside in a continuing bounce. If they continue moving we anticipate playing them. Frustrating so see such whiplash action: the futures were up 265 Dow points from the -660 Thursday before any news. In any event, it is what it is and we will play the good setups, e.g. GOOG, SPLK, if they continue to show good action, playing a continuing bounce.
Remember, the market just broke down from a yearlong topping pattern. This is the test of that first break lower. The indices likely move into the range of the prior lows and find resistance that stalls the move. The likelihood this 20% correction is enough to consolidate the entire move from early 2016 is low. The prior rallies suggest there is more selling to consolidate that tremendous move.
So, we don't despair, we play and take what the market gives us. After the Friday rejection of the rollover we see if it continues Monday. If so, we play more upside as noted. We don't become enamored with the upside given the huge top in place, but we also recognize the Fed can change the market character.
That said, also note that a mere cessation of hostilities against the economy is not, at this point, enough to stop the decline. The Fed would have to reverse policy, i.e. cut rates, perhaps add QE to turn the ship. The government won't produce any stimulus; the House democrats will not give the President anything so for the next 2 years at least there will be nothing on the fiscal side. That is why sages such as Art Cashin are calling not only for no rate cuts this year (he made this prediction a few weeks ago) but that the Fed will cut rates sooner than later.
Therefore, play the bounce if it continues; the repudiation of the Thursday selling is strong. Don't fall in love with the upside. Take good gains when in hand and when at or approaching logical resistance. Then see if good downside setups are in place, particularly if the indices are near the bottom of the prior range they crashed through in December. The downside will likely start from there to continue consolidating the huge move higher from early 2016.
Have a great weekend!
Wall Street Jumps on Strong Jobs Report, Soothing Powell Commentary
04-Jan-19 16:20 ET
Dow +746.94 at 23433.16, Nasdaq +275.35 at 6738.87, S&P +84.05 at 2531.90
https://www.briefing.com/investor/markets/stock-market-update/2019/1/4/wall-street-jumps-on-strong-jobs-report-soothing-powell-commentary.htm
[BRIEFING.COM] The S&P 500 gained 3.4% on Friday, as Fed Chairman Jerome Powell signaled patience and flexibility on rates in light of stronger-than-expected jobs data. Friday's gains helped the benchmark index secure a weekly gain of 1.9%.
The Dow Jones Industrial Average (+3.3%), the Nasdaq Composite (+4.3%), and the Russell 2000 (+3.8%) also sported sizable gains to finish the week up 1.6%, 2.3%, and 3.2%, respectively.
All 11 S&P 500 sectors closed the session in the green, with gains ranging from 1.0% (real estate) to 4.4% (information technology). Apple (AAPL 148.26, +6.07, +4.3%), for its part, recouped nearly half of its losses from Thursday.
The major averages began the day on a higher note, helped by optimism surrounding upcoming trade talks with China next week and a robust Employment Situation Report for December.
Specifically, nonfarm payrolls (Briefing.com consensus 180,000) exceeded expectations with an increase of 312,000, while average hourly earnings (Briefing.com consensus +0.2%) increased 0.4%, lifting the year-over-year growth rate to 3.2%.
There were some market concerns about how the Federal Reserve would respond to the strong jobs report. The latest comments from Fed Chair Powell, however, eased those concerns, evident from stocks soaring to session highs -- and maintaining their gains.
Some talking points from the Fed Chair that soothed the market included (1) the Fed will remain patient given the muted reading on inflation, (2) monetary policy will be nimble and shift if necessary, and (3) his softer tone regarding previous comments on the Fed's balance sheet reduction path being on autopilot.
The CBOE Volatility Index (VIX) fell 4.1 points to 21.38, reaching its lowest level since mid-December.
U.S. Treasuries ended the week sharply lower, surrendering their gains from Thursday. The 2-yr yield dropped 10 basis points to 2.48%, and the 10-yr yield dropped 11 basis points to 2.66%. The U.S. Dollar Index lost 0.1% to 96.17.
Reviewing the Employment Situation Report for December, which was the only economic report on Friday:
December nonfarm payrolls increased by 312,000 (Briefing.com consensus 180,000). Over the past three months, job gains have averaged 254,000 per month. November nonfarm payrolls revised to 176,000 from 155,000. October nonfarm payrolls revised to 274,000 from 237,000.
December private sector payrolls increased by 301,000 (Briefing.com consensus 175,000). November private sector payrolls revised to 173,000 from 161,000. October private sector payrolls revised to 281,000 from 251,000.
December unemployment rate was 3.9% (Briefing.com consensus 3.7%) versus 3.7% in November.
The average workweek in December was 34.5 hours (Briefing.com consensus 34.5) versus 34.4 hours in November.
The key takeaway from the report is that employment data are unlikely to deter the Federal Reserve from its tightening path, especially if average hourly earnings growth remains on its current trajectory.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for December on Monday.
Russell 2000 +2.4% YTD
Nasdaq Composite +1.6% YTD
S&P 500 +1.0% YTD
Dow Jones Industrial Average +0.5% YTD
Stocks Fall on Apple Warning, Weak Manufacturing Data
03-Jan-19 16:15 ET
Dow -660.02 at 22686.22, Nasdaq -202.43 at 6463.52, S&P -62.14 at 2447.85
https://www.briefing.com/investor/markets/stock-market-update/2019/1/3/stocks-fall-on-apple-warning-weak-manufacturing-data.htm
[BRIEFING.COM] The S&P 500 dropped 2.5% on Thursday, as a revenue warning from Apple (AAPL 142.19, -15.73, -10.0%) and weak manufacturing data stoked worries about a slowdown in global economic growth. The Dow Jones Industrial Average lost 2.8%, the Nasdaq Composite lost 3.0%, and the Russell 2000 lost 1.8%.
Nine of the 11 S&P 500 sectors finished in the red. The heavily-weighted information technology sector led the retreat with a loss of 5.1%, as Apple dragged on the group with a steep loss of 10.0%, which sent the stock to a level not seen since mid-2017. The industrials (-3.0%) and materials (-2.8%) sectors also underperformed the broader market.
Apple rattled the market when it lowered its revenue guidance for the first time since 2002. CEO Tim Cook attributed the lower outlook to weaker demand in China, where the economy has been decelerating notably.
Selling accelerated after the ISM Manufacturing Index for December (Briefing.com consensus 57.8) came in below consensus at 54.1, falling from 59.3 in November.
While growth concerns are not new, Thursday's setbacks exacerbated fears that economic growth might be slowing more quickly than anticipated, which would present a headwind to corporate earnings.
Delta Air Lines (DAL 45.61, -4.48), for its part, fell 8.9% after its pre-announced fourth quarter results included softer than expected unit revenue.
Fears over growth and corporate earnings had investors flocking to risk-free U.S. Treasuries. Consequently, the 2-yr yield and 10-yr yield fell 11 basis points each, to 2.38% and 2.55%, respectively. The rally in Treasuries took place amid building expectations for a rate cut by the end of the year. The fed funds futures market now sees a 46.1% implied likelihood of a rate cut in December, up sharply from yesterday's implied probability of just 9.6%. The U.S. Dollar Index lost 0.6% to 96.23.
The drop in interest rates did benefit some companies within the S&P 500. Namely those within the utilities (+0.1%) and real estate (+0.5%) spaces.
Reviewing Thursday's economic data, which included the ISM Manufacturing Index for December; the ADP Employment Change report for December; the weekly MBA Mortgage Applications Index; and the weekly Initial and Continuing Claims report:
The ISM Manufacturing Index for December decreased to 54.1% (Briefing.com consensus 57.8%) from 59.3% in November.
The key takeaway from the report is that the December decrease was fueled by a sharp pullback in the New Orders component, which is the same element that lifted the November ISM Manufacturing Index into the neighborhood of its high from 2018.
According to the ISM, the past relationship between the PMI and overall economy indicates the December reading corresponds to a 3.4% increase in real GDP on an annualized basis.
The ADP National Employment Report showed an increase of 271,000 in December (Briefing.com consensus 170,000), and the November reading was revised to 157,000 (from 179,000).
The weekly MBA Mortgage Applications Index decreased 8.5%, which is lower than the decrease of 5.8% from two weeks ago.
Initial claims for the week ending December 29 increased by 10,000 to 231,000 (Briefing.com consensus 220,000) from last week's revised reading of 221,000 (from 216,000). Continuing claims for the week ending December 22 increased by 32,000 to 1.740 million from last week's revised reading of 1.708 million (from 1.701 million).
The key takeaway from the report is that claims continue hovering within a sideways range that has been maintained since mid-2018.
Looking ahead, investors will receive the Employment Situation Report for December on Friday.
Russell 2000 -1.3% YTD
S&P 500 -2.4% YTD
Nasdaq Composite -2.6% YTD
Dow Jones Industrial Average -2.8% YTD
Wall Street Ekes Out Gains Despite Early Growth Concerns
02-Jan-19 16:15 ET
Dow +18.78 at 23346.24, Nasdaq +30.66 at 6665.95, S&P +3.18 at 2509.99
https://www.briefing.com/investor/markets/stock-market-update/2019/1/2/wall-street-ekes-out-gains-despite-early-growth-concerns.htm
[BRIEFING.COM] Wall Street finished slightly higher on Wednesday despite global economic growth concerns and volatility extending their reach into 2019. The S&P 500 managed to squeeze out a gain of 0.1% after being down as much as 1.6% in the opening minutes.
The Dow Jones Industrial Average (+0.1%), the Nasdaq Composite (+0.5%), and the Russell 2000 (+0.5%) traded in similar fashion to finish with modest gains.
Stocks opened sharply lower after weak economic data from China reminded investors that a slowing Chinese economy could adversely impact global growth and corporate earnings growth. The latest data showed a contraction in China's manufacturing sector for the first time since May 2017. The data was in-line with the official Manufacturing PMI reading, which was released earlier this week.
Bad news led to another broad-based effort to reduce risk, but it didn't seem bad enough to justify the steep losses. The S&P 500 would quickly recover and teeter between gains and losses for most of the day.
Within the S&P 500, the energy (+2.1%), communication services (+1.3%), consumer discretionary (+0.9%), and financial (+0.7%) sectors helped lead advance, though the defensive-oriented real estate (-2.3%), utilities (-1.8%), health care (-1.4%), and consumer staples (-0.4%) sectors dragged on the broader market.
Energy stocks abruptly reversed course after oil prices swung into positive territory. WTI crude increased 2.0% to $46.38/bbl after reports that Saudi Arabia decreased its crude exports in December by roughly 500,000 barrels per day.
Retail was another group that outperformed and helped lift the consumer discretionary sector. The SPDR S&P Retail ETF (XRT 41.57, +0.58) rose 1.4%.
Longer-dated U.S. Treasuries extended gains, pressuring yields. The 2-yr yield declined one basis points to 2.49%, and the 10-yr yield declined three basis points to 2.66%. The U.S. Dollar Index rose 0.7% to 96.82.
Investors did not receive any notable economic data on Wednesday.
Looking ahead, investors will receive several economic reports on Thursday: the ISM Manufacturing Index for December; the ADP Employment Change report for December; the weekly MBA Mortgage Applications Index; the weekly Initial and Continuing Claims report; and auto and truck sales in December.
Nasdaq Composite +0.5% YTD
Russell 2000 +0.5% YTD
Dow Jones Industrial Average +0.1% YTD
S&P 500 +0.1% YTD
Stocks End Tumultuous 2018 on Positive Note
31-Dec-18 16:20 ET
Dow +265.06 at 23327.46, Nasdaq +50.76 at 6635.29, S&P +21.11 at 2506.81
https://www.briefing.com/investor/markets/stock-market-update/2018/12/31/stocks-end-tumultuous-2018-on-positive-note.htm
[BRIEFING.COM] The trading session is over and so is the tumultuous 2018 that gripped the stock market. The S&P 500 (+0.9%), Dow Jones Industrial Average (+1.2%), and Nasdaq Composite (+0.8%) pared yearly losses to 6.2%, 5.6%, 3.9%. The Russell 2000 (+0.8%), for its part, reduced its yearly loss to a disappointing 12.2%.
Thin trading conditions for most of the day contributed to another volatile session on Monday, though all 11 S&P 500 sectors did finish in the green. The health care (+1.4%) and consumer discretionary (+1.1%) sectors remained constant leaders, while the real estate (unch) and utilities (+0.2%) sectors underperformed.
Stocks jumped out to a gain of 1.0%, helped by another hopeful trade tweet from President Trump, but the early advance provided another excuse to sell into strength. The benchmark index would slip into negative territory (-0.1%) at around 11:30 a.m. ET.
The S&P 500 quickly recovered and traded in positive territory for the rest of the day, but not with the same confidence that contributed to its strong start.
Buying conviction was reserved with no news catalysts or economic data to sway investors -- until a last minute swarm of buyers pushed the indices to near session highs.
The CBOE Volatility Index (VIX) decreased 2.9 points to 25.42, ending the year well above its low from early August (10.17).
U.S. Treasuries ended the abbreviated bond market session with gains across the curve, despite the positive disposition in the stock market. The 2-yr yield decreased two basis points to 2.50%, and the 10-yr yield decreased five basis points to 2.69%, reaching its lowest level since February.
As a reminder, the stock market will be closed Tuesday, Jan. 1.
Nasdaq Composite -3.9% YTD
Dow Jones Industrial Average -5.6% YTD
S&P 500 -6.2% YTD
Russell 2000 -12.2% YTD
Stocks Trade Mixed to Close Volatile Week
28-Dec-18 16:20 ET
Dow -76.42 at 23062.40, Nasdaq +5.03 at 6584.53, S&P -3.09 at 2485.70
https://www.briefing.com/investor/markets/stock-market-update/2018/12/28/stocks-trade-mixed-to-close-volatile-week.htm
[BRIEFING.COM] The S&P 500 lost 0.1% on Friday in what was another whipsaw day of trading that saw the S&P 500 up as much 1.3% at its high and down as much as 0.6% at its low. The benchmark index finished a remarkably volatile, and history-setting, week with a gain of 2.9%.
The Dow Jones Industrial Average (-0.3%), the Nasdaq Composite (+0.1%), and the Russell 2000 (+0.5%) also experienced roller-coaster action on Friday and finished with weekly gains of 2.8%, 4.0%, and 3.6%, respectively.
Price action was relatively tame (for this week anyway) after the S&P 500 fumbled an early rally effort shortly after the start of trading. However, at around 1:30 p.m. ET, the benchmark index climbed from a loss of 0.2% to as high as 1.3% without any news to account for the move.
All sectors were up and all major indices were higher.
Nevertheless, stocks would retreat just as quickly as they had climbed with no news catalysts to account for the subsequent downturn either. It was perhaps fitting that the S&P 500 ended the session close to where it started as that was an accurate reflection of the lack of conviction that characterized today's trading action.
Efforts to flatten out positions in front of the weekend, which could be a four-day weekend for many (the market is open December 31 and closed January 1) were likely responsible for some of the late-day selling.
The S&P 500 sectors finished mixed with energy (-0.9%) and materials (-0.6%) underperforming the broader market. Conversely, the consumer discretionary (+0.3%) and real estate (+0.2%) sectors outperformed.
U.S. Treasuries remained resilient to selling pressure with the 2-yr yield and 10-yr yield decreasing one basis point each to 2.52% and 2.74%, respectively. The U.S. Dollar Index lost 0.1% to 96.34.
Reviewing Friday's economic data, which included Pending Home Sales for November and the Chicago PMI for December:
Pending Home Sales decreased 0.7% in November (Briefing.com consensus +0.5%). Today's reading follows an unrevised 2.6% decrease in October.
The MNI Chicago Business Barometer, colloquially known as the Chicago PMI, decreased to 65.4 in December from 66.4 in November. The December pullback took place after the Index soared by nearly eight points in November.
The key takeaway from the report is that the overall reading remained elevated thanks to strong order backlogs and an increase in the Production Index.
Investors will not receive any notable economic data on Monday, which will be a full day of trading on Wall Street.
Nasdaq Composite -4.6% YTD
Dow Jones Industrial Average -6.7% YTD
S&P 500 -7.0% YTD
Russell 2000 -12.9% YTD
InvestmentHouse - The Pause That Refreshes or Start of Next Downside (Weekend Newsletter)
https://news.investmenthouse.com/2018/12/the-daily-part-1-of-3-12-29-18.html
- Market tries higher again with an afternoon spurt that then fails.
- Indices at the 10 day EMA with doji after two days of rallying. Pause that refreshes or start of next downside is the question.
The week saw two big upside sessions, Wednesday and Thursday, as the internals and sentiment finally hit levels where all were in place for a bounce. The final key was VIX, and it finally broke through the recent highs and challenged the early 2018 closing high. Both Wednesday and Thursday were marked by very strong across the board buying, making it look very much as if pensions were buying across the market to reach the proper mix of equities to bonds as mandated by their charters. Thursday started much weaker but the buying started early afternoon and surged the indices positive with the Dow moving almost 900 points low to close. Lots of buying.
Friday stocks started higher but squandered the move by midmorning. Stocks sloshed around into early afternoon, but at 1:45ET the afternoon rally started like clockwork -- as measured by Thursday -- as pensions looked to buy more stock to rebalance their portfolios.
It was just like Thursday -- until it wasn't. At the start of the last hour stocks tested, tried to hold and bounce, but failed. They tumbled back to the session lows by the close, the rally coming and going in two hours.
SP500 -3.09, -0.12%
NASDAQ 5.03, 0.08%
DJ30 -76.42, -0.33%
SP400 -0.05%
RUTX 0.46%
SOX 0.69%
NASDAQ 100 -0.05%
VOLUME: NYSE -17%, NASDAQ -10%
ADVANCE/DECLINE: NYSE +1.8:1, NASDAQ +2.2:1.
That left all indices but SOX testing the 10 day EMA with a doji on the third day of a rebound off the new lows minted Tuesday.
That raises the fundamental question: pause that then continues the move or a bounce that has shot up its fuel. Monday is 12/31 and a full day of trade. Likely some more buying that session, then some new money put to work to start the year. After all, the indices are still sold down 20% or so, still a 'great' buying opportunity, right? Perhaps short term; I am not that sanguine about the prospects of a rally to new highs from here as chronicled several times last week.
Thus, we still anticipate some more upside on this move, 2 to 3 days perhaps, but have to be ready in the event the Friday doji marked the highwater point for the relief move. Yes, still viewing this as a relief move despite commentary that all the selling was due to the trade war, miscues (Fed or otherwise), etc. Whether it was due to that or not, it is what it is, it happened, the damage is done, and the market is rarely wrong. Rarely. Perhaps never.
Accordingly, despite our belief the rally has some more time to run we have to prepare in the event it does not. We have some upside positions with gain in them, e.g. AMZN, WDAY, AVGO -- some more than others -- but 2 to 3 more days of upside helps a lot. If the move cannot push higher and sellers start to dominate, however, we need to close them out and flip to some downside. Therefore, we have some more downside plays ready in the event the move stalls.
Yes, while there is much commentary on the financial stations, etc. as to how this is not a bear market, how it was just the market mispricing or misinterpreting the Fed actions and data, the charts say otherwise and you don't want to get too enamored with the upside bounce as being some kind of market savior. We are not looking for this move to yield new highs or anything close to new highs, and thus we are not going to imbue it with attributes it does not have. If it cannot move higher, so be it.
THE MARKET
MARKET STATS
DJ30
Stats: -76.42 points (-0.33%) to close at 23062.40
Nasdaq
Stats: +5.03 points (+0.08%) to close at 6584.52
Volume: 2.21B (-9.43%)
Up Volume: 1.33B (-160M)
Down Volume: 852.05M (-50.79M)
A/D and Hi/Lo: Advancers led 2.23 to 1
Previous Session: Advancers led 1.03 to 1
New Highs: 7 (+6)
New Lows: 116 (-185)
S&P
Stats: -3.09 points (-0.12%) to close at 2485.74
NYSE Volume: 893.368M (-16.89%)
Up Volume: 447.587M (-218.977M)
Down Volume: 427.382M (+50.539M)
A/D and Hi/Lo: Advancers led 1.81 to 1
Previous Session: Advancers led 1.18 to 1
New Highs: 5 (-1)
New Lows: 99 (-120)
SENTIMENT
VIX: 28.34; -1.62
VXN: 34.20; -0.17
VXO: 31.64; -2.35
Put/Call Ratio (CBOE): 0.78; -0.18
Bulls and Bears:
Falling and rebounding to where they were four weeks back. Starting to converge. This coming week's numbers should show a bull dive and bear jump, converging the two to levels not seen since 2016.
Bulls: 39.3 versus 45.5
Bears: 21.4 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: 39.3 versus 45.4
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: 21.4 versus 20.4
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: 2.716% versus 2.774%. Bonds continue to rise, with TLT working in a flag pattern after breaking higher and reaching the July/August highs. TLT is setting up to break higher and that is not a good indication for the economy, the market.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.774% versus 2.811% versus 2.736% versus 2.788% versus 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus 3.074% versus 3.056% versus 3.065% versus 3.116% versus 3.127% versus 3.147% versus 3.186% versus 3.239% versus 3.228% versus 3.222% versus 3.201% versus 3.22% versus 3.146%
EUR/USD: 1.14425 versus 1.1432. Euro is trying to hold a move over the 50 day MA.
Historical: 1.1432 versus 1.13588 versus 1.14015 versus 1.13708 versus 1.13828 versus 1.13755 versus 1.13533 versus 1.13049 versus 1.13604 versus 1.1376 versus 1.13244 versus 1.13657 versus 1.1404 versus 1.1376 versus 1.13970 versus 1.13360 versus 1.13199 versus 1.13934 versus 1.13682 versus 1.12973 versus 1.13325 versus 1.13380 versus 1.13829 versus 1.13818 versus 1.14484 versus 1.14172 versus 1.13308 versus 1.13264 versus 1.13124 versus 1.12348 versus 1.13475 versus 1.1364 versus 1.14329 versus 1.14228 versus 1.14090 versus 1.13881 versus 1.14019 versus 1.13394 versus 1.13455 versus 1.13760 versus 1.14042 versus 1.13757 versus 1.3972 versus 1.14682 versus 1.14626 versus 1.1538
USD/JPY: 110.273 versus 110.845. Dollar does not look good as it bounces up and down below the 200 day SMA.
Historical: Last below 109 in June 2018: 110.845 versus 111.190 versus 110.337 versus 111.223 versus 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382 versus 113.634 versus 113.634 versus 113.385 versus 113.022 versus 112.66 versus 112.71 versus 112.813 versus 113.581 versus 113.474 versus 113.402 versus 113.559 versus 113.781 versus 113.510 versus 112.972 versus 113.007 versus 113.077 versus 112.617 versus 112.831 versus 113.585 versus 113.576.
Oil: 45.33, +0.72. Oil bounced on the week but closed below the 10 day EMA as it continues trending lower below the 10 day EMA.
Gold: 1283.00, +1.90. Gold continued higher after its breakout over the 200 day SMA last week.
Stocks Surge in Broad-Based Rally
26-Dec-18 16:20 ET
Dow +1086.25 at 22878.45, Nasdaq +361.44 at 6554.36, S&P +116.60 at 2467.66
https://www.briefing.com/investor/markets/stock-market-update/2018/12/26/stocks-surge-in-broadbased-rally.htm
[BRIEFING.COM] The S&P 500 rallied 5.0% on Wednesday from what many believed to be extremely oversold conditions on a short-term basis. Rebounding oil prices ($46.13/bbl, +$3.45, +8.1%), strong holiday sales, and some short covering helped drive the S&P 500 to its best one-day gain since March 2009.
The Dow Jones Industrial Average gained 5.0%, the Nasdaq Composite gained 5.8%, and the Russell 2000 gained 5.0%.
The S&P 500 overcame an early dip into negative territory with investors adopting a risk-on sentiment. In addition, rather than selling into the close, the benchmark index departed from the recent trend and accelerated its advance in the last hour of trading.
Risk-on sentiment was on full display with all 11 S&P 500 sectors finishing with gains. The cyclical consumer discretionary (+6.3%), energy (+6.2%), and information technology (+6.1%) groups outperformed the broader market.
Amazon (AMZN 1470.90, +126.94, +9.5%) and retail stocks, in particular, led the consumer discretionary space higher. The SPDR S&P Retail ETF (XRT 40.65, +2.20) rose 5.7%.
Amazon announced a record-breaking holiday season, and MasterCard's SpendingPulse report noted that holiday sales from November 1 through December 24 showed the strongest year-over-year growth rate since 2011, resulting in a new record for dollars spent.
Demand for U.S. Treasuries faded as investors flocked to riskier assets. Consequently, the 2-yr yield gained three basis points to 2.60%, and the 10-yr yield gained five basis points to 2.80%. The U.S. Dollar Index rose 0.5% to 97.07
Wednesday's sharp rally in equities caused the CBOE Volatility Index (VIX 30.41, -5.66) to surrender nearly six points. The decline pressured the volatility gauge to its closing level from Friday.
Reviewing Wednesday's economic data, which included the S&P Case-Shiller Home Price Index for October:
The S&P Case-Shiller Home Price Index for October (Briefing.com consensus 5.0%) increased 5.0%, down from a revised increase of 5.2% in September (from 5.1%).
Looking ahead, investors will receive several economic reports on Thursday: New Home Sales for November, the weekly MBA Mortgage Applications Index, the weekly Initial and Continuing Claims Report, the FHFA Housing Price Index for October, and the Conference Board's Consumer Confidence Index for December.
Nasdaq Composite -5.1% YTD
Dow Jones Industrial Average -7.5% YTD
S&P 500 -7.7% YTD
Russell 2000 -13.4% YTD
Broad-Based Retreat Leaves Little Joy on Wall Street
24-Dec-18 13:25 ET
Dow -653.17 at 21792.20, Nasdaq -140.08 at 6192.92, S&P -65.52 at 2351.06
https://www.briefing.com/investor/markets/stock-market-update/2018/12/24/broadbased-retreat-leaves-little-joy-on-wall-street.htm
[BRIEFING.COM] The S&P 500 fell 2.7% on Monday, as follow-through selling and unsettling developments in Washington served to further dampen investor sentiment. Trading action was cut short with the stock market closing early ahead of Christmas Day.
The Dow Jones Industrial Average lost 2.9%, the Nasdaq Composite lost 2.2%, and the Russell 2000 lost 2.0%.
The major indices entered the session with the Dow and Nasdaq having their worst weeks since the financial crisis and the S&P 500 having its worst week since August 2011.
The inability of the major indices to launch a sustainable rebound effort from oversold conditions contributed to the notion that the market has yet to hit a bottom. Accordingly, buyers went on strike again and stocks succumbed to another broad-based effort to cut exposure to the equity market.
A nettlesome headline that dampened investor sentiment involved the news that Treasury Secretary Steven Mnuchin made an unexpected call to the CEOs of the nation's six largest banks on Sunday. That call was intended to shore up confidence in the U.S. financial system at a time of heightened market volatility, yet it proved unsettling to the market giving its timing, which followed on the heels of a huge loss for stocks last week, the start of a partial government shutdown, and rumors, which were refuted by Mr. Mnuchin, that President Trump had discussed firing Fed Chair Powell
President Trump for his part tweeted during today's session that, "...the only problem our economy has is the Fed."
The heightened sense of uncertainty in the market fueled another clear-cut effort to reduce equity exposure. The clearest sign of that effort to reduce exposure to the stock market in general was today's worst-performing sector: the utilities sector (-4.3%), which is often looked at as a "safe-haven" sector during market downturns. That sector, however, led today's downturn, reflecting the pervasive sense of negativity hanging over the stock market.
All 11 S&P 500 sectors declined at least 2.0% and the major indices all closed at their lows for the day.
The CBOE Volatility Index (VIX), which is often referred to as Wall Street's "fear gauge," rose 18.8% to 35.76 -- its highest level since Feb. 9.
U.S. Treasuries remained higher ahead of the bond market's close at 2:00 p.m ET, pushing the benchmark 10-yr yield down five basis points to 2.74% in a flight-to-safety trade. The U.S. Dollar Index lost 0.5% to 96.50.
Investors did not receive any notable economic data on Monday. As a reminder, the stock and bond markets will both be closed Tuesday for Christmas.
Nasdaq Composite -10.3% YTD
Dow Jones Industrial Average -11.8% YTD
S&P 500 -12.1% YTD
Russell 2000 -17.5% YTD
InvestmentHouse - Embracing the Bear Market (Weekend Newsletter)
https://news.investmenthouse.com/2018/12/the-daily-part-1-of-2-12-22-18.html
- Early bounce is sold as Fed jawboning cannot overcome Navarro's China trade comments.
- Government shutdown adds some downside spice, but not a major market obstacle.
- VIX finally starting to breakout on the selling, the last piece of the oversold puzzle.
- Market could flush out now that VIX is breaking higher, but a holiday week may not provide the needed action.
- Embracing the bear market.
Stocks started higher, DJ30 rallied almost 400 points. The 'Dow-type' stocks were rallying, e.g. PG, AEP, MCD. Kind of back to the stocks that rallied and trended higher as NASDAQ struggled.
New York Fed president Williams appeared on CNBC and stated the Fed was not committed to the rate hikes for 2019, clarifying what Powell muddied up in his post-rate hike press conference. The market liked what he said and jumped, pushing the market higher.
After that interview stocks tested. Then more stories hit regarding a government shutdown today as Trump was not giving on the wall, wanting McConnell to dump the Senate rule requiring a filibuster proof number to even bring a bill to the floor for a vote. So, McConnell started calling senators back in. Collins of Maine complained that this was 'ruining her life.' Then QUIT! That is your job. It can happen. If you don't want to do it, then just resign. I am so tired of our elected officials, there to supposedly serve the electorate, complaining when the job calls. This kind of stuff happens. It is in your job description. You accept having your 'life ruined' by having to spend part of a holiday in DC. You asked for that. The rest of us voted you in to do that. Do not ruin our lives because you cannot sip some eggnog with cousin Eddie while he wears his black dickey under a think cream colored sweater.
Okay, Fed worries were somewhat calmed down but a government shutdown caused some worries. Then the real trouble started. Anew.
Mr. Navarro opined it would be difficult to construct a deal with China in 90 days because China would have to affect a 'full trade overhaul' in where it does not depend on stealing IP from the US, Japan, Europe.
The market tanked then tanked some more. It closed on the lows with DJ30 swinging 808 points high to close. NASDAQ 254 points high to close. Sure it was expiration and volatility runs hand in hand with it, but there was obviously more here, and that triumvirate of economy/Fed, trade, and government shutdown added more weight to the current selloff.
SP500 -50.84, -2.06%
NASDAQ -195.42, -2.99%
DJ30 -414.23, -1.81%
SP400 -2.01%
RUTX -2.56%
SOX -1.47%
NASDAQ 100 -3.15%
VOLUME: NYSE +134%, NASDAQ +39%. Massive surges on the triple witch. The fast moves downside also contribute to huge expiration volume as positions are rolled, shuffled, etc.
ADVANCE/DECLINE: NYSE -3.5:1, NASDAQ -3.8:1. Not blowout on the day, but it is the days of very negative breadth that tell the tale of a weak market.
NEW LOWS: Down, but even so, still very impressive. NYSE 1058, NASDAQ 1101. Again, NASDAQ new lows topped NYSE, something that rarely happens. These are screaming oversold.
It was a lot more of the same. Volume surged thanks to expiration. Internals are still extreme. Stocks are another day, another 2+% lower in price. Impressive selling. The economy was turned from a slowdown in an uptrend to a likely recession given the market leading indicator. The Fed is flabbergasted by it; 'but everything is so strong' they say. Yes, it is strong until it is not. If you only look at the economic numbers you are late to the game. There are leading indicators. Those are SCREAMING not that there is trouble ahead (the WERE screaming that), but that we ARE IN trouble. Because the Fed looks at the wrong indicators by virtue of its incorrect economic theories, they missed it. Again. Just as they did before that, and before that, and before that -- do I need to go on? Of course not.
Stocks that jumped early gave the move back. Stocks that have performed poorly were up modestly but then imploded. AMZN blew out the bottom of its range as did GOOG. They are just examples; many tech stocks were torched. Interestingly, the same stronger tech stocks held up decently, e.g. TEAM, AVGO. That is consolation: a couple of strong stocks did not get wasted. Okay, about 50 out of 8,000 held up. High praise indeed.
What are the market people saying? Well, you have heard my side for quite some time, about how we were in a slowdown many, many months back and that the Fed had better tread carefully. Of course it did not. Art Cashin today opined that the Fed won't hike again on this hiking campaign and that in 2019 there is an "outside chance" the Fed actually cuts rates. Not crazy, not stupid, just historically based. The markets are saying the Fed has caused a recession. The 2018 index patterns show that; they did not have to complete the top, but they started building it with the Fed hiking, and when the Fed did what the Fed always does, they completed the topping patterns. The markets are leading indicators of economic activity. The small and midcaps have led the way lower, big time, and they are economic indicators. The Fed has hiked into an inverted yield curve. Historically that all adds up to recession, necessitating the Fed cut rates. Thus, Cashin has a very good basis for his comments.
I said it before and it is clear: the Fed should have been hiking 5 or more years ago. Instead, Bernanke was gutless and Yellen was just dumb -- her questions to Greenspan when he was the Fed chair indicate she is a cookbook, stencil using, paint by numbers economic fraud, also with no guts. Then Powell comes in, a person with some guts, and he does what he felt needed to be done years ago. Problem is, he did it just as all other Fed chairs do: he hiked late in the cycle and right into recession. It is like those movies that try to change the past but no matter what they do, the events lead back to what was supposed to happen. As if the Fed is supposed to cause recessions. If aliens landed and studied US economic history they would conclude the Fed was established IN ORDER TO CAUSE PERIODIC RECESSIONS when the US citizens actually started making progress in creating their own wealth.
THE MARKET
The stock indices continued blowing lower to new selloff lows. All are now below the 2018 lows, giving up all of the gains that were logged through early fall. SP400 and RUTX gave up all of 2017 as well. A massive selloff as the tops consummate and break sharply lower. Bear market is here and the question is when will the periodic bounces set up and deliver those upside rips that set up the next downside slide.
Friday the market started decently with a move to provide one of those rips, but great moves by PEP, PG, AEP, MCD, AVGO were undermined by the negative news. The downside is still too ugly to provide that rip despite some extreme internals.
Sentiment is weak and VIX hit 30.1 on the close, moving past all second half 2018 highs. It is starting to make a break higher. Once the moves get going, they build momentum rapidly and then hit a peak rapidly as in early 2018. Thus, it is a good thing to see VIX break above 30 on the close, but it is not there yet as measured by its history. Just as bears have been EXTREMELY slow in rising, VIX has held itself in check. If both spike, then the market is set to put in those bear market rips.
They are both on the verge of making the moves as noted above. They have not made the moves, however, and this market does not appear to have enough upside impetus without a major clearing of near term sellers. Despite the selling to this point, there are still enough in the market to sell into rallies. Typically when conditions are this oversold a bounce ensues and a more standard procession downside takes place, i.e. selloffs then sharp bounces, followed by another leg lower, etc. Basically the opposite of the uptrend that was in place for so long. At this juncture, however, the market is still on that initial selloff phase from the break lower in the tops and, as noted, not enough have sold out yet to allow a relief move.
CHARTS
There is not much to add to the discussion on them: all are breaking to lower lows for the selloff, the year. Three weeks in a very sharp dive has VIX starting to generate some upside breakout action, something VIX has simply refused to show. As all other sentiment indicators and internals are at extremes, that is likely the last piece to the puzzle of a significant relief bounce to test the breakdown from the yearlong tops. A selloff after Christmas likely is the last part of this particular dive lower that yields to some sort of relief move.
Note NDX (NASDAQ 100). It is at some support form 2017 consolidation highs and lows. It is in a ripe position to rebound.
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
http://investmenthouse1.com/ihmedia/f/charts/nasdaq100.jpg
http://investmenthouse1.com/ihmedia/f/charts/VIX.jpg
LEADERSHIP:
While the internals and sentiment are in line and VIX looks as if it will reach a level to trigger a relief bounce with some additional selling, the critical element of any sustainable rally is missing: leaders.
Friday showed some life in the more defensive areas such as personal products (PG) and utilities (AEP), but early surges in these stocks soured as Navarro's trade comments hit. It appeared the market was setting up its 'Powell-Fed Plan' by going into the defensive sectors, then one of the other shoes bothering the market hit and that scuttled those moves.
Some FAANG looked to be in position to possibly attempt a bounce (AMZN, GOOG, NFLX), but that was blown up Friday as they all knifed lower.
Individual software, tech, and semiconductors are hanging in (e.g. TEAM, AVGO), but they are likely on borrowed time given the market's propensity for tearing down nearly all groups at this juncture.
Precious metals are not bad but they are not just screaming as buys across the board. A couple to consider based upon their patterns are AUY and SA.
That said, we are making money on our downside plays, e.g. CRM, FFIV, NVDA, ULTA, SLAB, Z and we are banking some of that gain -- sharp downside can turn to sharp upside quite rapidly. Once the market bounces in relief, likely this coming week, we will enter more when the bounce hits resistance. The next leg down will likely be ugly yet again, but very nice for the downside plays as seen to end the past week.
MARKET STATS
DJ30
Stats: -414.23 points (-1.81%) to close at 22445.37
Nasdaq
Stats: -195.41 points (-2.99%) to close at 6332.99
Volume: 4.56B (+39.02%)
Up Volume: 654.61M (+47.42M)
Down Volume: 3.82B (+1.19B)
A/D and Hi/Lo: Decliners led 3.78 to 1
Previous Session: Decliners led 3.41 to 1
New Highs: 8 (+1)
New Lows: 1101 (-52)
S&P
Stats: -50.80 points (-2.06%) to close at 2416.62
NYSE Volume: 3.244B (+133.53%)
Up Volume: 422.386M (+176.071M)
Down Volume: 2.796B (+1.668B)
A/D and Hi/Lo: Decliners led 3.47 to 1
Previous Session: Decliners led 4.22 to 1
New Highs: 2 (-2)
New Lows: 1058 (-212)
SENTIMENT
VIX: 30.11; +1.73. As noted, VIX closed at a new closing high since February, and though it is nowhere near as rambunctious as early year, ironically its closing high is not that far off the February high (37.32). Typically, the intraday spikes are the really high readings as they are often immediately followed by some sort of recovery such as an intraday reversal.
CHART: http://investmenthouse1.com/ihmedia/f/charts/VIX.jpg
VXN: 33.87; +2.87
VXO: 32.11; +2.06
Put/Call Ratio (CBOE): 1.43; -0.39. Logged many consecutive closes above 1.0 and is one of the indicators in position for a market bounce.
Bulls and Bears:
Falling and rebounding to where they were four weeks back. Starting to converge. This coming week's numbers should show a bull dive and bear jump, converging the two to levels not seen since 2016.
Bulls: 39.3 versus 45.5
Bears: 21.4 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: 39.3 versus 45.4
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: 21.4 versus 20.4
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: 2.788% versus 2.803%. Ten year yields fell as bonds were purchased as a bit of a safe haven trade. Bonds have surged off the lower low set in early September, with TLT now just below the July and August highs. This despite the Fed tightening. Clearly the market believes the Fed does not have a handle on the selling.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.803%. versus 2.762% versus 2.821% versus 2.855% versus 2.895% versus 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus 3.074% versus 3.056% versus 3.065% versus 3.116% versus 3.127% versus 3.147% versus 3.186% versus 3.239% versus 3.228% versus 3.222% versus 3.201% versus 3.22% versus 3.146%
EUR/USD: 1.13708 versus 1.1452. After bouncing on the week, Friday the euro flopped back to the 50 day SMA. Broke out over its 2 month lateral range, but that breakout might get reversed.
Historical: 1.13828 versus 1.13755 versus 1.13533 versus 1.13049 versus 1.13604 versus 1.1376 versus 1.13244 versus 1.13657 versus 1.1404 versus 1.1376 versus 1.13970 versus 1.13360 versus 1.13199 versus 1.13934 versus 1.13682 versus 1.12973 versus 1.13325 versus 1.13380 versus 1.13829 versus 1.13818 versus 1.14484 versus 1.14172 versus 1.13308 versus 1.13264 versus 1.13124 versus 1.12348 versus 1.13475 versus 1.1364 versus 1.14329 versus 1.14228 versus 1.14090 versus 1.13881 versus 1.14019 versus 1.13394 versus 1.13455 versus 1.13760 versus 1.14042 versus 1.13757 versus 1.3972 versus 1.14682 versus 1.14626 versus 1.1538
USD/JPY: 111.223 versus 111.21. Checked up the selling Friday by not selling harder. Did not recover the 200 day SMA broken Thursday in that plunge.
Historical: Last below 109 in June 2018: 111.21 versus 112.521 versus 112.477 versus 112.653 versus 113.382 versus 113.634 versus 113.634 versus 113.385 versus 113.022 versus 112.66 versus 112.71 versus 112.813 versus 113.581 versus 113.474 versus 113.402 versus 113.559 versus 113.781 versus 113.510 versus 112.972 versus 113.007 versus 113.077 versus 112.617 versus 112.831 versus 113.585 versus 113.576.
Oil: 45.59, -0.29. A less and less influential OPEC, even OPEC-Plus (with Russia included) cannot withstand world economic slowdown. Oil broke the key $50/bbl level Tuesday.
Gold: 1258.10, -9.80. Down, but holding at the 200 day SMA after that sharp Thursday break above that resistance. Likely just a quick test.
MONDAY AND CHRISTMAS WEEK.
Monday is a half session closing at 1:00ET. Tuesday the market is closed. The rest of the week is usual hours, but after the Friday volume surge on expiration, many will be gone for the week. That doesn't mean anything other than there will be less people around to sell stocks.
Okay, a bit tongue in cheek, but the obvious bias is downside. The thing I don't like is that the lack of people at work on Wall Street could mean the market doesn't show that additional selling that spikes VIX and sets up the relief move. If few are there to sell then buy, will that defer the climactic selling, at least climactic in terms of delivering a bounce? As noted, that is a concern.
Well, we will play it out as if they will be there because these kind of selling events usually follow a script, more or less. More selling early week and we take much of our downside off the table, particularly if it is the kind of selling seen to end the week.
Then we play for a bounce. Likely AEP, PG -- both sporting good patterns even after coming back from big gains early Friday -- are add-to's as they bounce off support. Perhaps some of the gold noted earlier (SA, AUY), but I am not planning on putting much of my money there. I would prefer the other names mentioned, and when they are done with a bounce, then we will see what stocks are set up best for the next leg lower.
That is the bear market mentality. Bear market; you now start thinking in terms of downside as predominant, upside as something to play on really, really good setups and for not very long. As noted, we have several downside plays working well (duh). Have banked some gain on them and will bank more on any significant selling this coming week, anticipating that if the selling gets bad enough it will spike VIX, the last holdout signal, and spark a bear market rebound. Then we play as noted above.
Have a great weekend and Christmas! We will be here, or at least I will, Monday, but the report will simply be market stats, updated play tables, and a note on anything significant occurring -- if anything significant occurs.
Stocks Tumble in Risk-Reducing Efforts
21-Dec-18 16:20 ET
Dow -414.23 at 22445.37, Nasdaq -195.41 at 6333.00, S&P -50.84 at 2416.58
http://www.wsj.com/mdc/public/page/2_3021-tradingdiary2.html?mod=topnav_2_3021
[BRIEFING.COM] The S&P 500 fell 2.1% on Friday, as uncertainty surrounding a host of issues, which included politics and trade, continued to provide a justification to reduce risk. Friday's decline pushed the benchmark index to a new yearly low of 2408.12 and a weekly loss of 7.1%.
The Dow Jones Industrial Average (-1.8%), the Nasdaq Composite (-3.0%), and the Russell 2000 (-2.6%) also posted considerable declines to cap weekly losses at 6.9%, 8.4%, and 8.4%, respectively.
The S&P 500 had climbed to session highs in morning action (+1.5%) amid some market-soothing commentary from New York Fed President John Williams. Specifically, Mr. Williams indicated that the Fed is listening to the market and that the path of balance sheet runoff in 2019 is not "inflexible."
That recovery effort, however, was yet again met with selling resistance that drove the market further into negative territory. Disappointment in the inability to sustain a rebound effort from short-term oversold conditions effectively led to a buyers strike that weighed heavily on the indices.
Some discouraging headlines that compounded risk-reduction efforts included (1) the threat of a partial government shutdown due to disagreement over funding for a border wall, and (2) a late-day report that Director of the White House National Trade Council Peter Navarro told Nikkei that an agreement with China in 90 days will be difficult to attain.
All 11 S&P 500 sectors finished in negative territory with the communication services (-3.1%), information technology (-3.0%), and consumer discretionary (-2.6%) groups leading the retreat.
Dow component Nike (NKE 72.37, +4.84, +7.2%), for its part, was the best-performing stock in the S&P 500 after it released a strong earnings report and issued an encouraging FY19 currency neutral revenue growth outlook.
U.S. Treasuries remained resistant to selling pressure amid the equity sell-off. The 2-yr yield dropped four basis points to 2.63%, and the 10-yr yield was unchanged at 2.79%.
Reviewing Friday's batch of economic data, which included Personal Income and Spending for November; PCE Prices for November; Durable Orders for November; and GDP - Third Estimate for Q3; and the final reading of the University of Michigan Consumer Sentiment for December:
Personal income increased 0.2% month-over-month in November (Briefing.com consensus 0.3%). Personal spending rose 0.4% (Briefing.com consensus 0.3%). The PCE Price Index increased 0.1% (Briefing.com consensus 0.0%) while the core PCE Price Index, which excludes food and energy, also increased 0.1% (Briefing.com consensus 0.2%).
The key takeaway from the report is that it showed PCE inflation continues to run below the Federal Reserve's longer-run target of 2.0%, which could raise the market's angst level about the Fed being on course to make a policy mistake with further tightening action.
Durable goods orders increased 0.8% in November (Briefing.com consensus 1.7%) after an upwardly revised 4.3% decline (from -4.4%) in October. Excluding transportation, orders declined 0.3% (Briefing.com consensus +0.3%) after increasing an upwardly revised 0.4% (from 0.1%) in October.
The key takeaway from the report is that business investment was weak, evidenced by the 0.6% decline in nondefense capital goods orders excluding aircraft. Moreover, a 0.1% decline in shipments of those same goods will be accounted for as a negative input in Q4 GDP forecasts.
The third estimate for Q3 GDP showed a downward revision to 3.4% from 3.5% (Briefing.com consensus 3.5%) and an upward revision to the GDP Price Deflator to 1.8% from 1.7% (Briefing.com consensus 1.7%).
The key takeaway from the report was the same as before, which is that real final sales grew at their slowest rate since the fourth quarter of 2016.
The University of Michigan Index of Consumer Sentiment checked in at 98.3 with the final reading for December (Briefing.com consensus 97.5) versus a preliminary reading of 97.5 and the final reading of 97.5 for November. That left the 2018 average at 98.4, which was the best year since 2000.
The key takeaway from the report is that sentiment wasn't dented with the stock market's losses; however, expectations were tempered a bit amid burgeoning concerns about income and job prospects.
Investors will not receive any notable economic data on Monday.
Nasdaq Composite -8.3% YTD
Dow Jones Industrial Average -9.2% YTD
S&P 500 -9.6% YTD
Russell 2000 -15.9% YTD
Wall Street's Tumble Continues
20-Dec-18 16:20 ET
Dow -464.06 at 22859.60, Nasdaq -108.42 at 6528.41, S&P -39.54 at 2467.42
https://www.briefing.com/investor/markets/stock-market-update/2018/12/20/wall-streets-tumble-continues.htm
[BRIEFING.COM] The S&P 500 fell 1.6% on Thursday, as ongoing concerns over trade, politics, and economic growth added to worries over a Fed policy mistake. For the month, the benchmark index is now down 10.6%, while the Dow Jones Industrial Average (-2.0%), Nasdaq Composite (-1.6%), and the Russell 2000 (-1.7%) extend monthly losses to 10.5%, 10.9%, and 13.5%, respectively.
The S&P 500 staged a late recovery try to cut its losses from 2.6% to 0.8%, but that recovery effort was once again met with selling resistance that drove the market further into oversold territory.
Some nettlesome elements that weighed on investor sentiment Thursday included (1) the possibility of a partial government shutdown, (2) a reminder that the dispute between the U.S. and China goes much deeper than just tariffs on goods, and (3) the understanding that credit markets appear to be anticipating a growth slowdown due to tighter monetary policy.
Furthermore, weakness in oil ($44.95, -$2.33, -4.8%) and copper ($2.70, -$0.01, -0.4%) prices, and the underperformance by the cyclical sectors, fed into the market's concerns about a slowdown in global economic growth.
Within the S&P 500, 10 of the 11 sectors finished in the red with energy (-2.8%), consumer discretionary (-2.3%), and information technology (-1.9%) leading the retreat. The utilities sector, on the other hand, was able to muster a gain of 0.3%.
In corporate news, Walgreens Boots Alliance (WBA 69.61, -3.68) topped fiscal first quarter earnings estimates, yet its stock fell 5.0% after the company acknowledged it is facing margin pressures.
U.S. Treasuries closed on a lower note, pushing the 2-yr yield up three basis points to 2.67% and the 10-yr yield up one basis point to 2.79%. The U.S. Dollar Index fell 0.7% to 96.36, while gold futures settled 0.9% higher to $1267.00/oz, reaching its highest level since June.
Of note, the CBOE Volatility Index (VIX) peaked at February levels (30.25) before pulling back to 28.38.
Reviewing Thursday's economic data, which included weekly Initial and Continuing Claims, the Philadelphia Fed Index for December, and the Conference Board's Leading Economic Index for November:
Initial claims for the week ending December 15 increased by 8,000 to 214,000 (Briefing.com consensus 221,000). Continuing claims for the week ending December 8 increased by 27,000 to 1.688 million.
The key takeaway from the report is that it covers the period in which the survey for the December employment report is conducted. Accordingly, the low level of initial claims should translate into an expectation for solid nonfarm payroll growth in December.
The Philadelphia Fed Survey for December declined to 9.4 (Briefing.com consensus 17.5) from an unrevised 12.9 in November.
The Conference Board's Leading Economic Index increased 0.2% in November (Briefing.com consensus 0.1%) after decreasing a revised 0.3% (from +0.1%) in October.
The key takeaway from the report is that the Conference Board expects the pace of economic growth to continue moderating in the second half of 2019.
Looking ahead, investors will receive several economic reports on Friday: Personal Income and Spending for November; PCE Prices for November; Durable Orders for November; and GDP - Third Estimate for Q3.
Nasdaq Composite -5.4% YTD
Dow Jones Industrial Average -7.5% YTD
S&P 500 -7.1% YTD
Russell 2000 -13.5% YTD
Stocks Fall on Less-Dovish Fed
19-Dec-18 16:30 ET
Dow -351.98 at 23323.66, Nasdaq -147.08 at 6636.83, S&P -39.20 at 2506.96
https://www.briefing.com/investor/markets/stock-market-update/2018/12/19/stocks-fall-on-lessdovish-fed.htm
[BRIEFING.COM] The S&P 500 dropped 1.5% on Wednesday in what was a tale of two trading sessions. The first part of the day was governed by a sense of hope that the Federal Reserve would provide the stock market with a dovish-minded perspective on the interest rate outlook. The second part of the day, which began at 2:00 p.m. ET (the time of the FOMC announcement) was governed by a sense of disappointment that the FOMC, and Fed Chair Powell, didn't deliver on the market's wishes.
The S&P 500, up as much as 1.5% at its high for the day, sold off in the wake of the FOMC announcement, setting a new low for the year (2488.96) before bouncing slightly in closing action to end the day at 2506.96.
The blue-chip Dow Jones Industrial Average lost 1.5%, the tech-heavy Nasdaq Composite lost 2.2%, and the small-cap Russell 2000 lost 2.0%.
The optimism early in the day was on full display in the stock market with all 11 S&P 500 sectors trading in the green and the broader market seemingly setting aside its concerns about disappointing outlooks from FedEx (FDX 162.51, -22.50, -12.2%) and Micron (MU 31.41, -2.70, -7.9%), both of which attributed earnings warnings to weaker-than-expected demand.
The battered financial (-1.2%) and energy (-1.3%) sectors assumed a leadership position in the early going, yet they rolled over with the rest of the market following the Fed's interest-rate decision and Fed Chair Powell's press conference.
In terms of the Fed decision, the target range for the fed funds rate was increased by 25 basis points to 2.25% to 2.50%, as most expected it would be, and the so-called dot-plot was revised to show a median projection for two rate hikes in 2019, versus three previously. That wasn't altogether surprising either; nonetheless, it still appeared hawkish relative to the zero rate hikes currently expected by the fed funds futures market.
Selling interest picked up noticeably right after the FOMC directive was released and then it kicked into a higher gear during Fed Chair Powell's press conference.
Some of Mr. Powell's more nettlesome talking points for the market were that (1) policy does not need to be accommodative now and that he doesn't believe the current policy is restrictive, and (2) he does not see the Fed altering its approach to balance sheet normalization and sees the preferred policy method being use of the fed funds rate.
Every sector was driven lower after the Fed decision and they all ended the day in negative territory with losses ranging from 0.2% (utilities) to 2.2% (consumer discretionary).
The sell-off in the stock market prompted a flight to safety in U.S. Treasuries, pushing yields lower. The yield curve also flattened with the Fed-sensitive 2-yr yield losing two basis points to 2.64%, and the benchmark 10-yr yield losing five basis points to 2.78%.
Separately, Facebook (FB 133.25, -10.41) was a notable laggard Wednesday, both in the first part of the day and in the second part of the day. It declined 7.3% after a New York Times article alleged Facebook provided technology companies more access to user data than it previously disclosed and following a Washington Post report stating the company is being sued by the Washington D.C. Attorney General over alleged privacy violations from the Cambridge Analytica scandal. Facebook is now down 38.7% from its all-time record close on July 25.
Reviewing today's economic data, which included Existing Home Sales for November, the weekly MBA Mortgage Applications Index, and the Current Account Balance for Q3:
Existing home sales increased 1.9% month-over-month in November to a seasonally adjusted annual rate of 5.32 million (Briefing.com consensus 5.20 million). Total sales were 7.0% lower than the same period a year ago.
The key takeaway from the report is that while sales have now increased for two consecutive months, the trajectory remains challenged by higher mortgage rates and limited affordability.
The weekly MBA Mortgage Applications Index fell 5.8%, compared to the 1.6% increase in the prior week.
The current account deficit for the third quarter totaled $124.8 billion (Briefing.com consensus -$126.0 billion). The second quarter deficit was revised to $101.2 billion from $101.5 billion.
Looking ahead, investors will receive weekly Initial and Continuing Claims, the Philadelphia Fed Index for December, and the Conference Board's Leading Economic Index for November on Thursday.
Nasdaq Composite -3.9% YTD
Dow Jones Industrial Average -5.7% YTD
S&P 500 -6.3% YTD
Russell 2000 -12.1% YTD
S&P 500 Ends Flat in Roller Coaster Session
18-Dec-18 16:30 ET
Dow +82.66 at 23675.64, Nasdaq +30.18 at 6783.91, S&P +0.22 at 2546.16
https://www.briefing.com/investor/markets/stock-market-update/2018/12/18/s-and-p-500-ends-flat-in-roller-coaster-session.htm
[BRIEFING.COM] The S&P 500 finished flat on Tuesday in what was another roller-coaster session, driven by shifts in sector leadership, a 7.2% plunge in oil prices to $46.57 per barrel, and lingering uncertainty surrounding trade, monetary policy, the economic growth outlook, and the budget battle in Washington to keep the government open.
The benchmark index was up as much as 1.1% in early action, bolstered by some technical buying after the S&P 500 managed to hold support at its February low (2532.69) on Monday. That rally, however, would not hold up.
Once again, the stock market succumbed to an inclination to sell into strength that saw the S&P 500 set a new low for the year (2528.71) entering the final hour of trading. Like Monday, though, there was some late buying interest on the re-test of the February low, which held once again on a closing basis.
The Dow Jones Industrial Average (+0.4%) and the Nasdaq Composite (+0.5%) managed to squeeze out some modest gains, yet they also finished well off their best levels of the day. The Russell 2000 shed 0.1%.
The S&P 500 sectors were mixed with consumer discretionary (+1.0%) and real estate (+1.0%) on the winning end, and energy (-2.4%) and consumer staples (-1.2%) on the losing end.
The S&P 500 financial sector (-0.5%) was another notable laggard and it stood out as the poster child for selling into strength. The financial sector was up as much as 1.6% during the rally effort, yet a poor showing by the bank stocks undercut the sector and led to another losing outing for the sector, which is down 11.7% this month alone.
The inability of the financial sector to hold its gains was a disappointment, yet it has been consistent with the sector's disposition all year, and particularly since the start of October.
Also weighing on sentiment was the fact that oil prices continued to get clobbered amid ongoing concerns over excess supply and slowing economic growth. WTI crude dropped 7.2% to $46.57/bbl, closing at its lowest level since September 2017. The oil-sensitive energy sector underperformed with a loss of 2.4%.
The weakness in the financials and oil prices, as well as in copper prices ($2.66, -$0.09, -3.3%), underscored the general growth concerns that have been weighing heavily on investor sentiment.
Those concerns, and concerns about the stock market's fortunes, showed up in the gains registered by the Treasury market and CBOE Volatility Index (VIX 25.58, +1.06, +4.3%) even while stocks were rallying. The Fed-sensitive 2-yr yield lost four basis points to 2.66%, and the benchmark 10-yr yield lost three basis points to 2.82%. The U.S. Dollar Index lost 0.1% to 97.05.
The disparate action came ahead of Wednesday's interest rate announcement from the FOMC and the release of an updated summary of economic projections and dot plot.
Market participants are largely expecting the FOMC to raise the target range by 25 basis points to 2.25% to 2.50%. What remains a pertinent source of uncertainty is what the Federal Reserve will do with its interest rate projections and possibly its balance sheet normalization effort.
The market is pining for a dovish-minded stance from the Federal Reserve when it comes to its interest rate projections for 2019. Everything will come to light at 2:00 p.m. ET on Wednesday and it will certainly be a market-moving event.
Reviewing Tuesday's economic data, which included Housing Starts and Building Permits for November:
The Housing Starts and Building Permits Report for November wasn't as strong as the headline figures suggested, as it featured little to no growth in both permits and starts for single-family units.
Total starts increased 3.2% to a seasonally adjusted annual rate of 1.256 million units (Briefing.com consensus 1.230 million), yet starts for single-family units declined 4.6% to 824,000, which is the lowest since May 2017.
Total permits increased 5.0% to a seasonally adjusted annual rate of 1.328 million (Briefing.com consensus 1.270 million), yet permits for single-family units were up just 0.1% to 848,000.
The key takeaway from the report is that it substantiates the weakening levels of homebuilder confidence and is a reflection of the impact rising interest rates are having on single-family construction activity.
Looking ahead, investors will receive the FOMC Rate Decision for December, Existing Home Sales for November, the weekly MBA Mortgage Applications Index, and the Current Account Balance for Q3 on Wednesday.
Nasdaq Composite -1.7% YTD
Dow Jones Industrial Average -4.2% YTD
S&P 500 -4.8% YTD
Russell 2000 -10.3% YTD
Stocks Tumble amid Broad De-Risking
17-Dec-18 16:25 ET
Dow -507.53 at 23592.98, Nasdaq -156.93 at 6753.73, S&P -54.01 at 2545.94
https://www.briefing.com/investor/markets/stock-market-update/2018/12/17/stocks-tumble-amid-broad-derisking.htm
[BRIEFING.COM] The S&P 500 lost 2.1% on Monday, as uncertainty surrounding a host of issues continued to drive an inclination to sell into strength and to reduce risk exposure to stocks. The benchmark index (2545.94) ran into resistance at the 2600 level amid a morning rebound effort before steadily backpedaling throughout the afternoon and re-testing its February low (2532.69). That re-test invited some late buying interest that enabled the indices to close off their worst levels of the day.
The Dow Jones Industrial Average (-2.1%), the Nasdaq Composite (-2.3%), and the Russell 2000 (-2.3%) also squandered intraday rebound efforts to finish near session lows. The tech-sensitive Nasdaq is now negative for the year, and the small-cap Russell 2000 has fallen more than 20.0% from its yearly high.
The degree of pessimism is picking up noticeably, evidenced by the widespread de-risking activity. No sector was safe today. All 11 sectors ended in negative territory, with losses ranging from 1.0% (financials) to 3.7% (real estate).
Influential fund manager, Jeffrey Gundlach, contributed to the bearish price action. In a CNBC interview, he expressed ample concern about the rising U.S. budget deficit, while adding that he thinks passive investing has reached "mania" status and that investors should avoid index funds. Mr. Gundlach also said his best idea for 2019 is "capital preservation."
Softening economic data also fueled concerns about the growth outlook and compounded the market's negative bias. The NAHB Housing Market Index for December fell from 60 to 56 (Briefing.com consensus 61), which is its lowest level in nearly four years. The Empire Manufacturing Index for December, meanwhile, dropped to 10.9 (Briefing.com consensus 20.0) from 23.3.
The silver lining, if one could call it that, is that the weaker-than-expected data will help validate the market's belief that the Federal Reserve is apt to turn more conservative with its 2019 rate-hike projections.
Mounting losses in the stock market have raised the stakes in front of Wednesday's FOMC announcement, which many participants still think is going to produce another rate hike and at the same time see the Fed temper its rate-hike projections for 2019. President Trump today questioned again why the Fed would be raising rates at this time.
The real estate (-3.7%), utilities (-3.3%), and consumer discretionary (-2.8%) sectors led the broad-based retreat. The financials sector (-1.0%) was the best-performing group, although it still finished notably lower and well off the 0.9% gain it registered earlier in the day.
The pullback in the financial sector was emblematic of a market that continues to see any sign of strength as a selling opportunity. On a related note, Goldman Sachs (GS 168.05, -4.72, -2.7%) underperformed after Malaysian authorities reportedly filed criminal charges against Goldman Sachs related to the 1MDB scandal.
The health care sector (-2.1%) for its part fell amid the uncertainty attached to a ruling by a federal judge in Texas that the Affordable Care Act is unconstitutional. That decision will head to an Appeals Court and most experts believe it is ultimately headed to the Supreme Court.
Separately, Xerox (XRX 21.29, -3.16) was the biggest laggard in the S&P 500 with a loss of 12.9% after Moody's cut Xerox's senior unsecured debt ratings to Ba1 from Baa3. The cut from investment grade to junk status was due to an uncertain revenue base amid a decline in demand for copy and printing services as well as intense global competition, according to Bloomberg.
Reviewing Monday's economic data, which included the Empire State Manufacturing Survey for December and the NAHB Housing Market Index for December:
The Empire Manufacturing Survey for December checked in at 10.9 for December (Briefing.com consensus 20.0), down from 23.3 in November, with a deceleration seen across almost every category.
A number above 0.0 still connotes expansion, yet it is clear to see that activity decelerated in December; moreover, the report indicates that optimism about the six-month outlook was slightly more tempered than in November.
The NAHB Housing Market Index for December came in at 56 (Briefing.com consensus 61), down from 60 in November.
The drop reflects deteriorating confidence in housing market conditions, although it needs to be noted that the dividing line between optimism and pessimism is 50.0.
Looking ahead, investors will receive Housing Starts and Building Permits for November on Tuesday.
Nasdaq Composite -2.2% YTD
Dow Jones Industrial Average -4.6% YTD
S&P 500 -4.8% YTD
Russell 2000 -10.3% YTD
InvestmentHouse - Can NASDAQ make a stand? (Weekend Newsletter)
https://news.investmenthouse.com/2018/12/the-daily-part-1-of-3-12-15-18.html
- Bounce off the bottom of the range that started early week is reversed.
- NYSE indices break to lower closing lows. Can NASDAQ make a stand?
- More leadership groups weaken.
- China economic data sliding farther down. EU as well.
- Retail Sales quite solid, prices soften. Isn't this want we want? Don't ask the Fed.
- We have lived in a textbook of economic cause and effect, yet our wealth is ruled by people in denial of history.
- Sentiment gets interesting with stock fund outflows jumping to a record. Everyone is negative as the indices break lower so watch for false breakdowns.
The week started with the indices hitting new selloff lows. They rebounded, however, the same session, putting in what looked to be a decent reversal off a lower low that just undercut the October low. Then some good news on trade, some mild inflation numbers, and a continued view the Fed was softening.
A bounce ensued, though it was halting at best. A gap higher Tuesday that faded to a loss or virtually no gain. A pair of moves upside Wednesday and Thursday, but neither could hold much of the upside. Friday the indices simply failed, at least on NYSE. Futures were lower and bids never materialized. The indices opened lower and then sold through the session, closing at the lows.
SP500 -50.59, -1.91%
NASDAQ -159.67, -2.26%
DJ30 -496.87, -2.02%
SP400 -1.47%
RUTX -1.53%
SOX -1.42%
NASDAQ 100 -2.56%
VOLUME: NYSE +8%, NASDAQ +2%. NYSE trade moved up to just over average. NASDAQ volume did move higher, but is still well below average. Selling volume for sure, but not blowout volume.
ADVANCE/DECLINE: NYSE -3.5:1, NASDAQ -3.2:1. Definitely on the strong side, definitely superior to any upside breadth of late.
SP500 and DJ30 closed at lower closing lows below the recent 3 month range. SP400 and RUTX were already there, and they continued to mine lower lows.
NASDAQ and SOX fared a bit better. NASDAQ again tested the 2016 trendline, holding it on the close. That kept it just over the November low. SOX gapped lower Friday but is still easily above the October, November and December lows. The chips showed some relative strength on the week mainly thanks to AVGO's rally along with INTC and AMD holding steady. Outside of that, chips were chippy.
After a week of tries at bouncing off the bottom of the range, struggling to find traction each session, stocks gave up Friday and sold early, avoiding the Christmas rush. They sold early, late, and in-between. Sentiment may be weak, and the market is taking down a leadership group at a time, but there is still no upside impetus.
The week saw the market damage, or outright take out, some leadership groups. What was left of retail was crushed as COST joined LULU and ULTA in their crashes. Food is under pressure as some sold off while others struggled. Not a dead group, however, as KR, KO, KDP held on, YUM survived Friday, while PEP, CMG went bad. Drugs were hit as JNJ was reported to have known about asbestos in its baby powder. Kiss of death that asbestos link. LLY sold on higher volume though hung onto the 50 day MA, PFE is struggling. None of these groups died except perhaps retail as it lost more huge names, but all are under pressure, even the drugs that should be a defensive sector.
NEWS/ECONOMY
Interesting news on the week, but not many draw the same conclusions from it, in an academic sense, that we do. Outside of academics, the data is what it is, the Fed will do what its members believe -- no matter how wrong, and the market and economy will react as usual, if they are not already doing so.
China: The economic data keeps getting worse for the 'emerging market economy' as it styles itself. Industrial output came in lower than expected at 5.4%, a 3 year low in the growth rate. Retails sales 8.1%, missing expectations and showing the slowest growth since 2003. Doom and gloom and it was blamed for the market weakness.
China is also rolling back its retaliatory 25% tariff on US autos for 3 months (the 90 day period). China has to do things at its own pace. The sides meet, discuss, Trump hints a big news to come, then when things die down, China makes its announcements. That is China's way of trying to make it look as if the idea was its own. Everyone knows the real score (other than the Chinese people), but that is its way.
EU: The union's economy expanded at its slowest rate in 4 years. France business activity turned negative. Germany is at a 4 year low in its growth pace. If I were the UK, given France is the EU's second largest economy and is turning negative, and Italy, the third largest EU economy is negative, I would tell the EU to stick it. Ah, but May in in charge and she is rather feckless. Gee, we have a FEW of those kind of government leaders over here.
US Retail Sales, Nov: 0.2% vs 0.1 exp vs 1.1% Oct (from 0.8)
Ex-auto: 0.2 vs 0.2 exp vs 1.0 prior (from 0.7)
Ex-auto, gas: 0.5% vs 0.7 prior (from 0.3)
Control Group: 0.9 vs 0.4 exp vs 0.7 prior (from 0.3)
Good number. The ex-auto/gas shows that sales were 'robust' once gasoline's lower price was factored out. Gasoline is one of those odd components: have to have it to get around to actually make the economy work, but it doesn't add anything, just subtracts. A sunk cost that is best to be at the lowest price possible so money can be used for other, more lasting things.
The key: the revisions. Impressive. Revisions are always more important as they show more clarity.
What the recent data shows.
Okay, here is something to consider when you listen to the media talk economics from their Keynesian view: First, the CPI and PPI were lower, indeed 'tame' by many standards. Of course, that scares Keynesians who want to devalue our currency with inflation as they think inflation is healthy as opposed to the erosion of wealth that in reality it is (they don't put it that way, but that is what their policies accomplish). Indeed, the Fed, to maintain its power grab over our lives these past 90 years, has convinced everyone that inflation is needed and is characteristic of a healthy economy. Thus, its 97% devaluation of the US dollar since its inception is justified to an easily gullible populace. An old but true example of what the Fed has accomplished: back in the early 1900's an ounce of gold could buy a good quality suit. Today an ounce of gold can still buy a good quality suit. The same amount of dollars from the early 1980's used to buy that suit would, today, not pay for the alterations. Not even the tax.
But I digress. What the data this week shows (tame CPI and PPI, solid retail sales) is the reality that the economy can grow and the citizens can be prosperous without triggering inflation and indeed without any inflation. Prices are lower for producers and buyers. That shows efficiency, functioning markets, free enterprise competition that reduces costs. At the same time, sales are higher. Companies are producing, jobs are plentiful, wages are up, people are buying. Gee, is that not what we missed for 10 years, desperately wanted, finally got with the changes in taxes, regulations, and bad deals? Why not celebrate?
In the Keynesian world that cannot happen. So Powell and Keynesians on the Fed panic in their confusion. Prices are lower and they should not be. So, in their quite limited world they believe they have to hike beyond neutral to control the inflation that surely is coming. It is inflation in their mind. This is why EVERY Fed from the 1920's central bank has crashed markets and caused recessions -- because the theory they espouse is based in CONTROL, NOT FREE MARKETS! Some day we will wake up and say just because the Fed has been devaluing our currency for almost 100 years that doesn't mean we were right in creating it and letting a dozen people control the value of our assets, to set the level of our wealth.
There are one or two in Congress who get it, at least the free market part. The others get it as well; it is just that they see the Fed as another very important method to control the general populace by controlling its wealth. The past 60 years have provided a living textbook as to what works economically with very definite cause and effect. Sure the political sides do all they can to obfuscate the clear facts, and the average American is too economically ignorant and too complacent on top of that to get as upset as the facts warrant.
Economics cause and effect: We have lived a textbook of what to do and what not.
In the early 1960's, JFK cut taxes and reduced regulation. Economic boom.
In the 1970's the US went off the gold standard, raised taxes back up, piled on mountains of regulations and we fell into what was called the Carter Malaise (though Nixon and Ford played large roles in this with Nixon freezing wages of all things--talk about Keynesian hogwash).
In the 1980's Reagan cut taxes, gave massive incentives to invest in the US for startups and big companies alike. It was called an era of deregulation. Boom. Huge boom. GDP quarters of 4%, 5%, 7%, 11% growth; again and again. Months with 1 million jobs created. Bush almost ruined it -- 8 years under Reagan, witnessed the boom, saw what worked, but had to try the James Baker theories and almost ruined the boom.
In the 1990's Clinton was smart enough not to get in the way of prosperity. He continued to reduce regulation thanks to a Congress that had popular support for a 'contract with America.' Great things were accomplished again until Clinton raised taxes because he told us it had to be done to cover our costs. When the boom still threw off huge amounts of tax revenues the costs were covered. Instead of lowering taxes, Clinton paid down the debt. A noble move but it took too much money out of the economy, money that should have been reinvested. He cut capital gains taxes and that helped, but too much money was removed, Greenspan went off the deep end for Y2K and then went the other way when 2000 started. The economy ran out of money. Crash.
In the 2000's Bush 2 cut taxes but his economics were a conflicting mass of mistakes. A bad tax cut squandered money. A good tax cut helped. Medicare Part D exploded the budget. Greenspan held rates too low too long to try and limp the housing market through the recession. Then it all exploded into the financial crisis. What a mess.
Then came Obama and his massive, massive, massive regulations. Tax hikes. The ACA and its regulations and tax hikes. Hundreds of thousands of new regulations IN ADDITION to the ACA's regulations. The economy posted its first 10 year period without a year of 3% average growth since the Great Depression. GDP stuck below 2%. The only jobs were created were bartenders, waitresses, retail -- the lowest wage areas. This even with the Fed holding rates at 0% and buying all of the junky assets anyone wanted to sell it. The stock market surged because that is where all the money went. Everything else outside of the government stagnated at best with millions of small businesses killed.
Then 2016 with tax cuts, investment incentives, repealing regulations. Investment renewed in the US. GDP jumped back up. More jobs than workers. High paying jobs that were never supposed to come back did just that. We still have 94+M working aged people OUT of the workforce, the ACA is still bleeding us dry, and more regulation reduction is needed. Just think what would happen if that occurred. It would be more like the 80's and the growth seen then.
You can see the change in policies and you can see the results. As the Frenchman in 'The Matrix Reloaded' said, cause and effect.
There is some more progress: a Texas federal district court Friday ruled the individual mandate unconstitutional. That sets up an appeal to the 5th Circuit Court of Appeals and on toward the Supreme Court. The issue is the repeal of the tax penalty: that is now removed from the law by Congress and that was the basis of the Supreme Court's initial ruling that upheld the ACA thanks to Chief Justice Robertson being a judicial activist and rewriting the law from the bench. With the fiction of the 'lawful tax' removed from the bill all you have left is the overreach under the Commerce Clause that the prior Court ruling said was unconstitutional. Ipso facto the ACA should now be unconstitutional.
THE MARKET
CHARTS
DJ30, SP500: Both closed at a new selloff closing low though still inside the October and November lows. The Dow is fading back to test that 2016 trendline once more. MACD still holding up for now.
NASDAQ: Gapped and sold off to the 2016 trendline, holding just over the November lows. Okay, NASDAQ at the lick log. MACD remains strong, areas such as software remain surprisingly strong, holding up NASDAQ.
SOX: Dancing over the June 2017 peak, the last one before the run to the high in February 2018. Still over the October, November, December lows and that keeps SOX in the game.
RUTX, SP400: Both diving lower, gapping and selling off to lower lows. SP400 is now lodged in the middle of the March to August 2017 trading range. This is an impressive, impressive selloff.
LEADERSHIP
Still some groups refusing to give in, but the problem for the market has been, while they don't give in at first, they eventually get dragged down. That is the MO of a bear market.
Defensive stocks: Some continued good moves on the week and Friday, e.g. PG, AEP, CLX, some did not, e.g. PEP, JNJ. Many held the line, but that is about all they did. For Friday that was good action. For longer term we will see. KR, KO, CL.
Food: Mixed action. CMG started getting shaky. PEP broke lower from its nice test. KO okay, MCD hanging in. Showing issues.
Drugs: JNJ clobbered on asbestos. PFE, LLY, MRK did not break but were hit on the day. Smaller biotechs felt heat on the week though held some decent patterns, e.g. ARWR, BCRX (though dropped harder Friday).
Personal Products: PG, CLX remained strong. Defensive.
Software: Some cracks e.g. ADBE dropping hard on earnings. VRSN struggled through Friday but is holding support. VMW to the 20 day EMA. FFIV broke lower and we started a downside play. WDAY still very strong in a great consolidation. ZS, SPLK, DATA, TEAM remain solid for now.
FAANG: AMZN broke lower 4%. AAPL broke lower on another downgrade. GOOG struggled Friday but is hanging in its range. FB not bad but still below the 50 day EMA.
THE MARKET
MARKET STATS
DJ30
Stats: -496.87 points (-2.02%) to close at 24100.51
Nasdaq
Stats: -159.67 points (-2.26%) to close at 6910.66
Volume: 2.2B (+1.85%)
Up Volume: 490.54M (-187.77M)
Down Volume: 1.69B (+230M)
A/D and Hi/Lo: Decliners led 3.18 to 1
Previous Session: Decliners led 2.87 to 1
New Highs: 12 (-4)
New Lows: 517 (+165)
S&P
Stats: -50.59 points (-1.91%) to close at 2599.95
NYSE Volume: 979.717M (+7.88%)
Up Volume: 181.265M (-182.388M)
Down Volume: 792.319M (+265.212M)
A/D and Hi/Lo: Decliners led 3.47 to 1
Previous Session: Decliners led 1.79 to 1
New Highs: 16 (-9)
New Lows: 616 (+238)
SENTIMENT
Outflows: $46B flowed out of US stock funds the prior week, a record. At the same time Money Market inflows hit a record as well. The market selling but NASDAQ and SOX are still holding above the lows, SP500 and DJ30 as well if measured by the intraday lows. The sentiment from the AAIA shows the most bearishness about the next six months in over a decade. This plays for a surprise bounce. They often happen when no one thinks it can, though I saw one pundit saying a 10% bounce can still happen.
VIX: 21.63; +0.98
VXN: 27.62; +1.82
VXO: 23.95; +1.43
Put/Call Ratio (CBOE): 1.14; -0.02
Bulls and Bears:
Minor fade on bulls after that surge the prior week from 38.3. Bears fell after finally breaking over 20; at least they held 20. They have converged more than anytime since 2016, but nothing that would suggest extreme. If anything, bears are still extremely low.
Bulls: 45.5 versus 46.7
Bears: 20.4 versus 21.5
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: 45.4 versus 46.7
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 21.50
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: 2.895% versus 2.913%. Bonds acting as a bit of a safe haven, working laterally along the 200 day SMA after rallying through that level early week.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.913% versus 2.908% versus 2.884% versus 2.863% versus 2.854% versus 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus 3.074% versus 3.056% versus 3.065% versus 3.116% versus 3.127% versus 3.147% versus 3.186% versus 3.239% versus 3.228% versus 3.222% versus 3.201% versus 3.22% versus 3.146%
EUR/USD: 1.13049 versus 1.13604. Euro faded on the week but is still in its 2-month lateral range.
Historical: 1.13604 versus 1.1376 versus 1.13244 versus 1.13657 versus 1.1404 versus 1.1376 versus 1.13970 versus 1.13360 versus 1.13199 versus 1.13934 versus 1.13682 versus 1.12973 versus 1.13325 versus 1.13380 versus 1.13829 versus 1.13818 versus 1.14484 versus 1.14172 versus 1.13308 versus 1.13264 versus 1.13124 versus 1.12348 versus 1.13475 versus 1.1364 versus 1.14329 versus 1.14228 versus 1.14090 versus 1.13881 versus 1.14019 versus 1.13394 versus 1.13455 versus 1.13760 versus 1.14042 versus 1.13757 versus 1.3972 versus 1.14682 versus 1.14626 versus 1.1538
USD/JPY: 113.382 versus 113.634. Slight fade to end the week, holding over the 50 day MA, still in a great pattern to break higher.
Historical: Last below 109 in June 2018: 113.634 versus 113.634 versus 113.385 versus 113.022 versus 112.66 versus 112.71 versus 112.813 versus 113.581 versus 113.474 versus 113.402 versus 113.559 versus 113.781 versus 113.510 versus 112.972 versus 113.007 versus 113.077 versus 112.617 versus 112.831 versus 113.585 versus 113.576.
Oil: 51.20, -1.38. Still working laterally for the past two weeks, trying to hold over the 50.00 level.
Gold: 1241.40, -6.00. Rallied up near the 200 day SMA, faded the rest of the week to the 10 day EMA. Nice break higher, good test.
MONDAY
SP500 broke 2600 and supposedly that sets up further downside. In the time of algos, beware of breakdowns. Sentiment is rather extreme as reported by the AAIA, outflows from stocks are at a record. From a sentiment standpoint you have to watch for a reversal.
Leadership remains weak, so any reversal from a breakdown, a false break if you were, expectations would be for no more than a rebound within the range.
Right now many people are in no mood to play a rally. Understandable given the selling, and more likely to come even if the Fed backs off after next week's rate hike. At least everyone assumes a rate hike.
The point is: when you feel beat up, when the last thing you want to do is play any upside, when you see the money outflows and feel that is the right move, that is when you really need to consider playing some upside if stocks in quality patterns make solid moves.
What kind? TEAM, WDAY, YUM, SPLK, DOCU, TECD, KDP, VMW, ILMN. They are in position to move higher if the sentiment drives a rally. If not, then we play some more downside along with the plays entered Friday.
Wednesday is FOMC rate hike day. A hike is expected, and if one does not come it is said that would be a shock. Perhaps, perhaps not. Friday is expiration. The Wednesday FOMC meeting and subsequent statement will be Powell's most important as backs away from his hard line stance. Can he dance for the markets? Does he care? We will see.
Have a great weekend!
Stocks Fall on Continued Global Growth Concerns
14-Dec-18 16:20 ET
Dow -496.87 at 24100.51, Nasdaq -159.67 at 6910.66, S&P -50.59 at 2599.95
https://www.briefing.com/investor/markets/stock-market-update/2018/12/14/stocks-fall-on-continued-global-growth-concerns.htm
[BRIEFING.COM] The S&P 500 fell 1.9% on Friday to extend its monthly loss to 5.8%. Friday's sell-off was a function of poor sentiment driven by global growth concerns and a continuation of weak price action.
The Dow Jones Industrial Average lost 2.0%, the Nasdaq Composite lost 2.3%, and the Russell 2000 lost 1.5%. For the month, the respective indices are down 5.6%, 5.7%, and 8.0%.
The selling started overseas when China, the second-largest economy in the world, reported some weaker-than-expected industrial production and retail sales data. In addition, some weaker-than-expected preliminary manufacturing PMI readings out of the eurozone helped feed into concerns over economic growth and corporate earnings prospects.
A solid November Retail Sales report out of the U.S. didn't change the selling bias either. Instead, the good news on that front was drowned out by the concern that weakness abroad will eventually lead to a slower pace of growth in the U.S.
Selling picked up after the close of the European markets (11:30 a.m. ET) and would continue in an orderly manner throughout the day, culminating in the S&P 500 closing just below 2600.
Within the S&P 500, the health care (-3.4%), information technology (-2.5%), and energy (-2.4%) sectors led the broad-based retreat.
The negative bias within the health care and tech groups was driven by some corporate news, while energy fell in tandem with oil prices.
Johnson & Johnson (JNJ 132.80, -14.84) dropped 10.0% after a Reuters report alleged that JNJ "knew for decades that asbestos lurked in its baby Powder." The company's litigation counsel rejected the report as "false and misleading."
Within tech, Apple (AAPL 165.48, -5.47, -3.2%) fell after an influential analyst from TF International Securities cut his first quarter 2019 iPhone shipment estimate by 20%, according to CNBC; Adobe Systems (ADBE 230.00, -18.08, -7.3%) fell after failing to overly impress investors with its fiscal fourth quarter results and outlook; and Cisco (CSCO 45.82, -1.65, -3.5%) fell after being downgraded to 'Neutral' from 'Buy' at Nomura.
In other corporate news, Costco (COST 207.06, -19.45) fell 8.6% after reporting its fiscal Q1 results, which included revenues that were slightly below consensus. Margin weakness, attributed to higher merchandising costs, also weighed on the stock.
There was little room to hide in the stock market, though the defensive-oriented real estate (-0.2%) and utility (-0.3%) sectors suffered only modest losses.
Investors sought safety in U.S. Treasuries, pushing yields lower across the curve. The 2-yr yield lost three basis points to 2.73%, and the 10-yr yield lost two basis points to 2.89%. Also, the U.S. Dollar Index rose 0.4% to 97.45, nearing a yearly high.
Reviewing Friday's economic data, which included Retail Sales for November, Industrial Production and Capacity Utilization for November, and Business Inventories for October:
Total retail sales increased 0.2% in November, as expected, while retail sales, excluding autos, jumped 0.2% (Briefing.com consensus +0.3%).
The key takeaway from the Retail Sales report is that core retail sales, which exclude auto, gasoline station, building materials, and food services and drinking places sales, increased 0.9%. That's important because core retail sales are used in the computation of the goods component for personal consumption expenditures in the GDP report.
Industrial production increased 0.6% in November (Briefing.com consensus 0.3%) after declining a downwardly revised 0.1% (from +0.2%) in October. The capacity utilization rate was 78.5% (Briefing.com consensus 78.6%) following a downwardly revised 78.1% (from 78.4%) in October.
The key takeaway from the report is that manufacturing output was flat on the heels of a 0.1% decline in October. That indication runs counter to the solid uptick seen in the November ISM Manufacturing Index.
Total business inventories increased 0.6% in October, in-line with the Briefing.com consensus estimate, after increasing an upwardly revised 0.5% (from 0.3%) in September. Total business sales increased 0.3% after increasing a downwardly revised 0.3% (from 0.4%) in September.
The key takeaway from the report is that business sales rose at a slower pace than inventories. That distinction, if it persists, will diminish pricing power.
Looking ahead, investors will receive the NAHB Housing Market Index for December, the Empire State Manufacturing Survey for December, and Net Long-Term TIC Flows for October on Monday.
Nasdaq Composite +0.1% YTD
Dow Jones Industrial Average -2.5% YTD
S&P 500 -2.8% YTD
Russell 2000 -8.1% YTD
Stocks Mixed in Lackluster Session
13-Dec-18 16:30 ET
Dow +70.11 at 24597.38, Nasdaq -27.98 at 7070.33, S&P -0.53 at 2650.54
https://www.briefing.com/investor/markets/stock-market-update/2018/12/13/stocks-mixed-in-lackluster-session.htm
[BRIEFING.COM] The U.S. major indices finished mixed on Thursday, as ongoing uncertainty surrounding global issues kept many buyers on the sidelines. The S&P 500 finished flat, the Nasdaq Composite lost 0.4%, and the Dow Jones Industrial Average gained 0.3%.
In particular, the continued weakness from the Dow Jones Transportation Average (-1.6%), S&P 500 financial sector (-0.6%), and small-cap Russell 2000 (-1.6%), all of which play a key role in driving sentiment on the domestic economic outlook, and some cautious-sounding commentary on the economic outlook from European Central Bank President Draghi following today's ECB policy meeting, subdued investor confidence.
Concerns over slowing economic growth, and its adverse effect on corporate earnings, helped contribute to investors assuming some defensive positioning within the stock market.
The S&P 500 utilities (+0.9%), consumer staples (+0.7%), and real estate (+0.6%) groups finished atop the sector standings on Thursday.
Procter & Gamble (PG 96.49, +2.46, +2.6%) was a standout in the consumer staples sector, and Dow, after being upgraded to 'Buy' from 'Neutral' at Bank of America/Merrill Lynch.
The information technology (+0.2%) and energy (+0.4%) sectors also showed relative strength. Renewed leadership from Apple (AAPL 170.95, +1.85, +1.1%) helped lift the tech sector, while the energy space benefited from rising oil prices. WTI crude rose 2.8% to 52.58/bbl.
In addition, some key standouts from the industrial sector (-0.3%) included Delta Air Lines (DAL 53.55, -2.72, -4.8%) and General Electric (GE 7.20, +0.49, +7.3%).
Delta fell after it reaffirmed a FY19 EPS target range that had a midpoint below Wall Street's average expectation. GE, meanwhile, led the S&P 500 in gains after a surprise upgrade to 'Neutral' from 'Underweight' at JP Morgan, though maintained its $6.00 price target.
Separately, retail stocks were one of the hardest hit groups on Thursday, which helped drive the weakness in the consumer discretionary (-0.4%) sector. The SPDR S&P Retail ETF (XRT 42.52, -1.17) lost 2.7%. On a related note, Tailored Brands (TLRD 14.13, -6.01) and Oxford Industries (OXM 67.24, -7.57) dropped 29.8% and 10.1%, respectively, after some disappointing guidance/outlook.
Reviewing Thursday's economic data, which included Export and Import Prices for November, weekly Initial and Continuing Claims, and the Treasury Budget for November:
Import prices declined 1.6% in November after increasing 0.5% in October. Export prices declined 0.9% in November after increasing an upwardly revised 0.5% (from 0.4%) in October. Excluding fuel, import prices were down 0.3%. Excluding agricultural products, export prices were down 1.0%.
The key takeaway from the report is that it stirred some thinking that inflation trends could be in a topping phase, which is constructive in terms of the market's belief that the Federal Reserve is apt to take a more conservative path with future rate hikes.
Initial jobless claims for the week ending December 8 dropped by 27,000 to 206,000 (Briefing.com consensus 228,000). Continuing claims for the week ending December 1 increased by 25,000 to 1.661 million.
The key takeaway from the report is that it helped quell for the time being burgeoning concerns about the rising trend in initial jobless claims.
The Treasury Budget for November showed a deficit of $204.9 billion versus a deficit of $138.5 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the November deficit cannot be compared to the $100.9 billion deficit for October.
The fiscal year-to-date deficit is $305.4 billion versus a deficit of $201.8 billion for the same period a year ago. The budget deficit over the last 12 months is $882.6 billion.
Looking ahead, investors will receive Retail Sales for November, Industrial Production and Capacity Utilization for November, and Business Inventories for October on Friday.
Nasdaq Composite +2.4% YTD
Dow Jones Industrial Average -0.5% YTD
S&P 500 -0.9% YTD
Russell 2000 -6.7% YTD
Stocks Rise on U.S.-China Trade Hopes, but Close Off Highs
12-Dec-18 16:25 ET
Dow +157.03 at 24527.27, Nasdaq +66.48 at 7098.31, S&P +14.29 at 2651.07
https://www.briefing.com/investor/markets/stock-market-update/2018/12/12/stocks-rise-on-uschina-trade-hopes-but-close-off-highs.htm
[BRIEFING.COM] The S&P 500 rose 0.5% on Wednesday, although it gave up a good chunk of its gains in the afternoon after trading as high as 1.9% intraday. Optimism that trade relations between the U.S. and China were progressing fueled the rally effort, but selling would accelerate into the close, leaving the benchmark index at its session low.
The Dow Jones Industrial Average (+0.6%) and the Nasdaq Composite (+1.0%) also experienced some selling to finish near their session lows. The Russell 2000 (+1.1%) led all the indices, but also finished off its highs for the day.
President Trump initiated the optimism when he told Reuters he would get involved in the Department of Justice case against Huawei CFO Meng Wanzhou if it would serve national security interests and help advance trade negotiations with China. U.S. Secretary of Commerce Wilbur Ross later softened the President's language, though, clarifying he hasn't actually decided if he would intervene.
Also, news that China is reportedly looking to tweak its "Made in China 2025" policy to allow more access and fairer competition for foreign companies helped lift sentiment.
These positive-sounding headlines fueled buying interest on the notion that a trade deal, if struck, would bode well for economic growth prospects. Stocks, however, would retreat from session highs on no specific news catalyst. The fading action was in keeping with a trend of selling into strength and likely reflected some nervousness about holding positions overnight given the headline-induced volatility of late.
The consumer discretionary (+1.1%), materials (+1.0%), health care (+0.9%), communication services (+0.8%), and information technology (+0.8%) sectors led today's gains.
Chip stocks, in particular, put in another strong showing with the Philadelphia Semiconductor Index rising 1.5%. The group's recent outperformance has helped contribute to the tech sector's leadership position this week (+2.3%).
The defensive-oriented consumer staples (-0.2%), utilities (-0.6%), and real estate (-1.9%) sectors, meanwhile, finished in the red as the market adopted more of a risk-on tone.
Strikingly, the Dow Jones Transportation Average, which is a key driver of economic sentiment, was also unable to find steam. UPS (UPS 101.21, -2.37, -2.3%) and FedEx (FDX 188.27, -1.38, -0.7%) dragged on the average. On a related note, XPO Logistics (XPO 60.27, -6.42, -9.6%) traded sharply lower after providing a disappointing adjusted EBITDA growth forecast for FY19.
Other notable laggards included Dow components Exxon Mobil (XOM 76.02, -0.66, -0.9%) and Verizon (VZ 57.25, -1.60, -2.7%). Exxon fell as oil prices rolled over, and Verizon was downgraded to 'Equal-Weight' from 'Overweight' at Morgan Stanley.
Under Armour (UAA 19.81, -2.31, -10.4%) also stood out as the worst-performing stock in the S&P 500 after the company provided a disappointing revenue growth outlook for its core North American market between 2020 and 2022 at its Investor Day.
Overseas, attention turned to the UK, where Prime Minister Theresa May won a "no confidence" vote from her own Conservative Party with respect to her leadership. The vote came amid the heightened uncertainty surrounding the UK's Brexit plan. The British pound rose 1.1% to 1.2617 against the dollar, which also benefited from the U.S. Dollar Index losing 0.3% to 97.08.
Reviewing Wednesday's economic data, which included the Consumer Price Index for November and the weekly MBA Mortgage Applications Index:
Total CPI was unchanged month-over-month in November, as expected, while core CPI, which excludes food and energy, was up 0.2%, also as expected. Total CPI was up 2.2% year-over-year, versus 2.5% in October, and core CPI was up 2.2%, versus 2.1% in October.
The key takeaway is that consumer inflation trends are not running away from the Federal Reserve's longer-run target, which should feed into the market's growing belief that the Federal Reserve has some data-based scope to take it easy after a December rate hike.
The weekly MBA Mortgage Applications Index rose 1.6% after increasing 2.0% in the prior week.
Looking ahead, investors will receive Export and Import Prices for November, the Treasury Budget for November, and weekly Initial and Continuing Claims on Thursday.
Nasdaq Composite +2.8% YTD
Dow Jones Industrial Average -0.8% YTD
S&P 500 -0.8% YTD
Russell 2000 -5.2% YTD
Tech Stocks Help Lift Wall Street in Shaky Session
10-Dec-18 16:25 ET
Dow +34.31 at 24423.26, Nasdaq +51.27 at 7020.52, S&P +4.64 at 2637.72
https://www.briefing.com/investor/markets/stock-market-update/2018/12/10/tech-stocks-help-lift-wall-street-in-shaky-session.htm
[BRIEFING.COM] The S&P 500 gained 0.2% on Monday in what was yet another volatile day of trading on Wall Street. The benchmark index overcame a loss of 1.9% intraday despite the uncertainty surrounding trade, growth prospects, the path of interest rates, and geopolitics.
Meanwhile, the Dow Jones Industrial Average gained 0.1% after being down as much as 2.1%, Nasdaq Composite gained 0.7% after being down as much as 1.3%, and the Russell 2000 lost 0.3%, though it was down as much as 1.7%.
The major indices fell to session lows shortly after UK Prime Minster Theresa May announced she will be delaying the vote in Parliament originally scheduled for Tuesday on the UK-EU Brexit plan.
It wasn't exactly surprising news since it had been speculated before the open that Ms. May was likely going to announce today a delay in the vote. It was also reported that the vote would have likely been defeated had it been held on Tuesday. Nevertheless, the announcement crystallized the uncertainty surrounding the Brexit matter, which left it akin to pouring fuel on a fire of uncertainty on a host of other issues that have been weighing on investor sentiment and stock prices.
Consequently, there was some knee-jerk selling following the news. That selling interest, though, was soon met with buying activity that coincided with the close of European markets at 11:30 a.m. ET and a sharp rebound in shares of Apple (AAPL 169.60, +1.11, +0.7%) that took hold shortly thereafter.
There wasn't a specific catalyst for the turn in Apple, which had been knocked down early following reports that a court in China granted Qualcomm (QCOM 57.24, +1.25, +2.2%) an injunction against Apple, banning the import and sale of most iPhones in China due to a Qualcomm software patent.
Apple said the patents in question do not apply to the latest operating system that comes installed on all new iPhones, and has filed an appeal to overturn the sales ban, according to CNBC.
Within the S&P 500, the information technology (+1.4%) and communication services (+0.7%) outperformed to help lift the broader market from its early struggles.
Semiconductor stocks helped lead the tech sector rebound effort. The Philadelphia Semiconductor Index climbed 1.4% with Broadcom (AVGO 239.25, +10.69, +4.5%) extending its post-earnings gains from Friday. Facebook (FB 141.85, +4.43, +3.2%), meanwhile, carried the communication services sector following an announcement after Friday's close that it will be boosting its share buyback authorization by $9 billion.
The real estate sector (-0.4%) was one of only three sectors to close Monday with a loss. The other two were the energy (-1.6%) and financial (-1.4%) sectors, which fed into the concerns over economic growth along with the underperformance of the Dow Jones Transportation Average (-0.8%)
Looking at energy, WTI crude fell 2.9% to $51.10/bbl. Continued weakness in oil prices has been an influential drag on the oil-sensitive sector, which is now down over 17.0% this quarter. In the same period, crude is down 30.2%.
Monday's decline also extended the financial sector's position as the worst-performing group this month with a loss of 8.4%. Notable laggards included Wells Fargo (WFC 48.80, -1.46, -2.9%) and Bank of America (BAC 24.76, -0.67, -2.6%).
The contrasting performances from the heavily-weighted tech and financial sectors was a noteworthy occurrence. While the behavior of the technology stocks will likely command the most attention as a potential short-term market catalyst, the behavior of the financial sector should not be overlooked given its command position as a driver of economic activity.
Separately, the bond market settled down from last week's hot streak, pushing yields slightly higher. The 2-yr yield added two basis points to 2.72%, and the 10-yr yield added one basis point to 2.86%.
The U.S. Dollar Index climbed 0.7% to 97.20, benefiting largely at the expense of the British pound, which fell 1.7% to 1.2558 against the dollar as news of the delayed vote on the UK-EU Brexit plan stirred angst about the future of leadership in the UK and the specter of a messy "no deal" Brexit.
Overseas, global equities closed Monday on a lower note amid the uncertainty surrounding global trade issues and Brexit. Japan's Nikkei led the Asian retreat with a loss of 2.1%, and Germany's DAX led the European retreat with a loss of 1.5%.
Reviewing Monday's lone economic report, the JOLTS - Job Openings and Labor Turnover Survey for October showed job openings increased to 7.079 million from a revised 6.960 million (from 7.009 million) in September.
Looking ahead, investors will receive the NFIB Small Business Optimism Index for November and the Producer Price Index for November on Tuesday.
Nasdaq Composite +1.7% YTD
Dow Jones Industrial Average -1.2% YTD
S&P 500 -1.3% YTD
Russell 2000 -6.0% YTD
InvestmentHouse - OPEC Cuts Production More Than Expected (Weekend Newsletter)
https://news.investmenthouse.com/2018/12/the-daily-part-1-of-3-12-8-18.html
- Thursday intraday reversal flops with the indices back down to the bottom of the range.
- Trade and yield curve inversion issues likely showing no near-term resolution.
- OPEC cuts production more than expected.
- Some leaders remain solid, others continue eroding.
- Market heads into the week trying to hold the selloff trading range.
The Thursday rebound from the bottom of the late October to present trading range failed Friday. From the get go. Stocks had no upside follow through to the 1492 point round trip on DJ30. Sure futures bumped higher off the lows after the jobs report was a bit weaker than anticipated and OPEC struck a deal to cut production by 1.2M bbl/day, more than anticipated. Indeed, stocks even started to recover as the trading session started. Within 10 minutes, however, the bids died and a half hour into trading the selling started in earnest. Stocks sold all session, taking the indices back down to the October/November lows with RUTX even closing below those lows.
SP500 -62.87, -2.33%
NASDAQ -219.01, -3.05%
DJ30 -558.72, -2.24%
SP400 -3.74%
RUTX -1.98%
SOX -3.74%
NASDAQ 100 -3.30%
VOLUME: NYSE -19%, NASDAQ -12%. Volume faded from the spikes Tuesday and Thursday, but was still above average as NYSE sold off. NASDAQ trade remained at average levels, elevated since it started selling back from the 200 day SMA test.
ADVANCE/DECLINE: -2.2:1 NYSE, -2.6:1 NASDAQ
So what was the problem? A bounce off the bottom of the range, the WSJ reporting the Fed will adopt a wait and see view to further hikes after the December hike -- if that even occurs as some on the Fed (Bullard) are now suggesting the Fed pass on a December hike, and the US and China calling a truce on the trade war for 90 days. Everything would appear conducive to the market rebounding.
Perhaps not. There is the yield curve that is stating to invert among the shorter maturities and the concern is the Fed will hike in December right into an inverted curve and bring about the usual result of a Fed hiking campaign: bear market, recession. The irony drips with bitterness: the Fed is always trying to prevent overheating leading to inflation that it causes a recession -- and inflation.
The yield curve is a huge, unresolved issue.
Then there is trade, truce or no. Thursday Canada arrested the CFO of Huawei for extradition to the US on charges of fraud. It is alleged she lied to US banks, inducing them to fund projects that were in violation of the US sanctions against Iran. Kudlow on Friday said he did not believe the arrest would impact the trade negotiations, but that may be just hope. He is an optimistic guy after all.
The real issue with trade is that a truce is just a truce. It is not resolution. So now, unless something happens faster than expected, at best we are in for 90 days of perhaps not a trade war but a truce war where we hear the daily back and forth sausage making process and have to deal with good and the bad that comes out. That is another way of saying uncertainty as to the future, and you know how the market disdains uncertainty.
Thus, as the 'truce war' proceeds the market has to deal with the possible outcomes, overlaid with the concerns of yield curve inversion and what that can mean for stocks.
Both of those are weighing on stocks and quite frankly the best outcome could very well be moves up and down inside the trading range while investors and traders and algorithm programs react to the daily news and events. Those algorithm trading programs, as we saw ahead of the Wednesday market closure, can be unpredictable as the word was that they were not programmed on how to react to an unexpected market closure. Not very comforting explanation.
That is not a great prognosis for the market, at least in terms of upside outside the current range. It may even prove difficult to hold the range given the uncertainties.
THE MARKET
CHARTS
After starting the week at or near the early November high, the top of the two-month trading ranges, stocks sold off to the bottom of the range to end the week. RUTX undercut its range on the Friday close. Now they show if they can hold the range. Every upside has been undercut by the ongoing issues and the 200 day SMA MA's are broken with the 50 day MA's crossing down through them in the so-called 'death cross.' Thus the overall bias has to be to the downside with these bounces off the bottom of the range.
SP500: Closed just over the November low, at the bottom of the October to present trading range. MACD continues to rise, to put in higher lows suggesting still upside momentum. Yes, there is that: some big surges inside the range for certain. As with the other indices, SP500 will have to show it can hold the range bottom and mount another bounce.
DJ30: Same action as SP500, testing the prior lows, its third trip to these levels. As with SP500, MACD continues to trend higher and looks as if it will put in a higher low -- if DJ30 can hold here again. That would suggest a hold yields another bounce higher in the range. Unlike SP500, the 50 day MA has not moved down through the 200 day MA, that is, no 'death cross' that suggests further downside to come.
NASDAQ: Sold below the October closing low, still over the November low (6908; closed 6929). Approaching the 2016 trendline it held and bounced from mid-November. MACD continues to trend higher here as well despite the 'death cross' on November 26. NASDAQ has the prior lows in the range as well as the 2016 trendline to try and bounce it back upside in the range.
RUTX: First close below the October low. No rebound this time. Small caps are the most economically sensitive stock group and their break below the October and November selloff lows suggests the Fed has again overshot in its zeal to remove what we worked so hard to achieved after 10 years of economic decline.
SP400: The midcaps are not as damning as the small caps though they did close at a lower closing low. Still above the October intraday lows and thus hanging in the range.
SOX: After peaking at the early October lower gap point SOX sold off into Friday. It closed below the November closing low but is still well above the October lows. MACD continues trending higher here as well. Chips were hard hit Friday on trade worries even as AVGO beat earnings expectations.
LEADERSHIP
Still some leaders, but the trend is less leaders versus more appearing. The week saw what was left of retail leaders collapse with drugs and software under pressure.
Retail/Apparel: Leading downside with so many breaking lower. LULU, ULTA, DG, WMT. Lots of heavy breaks by retail leaders as other leaders fall from leadership, at least upside.
Utilities: Not exciting, not leadership that breaks the market to new highs, but performance is performance, e.g. AEP moving higher Friday, keeping the uptrend in place.
Personal products: Makeup is now struggling as EL reversed a Monday breakout. PG, CLX continue their uptrends, now testing the 20 day EMA.
Food: Under pressure to end the week though holding up. YUM tested the 20 day EMA on the week, still a solid pattern. KO broke higher two Fridays back but then faded to the 20 day EMA to end last week. PEP broke higher the same Friday but fell to close below the 20 day EMA Friday. MCD tested the 20 day EMA but did slip below it Friday though very low volume. CMG holding the 50 day EMA as it tests. Still overall a solid sector.
Software: Showing some resilience and relative strength, but down for the week. TEAM still looks great VMW, VRSN, CRM, GLUU still holding their patterns but fighting to do so. ADBE broke lower below the 200 day SMA Friday in a sign of weakness.
Drugs: Biotechs tried to breakout but reversed hard, e.g. AMGN, the leader of the pack. Smaller biotech still has some winners e.g. BCRX, CRMD, ZGNX. Big pharma is under pressure, testing support to end the week having started to sell Tuesday. LLY, PFE, MRK.
FAANG: FB is still trying to rise up through the 20 day EMA as it tests that level for the sixth time since breaking below it in late July. AAPL sold to a lower low Friday as its woes regarding smart phone saturation and Chinese trade. AMZN broke over the 200 day SMA Tuesday then gave it back immediately. NFLX tried to rebound but failed at the 20 day EMA. GOOG gapped upside to the 200 day SMA Tuesday then reversed and sold off through Friday.
Chips: Under real pressure. NVDA tested the 20 day EMA and rolled over into Friday. AMAT and AMD reversed an early week move and broke support. SLAB showed the same action. ON as well. The pattern repeats all over the sector.
Financial: AXP broke out 7 sessions back. It hit a higher high Monday but reversed to give up the breakout. Banks still struggling, diving lower Tuesday and Friday, e.g. JPM, C. GS selling to lower lows as is MS.
MARKET STATS
DJ30
Stats: -558.72 points (-2.24%) to close at 24388.95
Nasdaq
Stats: -219.01 points (-3.05%) to close at 6969.25
Volume: 2.5B (-12.28%)
Up Volume: 426.6M (-1.203B)
Down Volume: 2.03B (+850M)
A/D and Hi/Lo: Decliners led 2.63 to 1
Previous Session: Decliners led 1.6 to 1
New Highs: 17 (+8)
New Lows: 270 (-195)
S&P
Stats: -62.87 points (-2.33%) to close at 2633.08
NYSE Volume: 1.031B (-19.36%)
Up Volume: 196.07M (-267.342M)
Down Volume: 821.558M (+16.826M)
A/D and Hi/Lo: Decliners led 2.19 to 1
Previous Session: Decliners led 1.58 to 1
New Highs: 39 (+4)
New Lows: 259 (-389)
SENTIMENT
VIX: 23.23; +2.04
VXN: 28.03; +2.06
VXO: 27.13; +3.60
Put/Call Ratio (CBOE): 1.17; +0.09
Bulls and Bears:
Seriously? Bulls surge over 8 points past the mid-forties. The trend, however, is lower. Bears continued higher, taking out the prior 2018 high. That is a positive longer term. Bears have been absent for over 2 years.
Bulls: 46.7 versus 38.3
Bears: 21.5 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: 46.7 versus 38.3
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: 21.50 versus 20.6
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: 2.854% versus 2.892%. Surged to the 200 day SMA and managed to hold near that level into Friday. This suggests there is concern about the economics and it also flattens the yield curve.
Historical: the last sub-2% rate was in November 2016 (1.867%). 2.892% versus 2.915% versus 2.979% versus 2.993% versus 3.032% versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus 3.074% versus 3.056% versus 3.065% versus 3.116% versus 3.127% versus 3.147% versus 3.186% versus 3.239% versus 3.228% versus 3.222% versus 3.201% versus 3.22% versus 3.146% versus 3.149% versus 3.119% versus 3.089% versus 3.079% versus 3.126% versus 3.111% versus 3.1692% versus 3.20% versus 3.196% versus 3.1779% versus 3.209% versus 3.165% versus 3.158% versus 3.167% versus 3.146% versus 3.169 versus 3.206% versus 3.233% versus 3.189% versus 3.183% versus 3.061% versus 3.087% versus 3.061% versus 3.052% versus 3.048% versus 3.048% versus 3.085% versus 3.066% versus 3.068% versus 3.076% versus 3.057% versus 2.99%
EUR/USD: 1.1404 versus 1.1376. Breaking over the 50 day MA for the first time in two months.
Historical: 1.1376 versus 1.13970 versus 1.13360 versus 1.13199 versus 1.13934 versus 1.13682 versus 1.12973 versus 1.13325 versus 1.13380 versus 1.13829 versus 1.13818 versus 1.14484 versus 1.14172 versus 1.13308 versus 1.13264 versus 1.13124 versus 1.12348 versus 1.13475 versus 1.1364 versus 1.14329 versus 1.14228 versus 1.14090 versus 1.13881 versus 1.14019 versus 1.13394 versus 1.13455 versus 1.13760 versus 1.14042 versus 1.13757 versus 1.3972 versus 1.14682 versus 1.14626 versus 1.1538 versus 1.14556 versus 1.14961 versus 1.1578 versus 1.15906 versus 1.15592 versus 1.15901 versus 1.15324 versus 1.4966 versus 1.4916 versus 1.1598 versus 1.15164 versus 1.14762 versus 1.15517 versus 1.15774 versus 1.16038 versus 1.16357 versus 1.17501
USD/JPY: 112.66 versus 112.71. Just below the 50 day MA after that Monday flop lower.
Historical: Last below 109 in June 2018: 112.71 versus 112.813 versus 113.581 versus 113.474 versus 113.402 versus 113.559 versus 113.781 versus 113.510 versus 112.972 versus 113.007 versus 113.077 versus 112.617 versus 112.831 versus 113.585 versus 113.576. Was at 110 three weeks back.
Oil: 52.61, +1.12. Up on OPEC reducing daily production 1.2M bbl, but gave up a move over 54 intraday. That leaves oil still below the 10 day MA.
Gold: 1252.60, +14.50. Continued to surge toward the 200 day SMA, a level it has not touched since June.
MONDAY
The indices start the week testing the bottom of the range formed with the October selling. The patterns and technical indicators suggest a trading range with moves from where the indices closed Friday back up to the November highs. After a reversal off the trading range lows Thursday, however, stocks fell right back to the bottom of the range. The range is there but the indices are not just surging off the lows given the trade, yield curve overlays that don't appear to have any near term resolution.
Heading into this week we watch how the indices hold the bottom of the range. We have upside plays that are still holding support; if the indices bounce, they will as well. We also have some more upside plays on leaders that have tested well while maintaining their trends as well as some downside plays ready -- if the bottom of the range does not hold, of course a possibility after the Thursday reversal bounce folded on Friday.
With the continuing uncertainty in key areas the market likely trades in the range as the best possible upside outcome, and if not, then we play downside.
Have a great weekend!
Stocks End Losing Week on Downbeat Note
07-Dec-18 16:25 ET
Dow -558.72 at 24388.95, Nasdaq -219.01 at 6969.25, S&P -62.87 at 2633.08
https://www.briefing.com/investor/markets/stock-market-update/2018/12/7/stocks-end-losing-week-on-downbeat-note.htm
[BRIEFING.COM] The S&P 500 lost 2.3% on Friday to close a losing week (-4.6%) on a sour note. The major averages fumbled an early morning rally effort and steadily retreated throughout the day to finish near session lows.
The Dow Jones Industrial Average lost 2.2%, the Nasdaq Composite lost 3.1%, and the Russell 2000 lost 2.0%. For the week, those indices lost 4.5%, 4.9%, and 5.6%, respectively.
The inability to sustain an early rally effort following Thursday's strong rebound, and a generally supportive employment report, raised some concern that the week's down leg had yet to run its course. Volatile price action also undercut investor sentiment and tempered confidence in buy-the-dip efforts.
Within the S&P 500, the information technology (-3.5%), consumer discretionary (-3.1%), and industrial (-2.6%) sectors underperformed the broader market.
Apple's (AAPL 168.49, -6.23, -3.6%) poor performance within the tech space was reflective of the ongoing effort to liquidate/reduce exposure to the market's most heavily-weighted group. The sector's non-response to Broadcom's (AVGO 228.56, +1.32, +0.6%) upbeat earnings report was also indicative of the negative sentiment hanging over the sector. The tech sector lost 5.1% this week and is now down 14.6% this quarter.
Chip stocks also struggled with the Philadelphia Semiconductor Index losing 3.7%. NVIDIA (NVDA 147.61, -10.68) underperformed with a notable loss of 6.8%.
Within the industrial sector, transport stocks were one of the most-heavily hit groups on Friday with the Dow Jones Transportation Average losing 3.9%, as growth concerns and an uptick in oil prices fed selling efforts. American Airlines (AAL 33.57, -3.37) and FedEx (FDX 201.39, -13.02) were notable laggards with steep losses of 9.1% and 6.1%, respectively.
On the other hand, the utilities (+0.4%) group was the only sector to finish in positive territory on Friday. The energy sector (-0.6%) also showed relative strength.
Looking at energy, OPEC+ producers agreed to a production cut of 1.2 million barrels per day to address weakening oil prices. Russia was a party to the proposed production cuts, yet Iran is reportedly exempt from the production cut requirements. WTI crude rose 2.0% to $52.60/bbl, although it gave up a good chunk of its gains.
In earnings, lululemon athletica (LULU 113.87, -17.57) and Ulta Beauty (ULTA 254.47, -38.45) fell 13.4% and 13.1%, respectively, after releasing their earnings reports. Lululemon sold-off despite beating top and bottom line estimates. Ulta tumbled after the company issued Q4 guidance below consensus.
U.S. Treasuries extended their recent climb, pushing yields lower, amid the equity sell-off. Friday's gains were led by the front end, which responded favorably to the November employment report and a contention from St. Louis Fed President Bullard (a 2019 FOMC voter) that the Fed could consider delaying a rate hike at the December FOMC meeting due to the narrowed yield curve.
Specifically, the 2-yr yield fell seven basis points to 2.70%, and the 10-yr yield fell two basis points to 2.85%. For the week, the 2-yr yield dropped 11 basis points, and the 10-yr yield dropped 16 basis points. Meanwhile, the U.S. Dollar Index decreased 0.2% to 96.92 on Friday.
Separately, the CBOE Volatility Index (VIX), which is often referred to as Wall Street's "fear gauge," rose 9.6% to 23.23. For the week, the VIX climbed nearly 30.0%.
Reviewing Friday's economic data, which included the Employment Situation Report for November, the Preliminary Reading for the University of Michigan Index of Consumer Sentiment for December, Wholesale Inventories for October, and Consumer Credit for October:
November nonfarm payroll growth was a little light of expectations, but key for the market was the recognition that average hourly earnings were up 0.2% month-over-month. The latter resulted in a year-over-year increase of 3.1%, which was unchanged for the 12-month period ending in October.
The key takeaway from the report is that the wage acceleration the Federal Reserve has been bracing for was missing. That won't likely keep the Federal Reserve from raising the target range for the fed funds rate at its December FOMC meeting, yet it's the type of data point that could lead the Federal Reserve to be more cautious-minded about raising rates after that.
The preliminary University of Michigan Index of Consumer Sentiment for December checked in at 97.5 (Briefing.com consensus 96.8), unchanged from the final reading for November and in-line with the two-year average from January 2017 to December 2018.
The key takeaway from the report is the observation that consumer attitudes around job and wage prospects are key to the consumer spending outlook and that some caution on that front may now be warranted as consumers recognize the goal of raising interest rates is to slow the pace of economic growth.
Wholesale inventories increased 0.8% in October (Briefing.com consensus 0.7%) on top of an upwardly revised 0.7% increase (from 0.4%) in September. Wholesale sales were down 0.2% following a downwardly revised 0.1% increase (from 0.2%) in September.
The key takeaway from the report is that inventory growth exceeded sales growth, which is a dynamic that could give way to lower pricing.
Total outstanding consumer credit increased by $25.4 billion in October after increasing an upwardly revised $11.6 billion (from $11.0 billion) in September.
The key takeaway from the report is that the healthy expansion in consumer credit is a good portent for consumer spending activity.
Looking ahead, investors will receive the JOLTS - Job Openings and Labor Turnover Survey on Monday.
Nasdaq Composite +1.0% YTD
Dow Jones Industrial Average -1.3% YTD
S&P 500 -1.5% YTD
Russell 2000 -5.7% YTD
Week in Review: Global Growth Concerns Pull Stocks Lower
The S&P 500 fell 4.6% this week, as global growth concerns were exacerbated by negative developments regarding U.S-China trade negotiations and the continued flattening of the U.S. Treasury yield curve. The Dow Jones Industrial Average lost 4.5%, the Nasdaq Composite lost 4.9%, and the Russell 2000 lost 5.6%.
Investors breathed a fleeting sigh relief that trade relations between the U.S. and China did not worsen over the weekend after the two countries agreed to suspend further tariff actions for 90 days to allow more time for trade discussions. Despite President Trump's optimism, the market's optimism quickly waned on the supposition that a March 1 deadline to resolve major trading issues won't be sufficient time to work out major trade issues that have been in place for years. Furthermore, the specter of increasing the tariff rate to 25% (from 10%) on $200 billion of Chinese goods should an acceptable deal not be reached weighed on investors' minds.
In addition, the news of the arrest of Huawei Technologies' CFO Meng Wanzhou heightened these burgeoning trade concerns. Ms. Meng was arrested Dec. 1 in Canada amid allegations that the company violated U.S. trade sanctions on Iran. Her arrest invited worries about trade negotiations going awry in the 90-day window and potential retaliation against U.S. companies doing business in/with China.
Economic growth concerns were cast into the spotlight by a decisive curve-flattening trade in the Treasury market that featured some inversions on the short end. The 2-yr yield (2.70%) and 3-yr yield (2.71%) closed higher than the yield on the 5-yr Treasury note (2.69%) this week.
Also, the difference between the 2-yr and 10-yr yields narrowed to its slimmest margin since 2007. Specifically, the 2-yr yield lost 11 basis points to 2.70%, and the 10-yr yield lost 16 basis points to 2.85%. Those moves were exacerbated by a "pain trade," as short sellers expecting higher rates were compelled to cover their bearish bets.
In a broader context, concerns over future economic growth drove concerns about future earnings growth. That fueled some of this week's selling interest, which completely unwound the 4.9% gain for the S&P 500 from the prior week at Friday's low.
Notably, that was the case despite there being one less day of trading. The market was closed Wednesday in recognition of the national day of mourning for President George H.W. Bush.
The worst-performing sectors this week were the financials (-7.1%), industrials (-6.3%), materials (-5.2%), information technology (-5.1%), and health care (-4.6%) sectors. The only two sectors that escaped the week with a gain were the utilities (+1.3%) and real estate (+0.3%) sectors.
The rate-sensitive financial sector was undermined by the flattening yield curve, which raised concerns about a compression in net interest margins. Regional banks were notable laggards as worries about lower mortgage loan demand stemmed from home builder Toll Brothers (TOL) acknowledging that it saw a moderation in demand in its fiscal fourth quarter ended Oct. 31 and that it saw the market soften further in November. The SPDR S&P Regional Bank ETF (KRE) fell 7.2% this week.
Transport stocks, in particular, weighed on the trade-sensitive industrial sector. The Dow Jones Transportation Average dropped 8.0% this week. American Airlines (AAL) struggled with a steep 16.4% loss this week.
Apple (AAPL) conceded more losses this week, as it dragged on the tech space. Apple has retreated over 20.0% since releasing its quarterly report in October and has remained a signpost of the ongoing effort to liquidate/reduce exposure to this widely-owned sector, which is still the market's most heavily-weighted sector.
The energy sector (-3.1%) was down for the week, yet it outperformed the broader market, helped by a 3.1% bump in oil prices to $52.52 per barrel.
Energy stocks pared gains on Friday after OPEC+ producers agreed to a production cut of 1.2 million barrels per day to address weakening oil prices. Russia was a party to the proposed production cuts; meanwhile, Iran will reportedly be exempt from the production cut requirements.
On a related note, Qatar, in a surprise move, announced plans to withdraw from OPEC to focus on gas production. Qatar has been a member of OPEC since 1961.
Separately, Atlanta Fed President Bostic (FOMC voter) said he thinks the fed funds rate is within shouting distance of neutral, which followed previous remarks from Dallas Fed President Kaplan (non-FOMC voter) who also suggested the fed funds rate is a little bit below neutral. A Wall Street Journal report also suggested that the Federal Reserve might be more cautious-minded about raising interest rates following its December FOMC meeting.
The November Employment Situation Report on Friday seemingly helped substantiate that view. It showed nonfarm payrolls increasing a weaker than expected 155,000 and average hourly earnings increasing 0.2%, which left them up 3.1% year-over-year, unchanged from October. In other words, the wage growth acceleration the Federal Reserve has been bracing for was missing.
Overseas, global markets finished the week with large losses as well. Germany's DAX (-4.2%) led the European retreat and Japan's Nikkei (-3.0%) led the decline in Asia.
Stocks Slide on Trade Concerns, but Recoup Heavy Losses
06-Dec-18 16:30 ET
Dow -79.40 at 24947.67, Nasdaq +29.83 at 7188.26, S&P -4.11 at 2695.95
https://www.briefing.com/investor/markets/stock-market-update/2018/12/6/stocks-slide-on-trade-concerns-but-recoup-heavy-losses.htm
[BRIEFING.COM] The S&P 500 lost 0.2%, but was able to fight back after being down as much as 2.9% earlier in the session. The Dow Jones Industrial Average lost 0.3% after being down as many as 785 points or 3.1%. The Nasdaq Composite added 0.4%, yet it had been down as many as 174 points or 2.4%.
The major indices suffered steep losses in the early going after news of the arrest of Huawei Technologies' CFO fueled concerns about U.S.-China trade negotiations. Investor sentiment reversed course after European markets closed, however, and kicked into overdrive late in the day following a Wall Street Journal report that suggested the Federal Reserve might be more cautious-minded about raising interest rates following its December FOMC meeting.
News surfaced Wednesday that Huawei CFO Meng Wanzhou was arrested in Canada Dec. 1 amid allegations the company violated U.S. trade sanctions on Iran. Ms. Meng is expected to be extradited to the U.S. to face the charges. Her arrest invited worries about potential retaliation against U.S. companies doing business in/with China. In a broader context, the sense that there might not be a trade deal fueled global growth concerns.
Those concerns, and the sharp selling in the stock market off the open, fueled a flight-to-safety in the Treasury market that pushed yields noticeably lower across the curve. The 2-yr yield dropped three basis points to 2.77% after hitting 2.68% intraday. The 10-yr yield dropped five basis points to 2.87% after hitting 2.82% intraday. The backtracking in the Treasury market also coincided with the close of European markets and the rebound effort in the stock market.
On a related note, Atlanta Fed President Bostic (FOMC voter) said he thinks the fed funds rate is within shouting distance of neutral, which followed previous remarks from Dallas Fed President Kaplan (non-FOMC voter) who suggested the fed funds rate is a little bit below neutral.
In other developments, JPMorgan Chase (JPM 105.19, -2.04, -1.9%) CEO Jamie Dimon shared some typically practical viewpoints in a CNBC interview that helped provide a measure of support for an oversold stock market. Mr. Dimon said he realizes the China trade issue is the main source of market volatility right now, but believes there could be enough progress in trade talks in the next 90 days to create, or push out, another deadline. He did acknowledge, though, that the trade uncertainty is not a good thing.
Regarding interest rates, Mr. Dimon believes the world is better off with the U.S. growing and rates going up because of that growth than it is with the U.S. being in a recession and rates going down because of it. He thinks if there is a bubble anywhere it is in U.S. government bonds.
Within the S&P 500, the energy (-1.8%), financials (-1.5%), materials (-1.4%), and industrial (-0.6%) sectors underperformed the broader market.
The oil-sensitive energy group fell in tandem with oil prices. WTI crude fell 3.0% to $51.56/bbl amid reports that Saudi Arabia is floating an idea for OPEC to cut production less than the market expected.
WTI crude was able to finish off session lows, though, as the weekly crude inventory report from the Energy Information Administration showed a decline in crude stockpiles for the first time since September. Crude oil inventories had a draw of 7.3 million barrels. Also, Saudi Arabia is reportedly waiting to hear from Russia before advancing any formal production cut agreement. An official communique from OPEC is expected sometime on Friday.
Financial stocks were set back amid the continued decline in U.S. Treasury yields, but like most stocks today, they were able to recoup major losses. Citigroup (C 60.06, -2.20, -3.5%) was an influential drag after its CFO said the bank no longer expects year-over-year revenue growth for its markets business in the fourth quarter. In addition, Citigroup expects to fall slightly short of its stated goal of achieving 100 basis points of improvement in year-over-year operating efficiency.
Conversely, the real estate (+2.7%), communication services (+1.0%), consumer discretionary (+0.6%), and information technology (+0.2%) sectors all finished in the green on Thursday.
Strong finishes from many of the FAANG stocks helped lift the broader market, which rallied sharply into the close on broad-based buying interest. Facebook (FB 139.63, +1.70), Netflix (NFLX 282.88, +7.55), Alphabet (GOOG 1068.73, +17.91), and Amazon (AMZN 1699.19, +30.79) all rose between 1.2% and 2.7%, Meanwhile, Apple (AAPL 174.72, -1.97) traded lower with a loss of 1.1%, but was able to close near its session high.
In earnings news, Hewlett Packard Enterprise (HPE 16.02, +0.97, +6.5%) was one of the top-performing stocks in the S&P 500 after it beat top and bottom line estimates.
Reviewing Thursday's economic data, which included the Trade Balance for October, Q3 Nonfarm Productivity and Unit Labor Costs, weekly Initial and Continuing Claims, Factory Orders for October, and ISM Services for November, and the ADP Employment Change Report for November:
The U.S. trade deficit was $55.5 billion in October (Briefing.com consensus -$54.7 billion) versus a downwardly revised $54.6 billion (from -$54.0 billion) in September.
The key takeaway from the report is that it doesn't reflect any improvement in the U.S trade deficit despite the tariff actions. The goods and services deficit has increased by $51.3 billion year-to-date, or 11.4%, from the same period in 2017.
Nonfarm business sector labor productivity for the third quarter was revised to 2.3% (Briefing.com consensus 2.2%) from 2.2%. Unit labor cost growth was revised to 0.9% (Briefing.com consensus 1.2%) from 1.2%.
The key takeaway from the report is that it points to fairly subdued labor costs in the third quarter, which could contribute to a willingness on the part of the Federal Reserve to be more gradual on its rate-hike path.
Initial jobless claims for the week ending December 1 decreased by 4,000 to 231,000 (Briefing.com consensus 225,000). Continuing claims for the week ending Nov. 24 decreased by 74,000 to 1.631 million.
The key takeaway from the report is that initial claims, while down in the latest week, are starting to pick up in a move that suggests the low for this cycle has been reached.
Factory orders declined 2.1% in October (Briefing.com consensus -2.0%) following a downwardly revised 0.2% increase (from 0.7%) in September. Excluding transportation, orders were up 0.3%.
The key takeaway from the report is that it shows a surprising lack of business investment in the face of business-friendly fiscal stimulus measures.
The ISM Non-Manufacturing Index rose to 60.7% in November (Briefing.com consensus 59.0%) from 60.3% in October. The November reading was the second-highest reading this year.
The key takeaway from the report is that the services-providing sector, which accounts for a much larger slice of economic activity than the manufacturing sector does, remains in a healthy and fairly vibrant state.
According to the ISM, the past relationship between the Non-Manufacturing PMI and the overall economy indicates the November reading corresponds to a 4.3% increase in real GDP on an annualized basis.
The ADP National Employment Report showed an increase of 179,000 in November (Briefing.com consensus 192,000), and the October reading was revised to 225,000 (from 227,000).
Looking ahead, investors will receive the Employment Situation Report for November, the Preliminary Reading for the University of Michigan Index of Consumer Sentiment for December, Wholesale Inventories for October, and Consumer Credit for October on Friday.
Nasdaq Composite +4.1% YTD
Dow Jones Industrial Average +0.9% YTD
S&P 500 +0.8% YTD
Russell 2000 -3.8% YTD
Stocks Fall on Concerns Over Trade, Economic Growth
04-Dec-18 16:25 ET
Dow -799.36 at 25025.97, Nasdaq -283.09 at 7158.63, S&P -90.31 at 2700.33
https://www.briefing.com/investor/markets/stock-market-update/2018/12/4/stocks-fall-on-concerns-over-trade-economic-growth-.htm
[BRIEFING.COM] The S&P 500 tumbled 3.2% on Tuesday, catalyzed by waning optimism in trade negotiations between the U.S. and China and concern over future economic growth, which was signaled by the drop in U.S. Treasury yields. A technical breach of the S&P 500's 200-day moving average (2762.32) also contributed to some selling.
Meanwhile, the Dow Jones Industrial Average lost 3.1%, the Nasdaq Composite lost 3.8%, and the Russell 2000 lost 4.4%.
Monday's trade-relief rally was under pressure from the onset as market participants reoriented their mindset to concerns that the U.S. and China won't be able to settle differences over major trading issues in the next 90 days. President Trump seemed to stoke those concerns with a tweet that acknowledged the possibility of getting a deal done with China, but which also carried the reminder that he is a "Tariff Man," implying that he would revert to further tariff action if a deal doesn't get done.
Beyond that factor, today's sell-off was really sparked by economic growth concerns, which manifested themselves in a decisive curve-flattening trade in the Treasury market that also featured an inversion of the 2-yr note yield (2.80%) and 3-yr note yield (2.80%) over the 5-yr note yield (2.79%). The 10-2 spread narrowed to 12 basis points, which is the narrowest spread since 2007.
The benchmark 10-yr yield dropped seven basis points to 2.92% while the 30-yr yield dropped 10 basis points to 3.17%. Those moves were exacerbated by a "pain trade," as short sellers expecting higher rates were compelled to cover their bearish bets.
It was telling, too, that the drop in interest rates wasn't a catalyst for increased buying interest in the stock market. The reason being is that the drop in rates was grounded in concerns over future economic growth, which in turn drove concerns about future earnings growth.
Concerns over future economic growth were reflected in the poor performances from the cyclical sectors, as well as the domestically-oriented Russell 2000 (-4.4%). The financials (-4.4%), industrials (-4.4%), consumer discretionary (-3.9%), and information technology sectors (-3.9%) underperformed the broader market.
The rate-sensitive financial sector was undermined by the flattening yield curve, which raised concerns about a compression in net interest margins.
Regional banks were notable laggards as worries about lower mortgage loan demand stemmed from home builder Toll Brothers (TOL 33.00, -0.53, -1.6%) acknowledging that it saw a moderation in demand in its fiscal fourth quarter ended Oct. 31 and that it saw the market soften further in November. The SPDR S&P Regional Bank ETF (KRE 52.63, -3.05) fell 5.5%.
Other laggards included the cyclical transport and chip stocks, which respectively weighed on the industrial and tech sectors. Notable underperformers included industrials UPS (UPS 106.80, -8.47, -7.4%) and American Airlines (AAL 36.69, -2.96, -7.5%); and chipmakers Advanced Micro (AMD 21.12, -2.59, -10.9%) and NVIDIA (NVDA 157.11, -12.93, -7.6%). The Dow Jones Transportation Average lost 4.4%. The Philadelphia Semiconductor Index lost 5.0%.
Apple (AAPL 176.69, -8.13) fell 4.4% after HSBC Securities downgraded the stock to Hold from Buy and another supplier issued a guidance warning. Chip supplier Cirrus Logic (CRUS 37.95, -0.72, -1.9%) lowered its revenue guidance due to recent weaknesses in the smartphone market. The other FANG stocks, Facebook (FB 137.93, -3.16, -2.2%), Netflix (NFLX 275.33, -14.97, -5.2%), Alphabet (GOOG 1050.82, -55.61, -5.0%), and Amazon (AMZN 1668.40, -103.96, -5.9%), also showed considerable losses.
On the other hand, the utilities sector (+0.2%) was the only group that finished in the green. The defensive-oriented real estate (-1.3%) and consumer staples (-1.6%) sectors were the only other groups to finish with losses under 2.0%.
In other corporate news, AutoZone (AZO 888.07, +55.61, +6.8%) led the S&P 500 in gains after it beat earnings expectations, while Dollar General (DG 104.10, -7.60, -6.8%) fell after it missed earnings estimates and lowered its fiscal 2019 outlook.
Separately, the CBOE Volatility Index (VIX) spiked 25.3% to 20.60 amid the market downturn, and WTI crude rose 0.1% to $53.13/bbl.
Investors did not receive any notable economic data on Tuesday.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the Fed's Beige Book for November on Wednesday. On Thursday, investors will receive the ADP Employment Change Report for November, Q3 Nonfarm Productivity and Unit Labor Costs, Trade Balance for October, weekly Initial and Continuing Claims, Factory Orders for October, and ISM Services for November.
As a reminder the stock market will be closed on Wednesday in honor of the late George H.W. Bush, the 41st President of the United States.
Nasdaq Composite +3.7% YTD
Dow Jones Industrial Average +1.3% YTD
S&P 500 +1.0% YTD
Russell 2000 -3.6% YTD
Stocks Extend Rally on Trump-Xi Trade Ceasefire
03-Dec-18 16:20 ET
Dow +287.97 at 25825.33, Nasdaq +110.98 at 7441.72, S&P +30.20 at 2790.64
https://www.briefing.com/investor/markets/stock-market-update/2018/12/3/stocks-extend-rally-on-trumpxi-trade-ceasefire.htm
[BRIEFING.COM] The S&P 500 extended last week's rally by 1.1% on Monday, as investors breathed a sigh of relief that U.S.-China trade relations did not worsen over the weekend. Meanwhile, the Dow Jones Industrial Average gained 1.1%, the Nasdaq Composite gained 1.5%, and the Russell 2000 gained 1.0%.
President Trump and President Xi agreed at their Saturday dinner meeting to suspend further tariff actions for 90 days, during which time further negotiations will be conducted with an aim of trying to settle disagreements over structural trade issues. National Economic Council Director Larry Kudlow told reporters the 90-day clock will start Jan. 1 and expects changes across a broad range of issues to happen "very quickly."
Stocks retreated from their best levels, though, reined in by an underlying sense that the morning's positive reaction to the Trump-Xi agreement to suspend further tariff actions was probably an overreaction since nothing concrete was achieved in terms of resolving the most important structural trade issues between the two countries. Also, the specter of moving the tariff rate to 25% (from 10%) on $200 billion of Chinese goods continues to hang there as a stick in the event an acceptable deal to the U.S. is not struck within the 90-day deadline.
Nevertheless, the stock market still had a solid day with the energy (+2.3%), consumer discretionary (+2.2%), information technology (+2.1%), and material (+1.8%) sectors outperforming the broader market.
WTI crude bounced 4.3% to $53.06/bbl to help lift the oil-sensitive energy group. Contributing to crude's advance was an upbeat growth perspective from the trade ceasefire and Canadian province Alberta's decision to cut oil production by 325,000 barrels per day, or 8.7%, starting in January to help curtail excess supply. Separately, Qatar surprisingly announced plans to withdraw from OPEC to focus on gas production; Qatar has been a member of OPEC since 1961.
Within the consumer discretionary space, heavyweights Amazon (AMZN 1772.36, +82.19) and Nike (NKE 77.94, +2.82) helped carry the sector with strong gains of 4.9% and 3.8%, respectively. Auto stocks also had a solid showing amid some trade tension relief.
President Trump tweeted Sunday evening, "China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%." Larry Kudlow noted in a Reuters interview on Monday that he expects China to reduce car tariffs to zero. Ford Motor (F 9.60, +0.19) and General Motors (GM 38.46, +0.51) added respective gains of 2.0% and 1.3%.
Chip stocks also had a notably strong performance on Monday, as the Philadelphia Semiconductor Index rose 2.7%. Advanced Micro (AMD 23.71, +2.41, +11.3%), which led the S&P 500 in gains on Monday, provided strong support for the index and the tech sector. Apple (AAPL 184.82, +6.24) also contributed to the tech sector's advance with a strong gain of 3.5%.
Conversely, the real estate (+0.4%), communication services (+0.1%), and consumer staples (-0.1%) sectors finished at the bottom of the sector standings. Notable laggards from each respective sector included American Tower (AMT 163.08, -1.41, -0.9%), Verizon (VZ 58.16, -2.14, -3.6%), and PepsiCo (PEP 118.98, -2.96, -2.4%). Verizon was downgraded to 'Neutral' from 'Overweight' at JP Morgan.
In M&A news, pharmaceutical company Tesaro (TSRO 73.50, +27.12) soared 58.5% after it agreed to be acquired by UK-based GlaxoSmithKline (GSK 38.61, -3.26, -7.8%) for roughly $5.1 billion. Also, Tribune Media (TRCO 44.98, +4.72) gained 11.7% after Nexstar (NXST 88.32, +5.68, +6.9%) agreed to acquire the media company for $46.50/share in a cash transaction that is valued at $6.4 billion.
Separately, U.S. Treasuries had a much better day than many participants might have expected in the face of some optimism in the stock market. The 2-yr yield added one basis point to 2.82%, and the 10-yr yield lost two basis points to 2.99%. Meanwhile, the U.S. Dollar Index declined 0.3% to 96.99. The resiliency of the Treasury market reflected a more practical awareness that an agreement to keep talking is still a long way from an economically-material solution on major trade issues.
Reviewing Monday's economic data, which included the ISM Index for November and Construction Spending for October:
The ISM Manufacturing Index for November checked in at 59.3% (Briefing.com consensus 57.2%) versus 57.7% for October, led by strength in the New Orders Index.
The key takeaway from the report is that it reflects an acceleration in national manufacturing activity at a time when concerns have been picking up about a general growth slowdown. Accordingly, it can help mitigate some of the slowdown concerns and potentially foster an improved outlook for Q4 GDP growth. According to the ISM, the past relationship between the PMI and overall economy indicates the November reading corresponds to a 4.9% increase in real GDP on an annualized basis.
Total construction spending declined 0.1% in October (Briefing.com consensus +0.3%) following a downwardly revised 0.1% decline (from 0.0%) in September.
The key takeaway from the report is that the weakness was driven by a decline in new single-family construction, providing further evidence of the softening in housing market activity.
Looking ahead, investors will receive Auto and Truck Sales for November throughout the day.
Nasdaq Composite +7.8% YTD
Dow Jones Industrial Average +4.5% YTD
S&P 500 +4.4% YTD
Russell 2000 +0.9% YTD
InvestmentHouse - Stocks Get Upside Help From the Fed (Weekend Newsletter)
https://news.investmenthouse.com/2018/12/the-daily-part-1-of-3-12-1-18_1.html
- Stocks get more upside help from the Fed, trade possibilities.
- Instead of another pause into the weekend, the news fuels more
upside and pushes indices to next resistance.
- Some really solid moves on the week leave less positions to consider
for next week. A pause Monday and Tuesday would cure that . . .
- Still waiting on Trump/Xi meeting resolution, but based upon the
likely outcome it likely won't add much more as the market has priced in
expectations for some minor deal.
- Would not be surprised to see the indices pause to start the week
given a lot of good news is build into the past week's move.
Friday the market did not give us the perfect setup; as noted Thursday, it
often does not. That does not mean it was a bad session. Hardly. The
indices rallied nicely.
What we wanted, however, was another pause following Thursday's sluggish
session, a pause to better setup a new move higher in the coming week to
continue the move with a new breakout.
Stocks did start lower pre-market and by the open improved but were still
mixed and near the flat line. The problem was the Fed was active again.
Wednesday Powell confirmed the Fed-speak of the Fed vice chair Clarinda,
i.e. that the FFR was just below neutral. Friday the New York Fed
reiterated the FFR was not far from neutral and indeed the FFR was to remain
'low.' Okay, the top three on the Fed all agreeing rates were near neutral,
meaning quite limited upside in terms of more rate hikes. Ultra-ultra Fed
dove Kashkari also threw in that the Fed should not hike rates when job
creation is strong and inflation tame. What more could you want?
How about the administration suggesting a US/China trade deal Saturday was a
done deal. Mr. Lighthizer, a White House advisor who has been very negative
about the possibility of a deal, stated he would be 'surprised' if the
Trump/Xi dinner was not a success. Okay, so even the negative folks were
pushing for a deal.
The market, of course, liked it. Stocks opened, rallied, tested into
midday, then sprinted higher to the close. Volume surged, but it was month
end and stocks had posted quite a rebound. Thus there was some position
shuffling to take place before the new month.
SP500 22.41, 0.82%
NASDAQ 57.46, 0.79%
DJ30 199.62, 0.79%
SP400 0.64%
RUTX 0.52%
SOX 1.49%
NASDAQ 100 0.82%
VOLUME: NYSE +90%, NASDAQ +26%. NASDAQ back to just over average, NYSE
surging to the highest since expiration in September. Beginning of the
month, a rally that the big money did not expect, and now a lot of money
getting put to work suddenly.
ADVANCE/DECLINE: NYSE +1.2:1, NASDAQ +1.2:1. Puny breadth, more a large
cap session. Nothing new there.
There was more news that proved perhaps helpful.
China's PMI came in at a 29 month low. It just keeps getting better and
better for China as the Shanghai index tests the early 2016 lows after an 11
month selloff.
The move pushed the indices higher, pushing the indices into resistance.
DJ30 at the 50 day SMA. SP500 rallied to the 200 day SMA. NASDAQ moved
closer to the 50 day EMA up at 7400 (70 points higher). SOX is at the 50
day EMA. SP400 pushed closer to the 50 day SMA, RUTX held more or less
steady just over the 20 day EMA.
Big name 'Dow-type' stocks enjoyed solid moves, e.g. big drugs, VZ, PEP,
CAT, AXP, HD. Other big names as well, e.g. INTC, and a bevvy of software
stocks such as DATA hitting our target.
Again, there was no pause as the move took a one-day breather and renewed
the upside. That leaves the large cap indices moving into next week at
resistance. Oh well, the market moved on good news. The yearend rally is
showing good strength. Good stocks are moving quite well. The setup for
the continuing rally remains solid as many are now waking up and realizing
the market got what it wanted from the Fed, and most were not looking at the
good patterns as we were and picked up some great positions right at the
start of the move. Now they are buying and driving our positions higher.
That works, though we would have preferred to get the lateral move and set
up new buys. With the continued move upside that leaves fewer entries as
the week starts, but that may change if we get a little pause Monday and
Tuesday.
THE MARKET
CHARTS
DJ30: Upside 4 of 5 sessions, moving off the Thursday doji up to just below
the 50 day SMA. Solid double bottom bounce but now at some resistance.
Lots of good news built into the move (Fed, trade) and a 1250 point move on
the week. It would appear DJ30 needs to rest a bit, but with a yearend
rally the moves are not necessarily standard.
SP500: Also rallied off the Thursday doji, moving higher to close just below
the 200 day SMA, a significant resistance point. Four of five sessions
upside here as well. Basically the same pattern as DJ30 in application,
i.e. the double bottom rally up to a resistance point.
NASDAQ: Continued higher Friday off a Thursday pause, moving closer toward
the 50 day EMA. The big upside days were Monday and Wednesday while
Thursday and Friday were more a coast upside. A bit of slower trade here
leaves NASDAQ with some more room to rally though both 50 day MA's and the
200 day SMA overhead for the next 175 or so points.
SOX: Very similar to NASDAQ in terms of approaching the 50 day MA's though
a bit closer after the Friday rally. Chips are improved with many having
put in longer bases and SOX' pattern is better itself. Still, it is more in
a position of having to prove it can make the break over the 50 day MA and
rally to that early October gap lower at 1300 (closed at 1240ish).
SP400: Similar to SOX in its pattern of the past three months, moving up
near the 50 day MA's where it failed in early November. Put in a higher low
the third week in November, bounced off that, but at this point is still a
follower not a leader.
RUTX: Off the double bottom, moving through the 20 day EMA, but not much
more than that. Kind of a SOX pattern, just not at the 50 day MA's yet.
Follower.
LEADERSHIP
Drugs: Strong week for big names and some smaller issues look better. LLY,
ABT, PFE very solid. Biotech is also moving, with some large caps (BIIB,
AMGN, ILMN) working well. Smaller are getting a bit better but need work.
Software: Some nice moves for sure, e.g. DATA, VMW, CRM, TEAM. The latter
two had earnings and we did not want to get in on that. DATA hit our target
Friday already.
Food: Still chomping. PEP, KO surged Friday. MCD faded Friday but a solid
week overall. CMG struggled Friday but recovered well enough. MKC continues
to recover off the test the prior week. Still eating, still a group seen as
protection for a slowing economy.
Transports: Airlines surged on the week as SAVE reported good results and
all went higher. Rails are actually setting up some, e.g. KSU, NSC. Trucks
are trying to set up bottoms but are not there just yet.
Retail: Very mixed, most struggling. COST, ROST, BBY, WSM. AMZN bounced on
the week to the 200 day SMA.
Chips: Some good moves, some. ON broke higher late week. XLNX continued
to a higher high. LRCX showed good upside action. AMD, AMAT set up very
well.
Telecom: If you mean VZ, then yes it is doing fine.
SCAANN: SQ languishing in a non-move. CRM gapped on earnings Wednesday.
AMZN at the 200 day SMA after a week of upside. AAPL testing 2 days, in
good position to bounce. NFLX up to the 20 day EMA and showing a doji after
a bounce on the week. NVDA bounced to the 10 day EMA. None look awesome
though AAPL is due to continue its move higher after this short test -- wish
the rest of the market would have done this.
Metals: Basically crappy but FCX is one to watch.
China: Good end to the week in anticipation of a US/China deal. BABA
jumped nicely as did QIWI. SOHU still looks good, still looking for SOHU to
make good.
MARKET STATS
DJ30
Stats: +199.62 points (+0.79%) to close at 25538.46
Nasdaq
Stats: +57.45 points (+0.79%) to close at 7330.54
Volume: 2.54B (+26.37%)
Up Volume: 1.49B (+549.63M)
Down Volume: 1.02B (-20M)
A/D and Hi/Lo: Advancers led 1.24 to 1
Previous Session: Decliners led 1.23 to 1
New Highs: 51 (+14)
New Lows: 119 (+25)
S&P
Stats: +22.41 points (+0.82%) to close at 2760.17 NYSE Volume: 1.509B
(+89.21%)
Up Volume: 870.304M (+532.626M)
Down Volume: 624.773M (+172.887M)
A/D and Hi/Lo: Advancers led 1.18 to 1
Previous Session: Decliners led 1.13 to 1
New Highs: 57 (+19)
New Lows: 259 (+91)
SENTIMENT
VIX: 18.07; -0.72
VXN: 24.02; -0.31
VXO: 20.75; -0.60
Put/Call Ratio (CBOE): 0.76; -0.13
Bulls and Bears:
A second week below 40 as bulls slide a bit more in what is a precipitous
drop. Maybe not into the low thirties, but the magnitude and angle of
decline was enough to contribute to the bounce. Bears move over 20 for the
first time since early 2018. Significant as well.
Bulls: 38.3 versus 39.6
Bears: 20.6 versus 19.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 38.3 versus 39.6
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 19.8
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: 2.993% versus 3.032%. Wow, back below 3% for the first time in over
2 months.
Historical: the last sub-2% rate was in November 2016 (1.867%). 3.032%
versus 3.061% versus 3.058% versus 3.059% versus 3.048% versus 3.065% versus
3.074% versus 3.056% versus 3.065% versus 3.116% versus 3.127% versus 3.147%
versus 3.186% versus 3.239% versus 3.228% versus 3.222% versus 3.201% versus
3.22% versus 3.146% versus 3.149% versus 3.119% versus 3.089% versus 3.079%
versus 3.126% versus 3.111% versus 3.1692% versus 3.20% versus 3.196% versus
3.1779% versus 3.209% versus 3.165% versus 3.158% versus 3.167% versus
3.146% versus 3.169 versus 3.206% versus 3.233% versus 3.189% versus 3.183%
versus 3.061% versus 3.087% versus 3.061% versus 3.052% versus 3.048% versus
3.048% versus 3.085% versus 3.066% versus 3.068% versus 3.076% versus 3.057%
versus 2.99% versus 3.00% versus 2.972% versus 2.963% versus 2.977% versus
2.937%
EUR/USD: 1.13199 versus 1.13934. After rallying Wednesday, an ugly turn
back down.
Historical: 1.13934 versus 1.13682 versus 1.12973 versus 1.13325 versus
1.13380 versus 1.13829 versus 1.13818 versus 1.14484 versus 1.14172 versus
1.13308 versus 1.13264 versus 1.13124 versus 1.12348 versus 1.13475 versus
1.1364 versus 1.14329 versus 1.14228 versus 1.14090 versus 1.13881 versus
1.14019 versus 1.13394 versus 1.13455 versus 1.13760 versus 1.14042 versus
1.13757 versus 1.3972 versus 1.14682 versus 1.14626 versus 1.1538 versus
1.14556 versus 1.14961 versus 1.1578 versus 1.15906 versus 1.15592 versus
1.15901 versus 1.15324 versus 1.4966 versus 1.4916 versus 1.1598 versus
1.15164 versus 1.14762 versus 1.15517 versus 1.15774 versus 1.16038 versus
1.16357 versus 1.17501
USD/JPY: 113.474 versus 113.402. Holding the bounce from the 50 day MA
test.
Historical: Last below 109 in June 2018: 113.402 versus 113.559 versus
113.781 versus 113.510 versus 112.972 versus 113.007 versus 113.077 versus
112.617 versus 112.831 versus 113.585 versus 113.576. Was at 110 three
weeks back.
Oil: 50.93, -0.52. Moving laterally for a week just over 50. Trying to
hold there but thus far showing no other signs of bouncing back up to break
the trend.
Gold: 1220.20, -3.90.
MONDAY
Still waiting on the outcome of the Trump/Xi dinner after the G-20
conclusion and whether we will be 'surprised' by no deal or a deal as we are
told will occur. Frankly, the deal would likely be a cessation of
hostilities to a certain extent, though that does not really help the US,
just gives China a chance to save some face and perhaps then the sides come
up with a real deal that addresses the real issues.
If it is a sweeping deal the market could surge on the news, but after 5
days up, how much more and what kind of test afterward? If it is not a
sweeping deal, that is likely already built into the move into the Friday
close. Thus, it would not add much more nor would it detract.
We will have to see, but for now the indices have moved up to next
resistance on a week of upside. We wanted a pause Friday into Monday, but
didn't happen. Now we see if that occurs to start the week then takes back
upside.
In any event, outside a letdown from Xi/Trump we anticipate the market to
continue the yearend move either without a rest or taking that rest. Thus,
we will continue looking at upside plays.
Have a great weekend!
Stocks Climb Ahead of G-20 Meeting Between Trump, Xi
30-Nov-18 16:25 ET
Dow +199.62 at 25537.36, Nasdaq +57.45 at 7330.74, S&P +22.41 at 2760.44
https://www.briefing.com/investor/markets/stock-market-update/2018/11/30/stocks-climb-ahead-of-g20-meeting-between-trump-xi.htm
[BRIEFING.COM] The S&P 500 finished strong with a gain of 0.8% on Friday to conclude one of its best weeks of the year. Investors turned their attention to the highly-anticipated G-20 Leaders Summit in Argentina, where U.S. President Trump and China President Xi are expected to take the main stage at a dinner meeting on Saturday.
The Dow Jones Industrial Average gained 0.8%, the Nasdaq Composite gained 0.8%, and the Russell 2000 gained 0.5%.
The major indices hovered near their flat lines in afternoon trading before a Reuters report indicated a Chinese official saying that there are points of consensus between the U.S. and China on trade. Though, some disagreements remain. With that in mind, there seems to be a consensus building around the idea that the best one can hope for is a mutual agreement to forestall further tariff actions for several months so that further talks can be conducted to address trade policy issues.
U.S. Trade Representative Lighthizer spurred some optimism Friday morning when he said he would be surprised if the dinner meeting was not a success. He added it is entirely up to the two Presidents if a deal will be made, though.
10 of the 11 S&P sectors finished in the green on Friday with the utilities (+1.5%), health care (+1.1%), and information technology (+1.1%) sectors outperforming the broader market.
Chip stocks also outperformed, evidenced by the Philadelphia Semiconductor Index rising 1.5%, to help lift the heavily-weighted information technology sector. NVIDIA (NVDA 163.43, +6.07, +3.9%) led chip stocks higher, though Apple (AAPL 178.58, -0.97, -0.5%) was unable to gain traction, eventually losing its status as the S&P 500's largest company by market cap to Microsoft (MSFT 110.89, +0.70, +0.6%).
Some positive earnings reports from tech companies HP (HPQ 23.00, +0.14, +0.6%), VMware (VMW 166.17, +4.69, +2.9%), and Workday (WDAY 164.00, +18.70, +12.9%) also contributed to the sector's advance. Workday and VMware beat both top and bottom line estimates, and HP beat revenue estimates. Workday also raised its fiscal 2019 subscription revenue outlook.
Transport stocks had a great day with the Dow Jones Transportation Average rising 1.3%. With oil and its derivatives factoring heavily in their cost of operations, transport issues reacted favorably to the decline in oil prices and were a leadership area in November. The average finished with a monthly gain of 6.2%.
On the other hand, the energy (-0.2%), materials (+0.4%), and communication services (+0.4%) sectors underperformed the broader market.
In other corporate news, General Electric (GE 7.50, -0.44) and Marriott (MAR 115.03, -6.81) lost 5.5% and 5.6%, respectively, amid some negative occurrences. A WSJ report indicated that General Electric ignored insurance risks, according to some former employees. Deutsche Bank also lowered its GE price target to $7. Separately, Marriott announced a data breach involving its guest reservation database for its Starwood-branded hotels.
Separately, the U.S. Treasury yield curve saw some flattening with the 2-yr yield adding one basis point to 2.81%, and the 10-yr yield losing three basis points to 3.01%. Also, the U.S. Dollar Index rose 0.4% to 97.20, and WTI crude lost 1.6% to $50.65/bbl, weighing on the oil-sensitive energy group.
Reviewing Friday's economic data, which only included the Chicago PMI for November:
The MNI Chicago Business Barometer, popularly referred to as the Chicago PMI, surged to 66.4 in November (Briefing.com consensus 58.0) from 58.4 in October. The November reading is an 11-month high.
The key takeaway from the report is that it was fueled by a big uptick in the New Orders Index, which hit its highest level since May 2014. The strength in new orders is an encouraging sign of robust manufacturing demand for the Chicago Fed region.
Looking ahead, investors will receive the ISM Index for November and Construction Spending for October on Monday.
Nasdaq Composite +6.2% YTD
Dow Jones Industrial Average +3.3% YTD
S&P 500 +3.2% YTD
Russell 2000 -0.2% YTD
Week in Review: Stock Market Rallies with Optimism Surrounding Fed and U.S.-China Trade Relations
The S&P 500 rallied 4.9% this week, helped by the Fed softening its policy stance and by hope that U.S-China trade tensions would be meaningfully eased at the G-20 Leaders Summit. For the month, the benchmark index rose 1.8%.
Meanwhile, the Dow Jones Industrial Average gained 5.2%, the Nasdaq Composite gained 5.6%, and the Russell 2000 gained 3.0%. For the month, the respective indices gained 1.7%, 0.3%, and 1.5%.
The stock market had one of its best days of the year on Wednesday when Federal Reserve Chair Jerome Powell said he sees current interest rates "just below" neutral. That proved to be a rally point because the language Mr. Powell used in early October indicated a view that the fed funds rate was "a long way from neutral."
Mr. Powell added that there is no preset policy path, and the Fed will be data-dependent in its decision making, which pleased investors. By highlighting risks, though, that included previous rate increases, trade disputes, and Brexit/EU political uncertainty, the market chose to read between the lines that the Fed chair isn't wedded to three rate hikes in 2019.
On a related note, the FOMC's minutes from its November 7-8 meeting, which were released on Thursday, did nothing to upset the notion that the Fed will be hiking rates next month; the CME FedWatch Tool puts the chances at 82.7%.
Regarding U.S.-China trade, President Trump and President Xi are to take the G-20's main stage when they discuss trade matters over dinner on Saturday. U.S. Trade Representative Lighthizer said that he would be surprised if the dinner meeting was not a success. Perhaps causing some jitters, though, is the fact that notable China trade hawk Larry Kudlow is reportedly expected to attend the dinner meeting, along with other staff on hand.
A Wall Street Journal report published Thursday is probably as good a preview of what an eventual best-case outcome would be from the G-20 meeting between the two Presidents. The Wall Street Journal noted that (unnamed) officials on both sides have been floating the idea of forestalling any further tariffs through the spring to set the stage for a new round of talks to address changes in China's economic policy.
In addition to the trade speculation and dovish rhetoric from the Fed, there was a positive bias in the market this week due to the belief that the prior week's sell-off resulted in short-term oversold conditions. Efforts to pick up oversold issues, and some chasing behavior, helped fuel this week's gains, which ultimately turned November from a negative month into a positive month for the major indices.
This week, all S&P sectors finished higher with the consumer discretionary (+6.4%), information technology (+6.1%), health care (+5.9%), and communication services (+5.5%) sectors outperforming.
The rally began with the consumer discretionary group rising on the back of continued strength from the U.S. consumer. Reports of record online Black Friday sales and encouraging forecasts for Cyber Monday sales helped lift investor sentiment. The SPDR Retail ETF (XRT) rose 5.1% this week, and Amazon (AMZN) climbed 12.5%.
Conversely, the defensive-oriented real estate (+2.7%), consumer staples (+2.9%), and utility (+2.7%) sectors underperformed the broader market, though still finished with respectable gains.
In corporate news, General Motors (GM) announced additional restructuring plans that will result in a 15% reduction of its salaried staff and the closure of five of its North American plants. President Trump tweeted his disappointment in GM and is looking to cut all of its government subsidies. Separately, United Tech (UTX) announced its intention to split into three independent companies after the Dow component acquired Rockwell Collins earlier this month.
On the earnings front, Salesforce (CRM), Burlington Stores (BURL), Dollar Tree (DLTR), VMware (VMW), HP (HPQ), and Workday (WDAY) released upbeat reports, while Tiffany & Co (TIF), GameStop (GME), and J.M. Smucker (SJM) disappointed investors.
Looking at other markets, the Treasury yield curve saw some flattening with the 2-yr yield losing one basis point to 2.81%, and the 10-yr yield losing four basis points to 3.01%. The U.S. Dollar Index increased by 0.3% to 97.20, and WTI crude added 0.1% to $50.67/bbl, though lost over 20.0% this month.
Overseas, equity indices in the Asia-Pacific region closed the week on a modestly positive note with Japan's Nikkei (+3.3%) showing relative strength. In Europe, the major indices closed the week slightly higher with Italy's MIB (+2.5%) showing relative strength.
S&P 500 Trims Weekly Rally with Focus Shifting Towards G-20 Meeting
29-Nov-18 16:25 ET
Dow -27.59 at 25337.74, Nasdaq -18.51 at 7273.29, S&P -5.96 at 2738.03
https://www.briefing.com/investor/markets/stock-market-update/2018/11/29/s-and-p-500-trims-weekly-rally-with-focus-shifting-towards-g20-meeting.htm
[BRIEFING.COM] The S&P 500 trimmed this week's rally by 0.2% on Thursday with market participants shifting focus to this weekend's G-20 meeting between U.S. President Donald Trump and China President Xi Jinping.
Meanwhile, the Dow Jones Industrial Average lost 0.1%, the Nasdaq Composite lost 0.3%, and the Russell 2000 lost 0.3%.
Though the market succumbed to early profit-taking from Wednesday's Powell-driven rally, stocks gradually climbed from session lows as news wires heated up with U.S.-China trade headlines. Despite the uncertainty surrounding the meeting, The Wall Street Journal report published Thursday is probably as good a preview of what an eventual best-case outcome will be from the G-20 meeting. The Wall Street Journal noted (unnamed) officials on both sides are floating the idea of forestalling any further tariffs through the spring to set the stage for a new round of talks to address changes in China's economic policy.
It would be a small victory for the market if there was an agreement at the G-20 meeting to hold off on such tariff actions, yet it isn't the ultimate solution since it kicks the tariff can down the road without eliminating the threat that further tariffs will be imposed.
In addition, The South China Morning Post reported that Peter Navarro, a well-known China trade hawk, will be attending the dinner meeting between President Trump and President Xi on Saturday. Mr. Navarro's presence at the dinner table briefly unnerved investors.
Separately, the Federal Open Market Committee (FOMC) released its minutes from its November 7-8 meeting. Though the market crossed into positive territory shortly after its late afternoon release, one should not get too caught up with the minutes.
Some reasons include (1) the fact that Fed Chair Powell had already stated "interest rates... remain just below the broad range of estimates of the level that would be neutral for the economy," and (2) the market has already been handicapping the strong likelihood that the target range for the fed funds rate will be increased to 2.25% to 2.50% at the December 18-19 FOMC meeting. The latest minutes largely echoed Mr. Powell's language and the likelihood of a December rate hike.
Back to stocks, the heavily-weighted information technology (-1.0%) and financial (-0.8%) sectors weighed on the broader market.
Apple (AAPL 179.55, -1.39, -0.8%) and other tech heavyweights dragged on the group. The sector, though, had risen 6.0% for the week heading into Thursday's session. On the other hand, Qualcomm (QCOM 58.11, +1.46) was a bright spot after the company's former Chairman said in a Bloomberg interview that he is still thinking about taking the company private.
Also, the financial sector was pressured by weak housing data that weighed on investor sentiment. Pending home sales declined 2.6% in October, reported on the heels of a report showing new home sales declined 8.9% in October. The weak reports have fueled concerns about weakening mortgage loan demand, which is a negative for many banks and many of the regional banks in particular. Charles Schwab (SCHW 44.16, -1.50) was a notable financial laggard with a loss of 3.3%.
Conversely, the energy (+0.6%), materials (+0.6%), communication services (+0.4%), and health care (+0.3%) sectors outperformed the broader market.
The oil-sensitive energy group benefited from WTI crude rebounding 2.5% to $51.46/bbl. Crude bounced on the hope that the recent downturn in oil prices will spur OPEC+ producers to agree to a meaningful production cut next week.
FANG stocks Facebook (FB 138.68, +1.92, +1.4%), Netflix (NFLX 288.75, +6.10, +2.2%), and Alphabet (GOOG 1088.30, +2.07, +0.2%) extended gains to lift the communication group.
In earnings, Dollar Tree (DLTR 88.43, +5.11) rose 6.1% after it beat earnings estimates. The discount store company did guide its Q4 earnings and revenues below consensus, however. Also, Abercrombie & Fitch (ANF 20.70, +3.58) spiked 20.9% after a shift in identity helped the clothing retailer beat earnings expectations.
Elsewhere, U.S. Treasuries finished near their unchanged marks with the benchmark 10-yr yield losing one basis point to 3.04%. Also, the U.S. Dollar Index finished flat at 96.76.
Reviewing Thursday's economic data, which included PCE Price Index for October, Personal Income and Spending for October, Pending Home Sales for October, and weekly Initial and Continuing Claims:
Personal income increased 0.5% in October (Briefing.com consensus +0.4%) while personal spending jumped 0.6% (Briefing.com consensus +0.4%). Real PCE, which is the component that factors into Q4 GDP forecasts, was up a solid 0.4%. The PCE Price Index was up 0.2% and the core PCE Price Index, which exclude food and energy, was up 0.1% (Briefing.com consensus +0.2%).
The tame inflation readings are the key takeaway from the report since they are supportive of the Federal Reserve taking a more deliberate approach to raising the fed funds rate.
Pending Home Sales decreased 2.6% in October (Briefing.com consensus +0.7%). Today's reading follows a revised 0.7% increase in September (from +0.5%).
Initial claims for the week ending November 24 increased by 10,000 to 234,000 (Briefing.com consensus 218,000) while continuing claims for the week ending November 17 increased by 50,000 to 1.710 million.
The key takeaway from the report is that it is apt to contribute to assertions that the bottom for the trend in initial and continuing claims may have been reached in this cycle.
Looking ahead, investors will receive the Chicago PMI for November on Friday.
Nasdaq Composite +5.4% YTD
Dow Jones Industrial Average +2.5% YTD
S&P 500 +2.4% YTD
Russell 2000 -0.7% YTD
Stocks Take Powell's 'Dovish' Comments in Stride
28-Nov-18 16:25 ET
Dow +617.70 at 25365.33, Nasdaq +208.89 at 7291.80, S&P +61.65 at 2743.99
https://www.briefing.com/investor/markets/stock-market-update/2018/11/28/stocks-take-powells-dovish-comments-in-stride.htm
[BRIEFING.COM] The S&P 500 confidently extended weekly gains by 2.3% on Wednesday after Federal Reserve Chair Jerome Powell said he sees current interest rates "just below" neutral. That proved to be a rally point because the language Mr. Powell used early last month indicated a view that the fed funds rate was "a long way from neutral."
Meanwhile, the Dow Jones Industrial Average gained 2.5%, the Nasdaq Composite gained 3.0%, and the Russell 2000 gained 2.5%.
Fed Chair Powell added that there is no preset policy path, and the Fed will be data-dependent in its decision making, which pleased investors. By highlighting risks, though, that included previous rate increases, trade disputes, and Brexit/EU political uncertainty, the market chose to read between the lines that the Fed chair isn't wedded to three rate hikes in 2019.
Mr. Powell's perceived dovish remarks sent bond yields and the dollar lower. The U.S. Dollar Index dropped 0.6% to 96.84, the 2-yr yield fell three basis points to 2.80%, and the 10-yr yield slipped one basis point to 3.04%.
Regarding trade disputes, investors remain hopeful that some kind of agreement can be struck between the U.S. and China to forestall further protectionist trade measures. There is a burgeoning belief that President Donald Trump might aim to keep a floor of support under the stock market by striking a more conciliatory tone in his Saturday meeting with China President Xi Jinping. Nevertheless, it remains a speculative trade given President Trump's tough-minded tariff position.
Back to the stock market, the S&P information technology (+3.4%), consumer discretionary (+3.2%), and health care (+2.5%) sectors provided strong support for the broader market.
The heavily-weighted tech sector welcomed a solid showing from heavyweights Apple (AAPL 180.94, +6.70), Microsoft (MSFT 111.12, +3.98), Visa (V 141.38, +5.47), and MasterCard (MA 202.28, +9.30), which rose between 3.7% and 4.8%. Amazon (AMZN 1677.75, +96.33) and UnitedHealth (UNH 280.95, +9.80) jumped 6.1% and 3.6%, respectively, with the latter rising to a record close.
Also, the cyclical transport and chip stocks had noteworthy performances, evidenced by the strong gains within the Dow Jones Transportation Average (+2.5%) and Philadelphia Semiconductor Index (+2.3%). Alaska Air (ALK 74.74, +3.99) outperformed with a gain of 5.6% after Cowen raised its ALK price target to $84 from $80. Chipmaker Micron (MU 38.71, +1.71) rose 4.6% after it said earnings were tracking towards the higher-end of its outlook and was very pleased with the progress on tariffs.
Conversely, the utilities (-0.1%), real estate (+0.9%), and consumer staples (+1.0%) groups finished at the bottom of the sector standings.
In earnings, Salesforce (CRM 140.64, +13.10) and Burlington Stores (BURL 167.56, +19.00) jumped 10.3% and 12.8%, respectively, after releasing upbeat reports. On the other hand, Tiffany & Co (TIF 92.54, -12.41) fell 11.8% after the company missed revenue expectations due to weaker spending among Chinese tourists.
Also, WTI crude dropped 2.7% to $50.20/bbl after crude stockpiles rose for the 10th consecutive week, according to the Energy Information Administration (EIA). Specifically, the EIA reported a higher-than-expected build of 3.6 million barrels. Nevertheless, the oil-sensitive energy sector (+1.7%) rose in tandem with the stock market.
Reviewing Wednesday's economic data, which included New Home Sales for October; the second estimate of Q3 GDP; Advance Reports for International Trade in Goods, Retail Inventories, and Wholesale Inventories for October; and the weekly MBA Mortgage Applications Index:
New home sales declined 8.9% month-over-month in October to a seasonally adjusted annual rate of 544,000 (Briefing.com consensus 575,000). September was revised up to 597,000 from 553,000.
Regardless of the upward revision to September, the key takeaway from the report is that the pace of new home sales is weak across all regions and reflects the affordability constraints fueled by rising mortgage rates. The October sales pace is the slowest since March 2016.
The second estimate for Q3 real GDP showed output increasing at an annualized rate of 3.5% (Briefing.com consensus 3.6%), unchanged from the advance estimate as downward revisions to personal spending and state and local government spending offset upward revisions to nonresidential fixed investment and private inventory investment. The GDP Price Deflator was also unchanged at 1.7% (Briefing.com consensus 1.4%).
The key takeaway from the report is that real final sales, which exclude the change in inventories, were up just 1.2%, which was the weakest growth rate since the fourth quarter of 2016.
The Advance report for International Trade in Goods for October showed a deficit of $77.2 billion. Meanwhile, the Advance report for Wholesale Inventories for October showed an increase of 0.7%, and the Advance report for Retail Inventories for October showed an increase of 0.9%.
The weekly MBA Mortgage Applications Index showed an increase of 5.5%, reversing course from the 0.1% decline in the prior week.
Looking ahead, investors will receive Personal Income and Spending for October, PCE Price Index for October, FOMC Minutes for November, weekly Initial and Continuing Claims, and Pending Home Sales for October.
Nasdaq Composite +5.6% YTD
S&P 500 +2.6% YTD
Dow Jones Industrial Average +2.6% YTD
Russell 2000 -0.3% YTD
Broader Market Brushes Off Tariff Reminder
27-Nov-18 16:25 ET
Dow +108.49 at 24747.63, Nasdaq +0.85 at 7082.91, S&P +8.75 at 2682.34
https://www.briefing.com/investor/markets/stock-market-update/2018/11/27/broader-market-brushes-off-tariff-reminder.htm
[BRIEFING.COM] The S&P 500 recouped losses to finish with a gain of 0.3% in a volatile session on Tuesday. The stock market was able to shrug off early angst caused by President Donald Trump reiterating his hard-nosed tariff stance. President Trump's comments struck concerns that his G-20 meeting with President Xi Jinping at the end of the week might not meaningfully ease trade tensions between the two countries.
Meanwhile, the Dow Jones Industrial Average gained 0.4%, the Nasdaq Composite finished flat, and the Russell 2000 underperformed with a loss of 0.9%.
Specifically, President Trump said in a Wall Street Journal interview that it is "highly unlikely" he will refrain from raising a 10% tariff on $200 billion of Chinese goods to 25%, effective January 1. He added, too, that if China and the U.S. don't make a deal he will move ahead with a plan to place a tariff of 10% or 25% on an additional $267 billion of imported Chinese goods, which would possibly include iPhones and laptop computers.
White House economic advisor Larry Kudlow followed up with his disappointment in China talks thus far and stated that talks between President Trump and President Xi will occur on Saturday evening. He added that President Trump will make up his mind on the $267 billion tariff tranche at the end of the meeting.
Subsequently, the trade-sensitive materials (-1.3%) and industrial (-0.2%) sectors underperformed the broader market. The energy group (-0.3%) also finished near the bottom of the sector standings.
Also contributing to the industrial sector's decline was United Tech (UTX 122.68, -5.30, -4.1%) after the company announced its intention to split into three independent companies. Investors seemed bothered by the cost associated with dividing the company, which will include the spin-off of the Otis and Carrier businesses. The decision came after United Tech acquired Rockwell Collins earlier this month.
Apple (AAPL 174.24, -0.38, -0.2%) never traded in positive territory after the President's comments reminded investors that tariffs remain a headwind for the company. Microsoft (MSFT 107.14, +0.67, +0.6%) helped lift the heavily-weighted information technology sector (+0.2%), and chip stocks also rose, with the Philadelphia Semiconductor Index tacking on 0.2%.
On the other hand, the stock market assumed a defensive tone on Tuesday with the defensive-oriented health care (+1.0%), utilities (+0.9%), and consumer staples (+0.9%) sectors finishing with strong gains. The real estate (+0.6%) and communication services (+0.6%) sectors also had solid showings.
Separately, General Motors (GM 36.69, -0.96) fell 2.6% after President Trump tweeted he is disappointed in GM and is looking to cut all of its subsidies. Mr. Trump's frustration stemmed from GM's decision to close plants in Ohio, Michigan, and Maryland but not those in Mexico or China. The White House is hopeful that General Motors will make some adjustments and does not believe GM's job layoffs will impact the overall economy.
In the bond market, U.S. Treasuries finished on a modestly higher note with the belly of the curve showing relative strength. The 2-yr yield was unchanged at 2.83%, and the 10-yr yield decreased two basis points to 3.06%.
Overseas, European equities finished modestly lower on Tuesday with Germany's DAX (-0.4%) showing relative weakness. Elsewhere, Asian equity markets finished mixed with China's Shanghai Composite unchanged.
Reviewing Tuesday's economic data which included the Conference Board's Consumer Confidence Index for November, the Case-Shiller 20-city Index for September, and the FHFA Housing Price Index for September:
The Conference Board's Consumer Confidence Index dipped to 135.7 in November (Briefing.com consensus 135.5) from 137.9 in October, which was the highest reading since September 2000.
The key takeaway from the report is that consumer confidence remains at historically strong levels due in large part to positive views on the labor market.
The Case-Shiller 10-city Index for September increased 5.1%, lower than the prior unrevised 5.5% increase in August.
FHFA Housing Price Index for September increased 0.2%, lower than the revised 0.4% increase in August (from 0.3%).
Looking ahead, investors will receive several economic reports on Wednesday: the FOMC Minutes for November; New Home Sales for October; Q3 GDP - Second Estimate; Advanced Readings for International Trade in Goods, Retail Inventories, and Wholesale Inventories for October; and the weekly MBA Mortgage Applications Index.
Nasdaq Composite +2.6% YTD
S&P 500 +0.3% YTD
Dow Jones Industrial Average +0.1% YTD
Russell 2000 -2.8% YTD
Amazon, Retail Stocks Lead Broad-Based Stock Rebound
26-Nov-18 16:30 ET
Dow +354.29 at 24639.14, Nasdaq +142.87 at 7082.06, S&P +40.89 at 2673.59
https://www.briefing.com/investor/markets/stock-market-update/2018/11/26/amazon-retail-stocks-lead-broadbased-stock-rebound.htm
[BRIEFING.COM] The S&P 500 rebounded 1.6% on Monday, as Amazon (AMZN 1581.33, +79.27, +5.3%) and retail stocks led the broad-based advance from what many considered to be short-term oversold conditions. Meanwhile, the Dow Jones Industrial Average gained 1.5%, the Nasdaq Composite gained 2.1%, and the Russell 2000 gained 1.2%.
Reports of record online Black Friday sales and encouraging forecasts for Cyber Monday sales contributed to the upbeat investor sentiment within the top-performing consumer discretionary sector (+2.6%). Adobe Analytics reported that online Black Friday sales surged 23.6% to a record $6.22 billion and expected a 17.6% year-over-year growth of $7.8 billion on Cyber Monday. The S&P SPDR Retail ETF (XRT 45.75, +0.87) rose 2.0%.
The information technology (+2.3%), financials (+2.1%), communication services (+1.9%), and energy (+1.7%) sectors also had solid performances on Monday.
A positive showing from the other FANG stocks also manifested the general belief that the market was due for a bounce. Facebook (FB 136.38, +4.65, +3.5%), Alphabet (GOOG 1048.62, +24.74, +2.4%), Netflix (NFLX 261.43, +2.61, +1.0%), and Apple (AAPL 174.62, +2.33, +1.4%) all sported healthy gains. Apple was able to shrug off midday losses to finish near its session high.
Financial heavyweights JPMorgan Chase (JPM 109.26, +2.61, +2.5%), Bank of America (BAC 27.56, +0.59, +2.2%), Citigroup (C 63.73, +1.98, +3.2%), and American Express (AXP 109.68, +3.94, +3.7%) provided strong support for the group. Though there was no specific news catalyst for the sector's strong performance, the financials space has been able to weather the stock market's decline in the fourth quarter better than most. The financials group is down 4.1% this quarter compared to the S&P 500's quarterly decline of 8.3%.
Looking at energy, the oil-sensitive energy sector rose in tandem with oil prices. WTI crude, which had fallen over 10.0% last week, jumped 2.4% to $51.66/bbl. Top-weighted component Exxon Mobil (XOM 76.98, +1.49) gained 2.0% after being upgraded to 'Outperform' at Wolfe Research.
Conversely, the defensive-oriented consumer staples (unch), real estate (+0.2%), and utility (+0.5%) sectors finished at the bottom of the sector standings, though still finished above their flat lines.
In other corporate news, General Motors (GM 37.65, +1.72, +4.8%) announced additional restructuring plans that will result in a 15% reduction of its salaried staff and possibly the closure of five of its North American plants. President Donald Trump said to reporters that he told GM executives that he is unhappy with the job cuts and is hopeful that something else will replace the GM plants in Ohio.
Separately, U.S. Treasury selling was modest in scope, especially when considering the optimism that was on display in stocks. The 2-yr yield added one basis point to 2.83%, and the 10-yr yield added two basis points to 3.07%. Also, the U.S. Dollar Index rose 0.1% to 97.05.
In Europe, some ostensibly positive reports surfaced amid the equity rally. Italy's MIB showed relative strength (+2.8%) amid reports that Italian officials indicated a willingness to lower next year's deficit target of 2.4%. However, this report follows weekend remarks from Italy's Deputy Prime Minister Matteo Salvini, who said he would bring down the government if the deficit target is changed. Separately, EU leaders approved the UK Brexit plan, but the plan still faces a lot of dissent in the UK, and there is no assurance it will pass a vote in Parliament.
Elsewhere, equity indices in the Asia-Pacific region closed mostly higher with Hong Kong's Hang Seng rising 1.7%.
Investors did not receive any notable economic data on Monday. Looking ahead, investors will receive the Case-Shiller 20-city Index for September, the Conference Board's Consumer Confidence Index for November, and the FHFA Housing Price Index for September on Tuesday.
Nasdaq Composite +2.6% YTD
Dow Jones Industrial Average -0.3% YTD
S&P 500 unch YTD
Russell 2000 -1.9% YTD
Energy Stocks Drag on Broader Market amid Falling Oil Prices
23-Nov-18 13:25 ET
Dow -178.84 at 24284.85, Nasdaq -33.27 at 6939.19, S&P -17.37 at 2632.70
https://www.briefing.com/investor/markets/stock-market-update/2018/11/23/energy-stocks-drag-on-broader-market-amid-falling-oil-prices.htm
[BRIEFING.COM] The S&P 500 lost 0.7% on Friday in what was a shortened, low-volume trading day on Wall Street. Friday's volatile session extended the benchmark index's weekly losses to 3.8%.
Meanwhile, the Dow Jones Industrial Average lost 0.7%, the Nasdaq Composite lost 0.5%, and the Russell 2000 finished flat on Friday.
The oil-sensitive energy sector greatly underperformed the broader market with a loss of 3.3%, as oil prices continued to fall. WTI crude fell 6.1% to $51.28/bbl, extending its decline to 33.3% from its October 3 high. A Wall Street Journal report indicated that Saudi Arabia and OPEC are considering a disguised production cut to satisfy President Donald Trump. Specifically, the cartel would retain current output targets, first set in 2016, which would imply a production pullback because Saudi Arabia is allegedly overproducing by nearly 1 million barrels a day.
FANG stocks also struggled on Friday with Facebook (FB 131.73, -3.09, -2.3%) and Apple (AAPL 172.29, -4.49, -2.5%) leading the retreat. Apple reportedly resumed production of its 2017 iPhone X amid shrinking demand for its 2018 iPhone X Max model, according to IBN; and has also reportedly lowered the price of its iPhone XR in Japan to increase sales, according to the WSJ. Facebook and Apple shares dropped over 5.0% and 10.0%, respectively, this week.
On the other hand, the consumer staples (+0.3%), health care (+0.1%), and utility (+0.1%) sectors closed on a higher note.
Also, many companies within the consumer discretionary sector (-0.4%) were on display as consumers flocked to retailers for the sales-driven Black Friday shopping event. Though financial media commented on consumer traffic trends, the small sample size should not be used to draw final conclusions about the strength of holiday sales across the country.
In the bond market, the 2-yr yield added one basis point to 2.83%, while the 10-yr yield shed one basis point to 3.05%. The bond market will officially close at 2:00 PM ET. Also, the U.S. Dollar Index, which tracks the dollar's performance against six major currencies, rose 0.2% to 96.94.
Overseas, global equities closed Friday on a mixed note. China's Shanghai Composite led Asian markets lower with a loss of 2.5%, while Italy's MIB led the European advance with a gain of 0.6%.
Investors did not receive any notable economic data on Friday. Looking ahead, investors will receive the Conference Board's Consumer Confidence Index for November, the Case-Shiller 20-city Index for September, and the FHFA Housing Price Index for September on Monday.
Nasdaq Composite +0.5% YTD
Dow Jones Industrial Average -1.8% YTD
S&P 500 -1.5% YTD
Russell 2000 -3.1% YTD
Week in Review: Energy, Tech Stocks Crushed as S&P 500 Loses Yearly Gains
The S&P 500 fell 3.8% on this holiday-shortened trading week, erasing its gain for the year. The Dow Jones Industrial Average lost 4.4%, the Nasdaq Composite lost 4.3%, and the Russell 2000 lost 2.6%.
There was palpable sense of real angst about the market's prospects with market commentary beginning to emphasize the growing risk of a bear market. Factors contributing to that outlook have included rising recession risk; widening credit spreads; the message being sent by the sharp losses in cyclical sectors and former leadership stocks/sectors; lack of buy-the-dip success in November, calling into question the prospects of a seasonal rally; and burgeoning calls to bolster defensive positioning in investment portfolios.
Energy and tech stocks took the brunt of the damage with the energy (-5.1%) and information technology (-6.1%) sectors posting heavy losses this week. The consumer discretionary (-4.3%), communication services (-4.0%), materials (-3.5%), and industrial (-3.2%) sectors also had poor performances.
WTI crude, which has been pressured by ongoing supply concerns and decreasing demand, dropped 9.2% to $51.28/bbl this week and extended its decline to 33.3% from last month's four-year high. Oil prices were pressured on Tuesday after some speculation that Saudi Arabia might not force an oil production cut after U.S. President Donald Trump defended the United States' relationship with Saudi Arabia in the wake of the killing of Jamal Khashoggi. U.S. crude stockpiles also rose for the ninth consecutive week, according to the U.S. Energy Information Administration's weekly crude inventory report.
The tech sector, in particular, has been prone to liquidation efforts that have aimed to reduce exposure to a crowded sector running into concerns about a cyclical slowdown, valuations, and increased regulatory scrutiny. In addition, a lack of leadership and the continued inclination to sell into strength have translated into a lack of buying interest.
Apple (AAPL) shares took a hit after a Wall Street Journal report indicated the company cut its production orders for all three new iPhones it launched in September. Regarding the iPhone XR, Apple reportedly slashed its production plan by up to a third of the approximately 70 million units it had asked some suppliers to produce between September and February. Apple has fallen 21.3% since providing a disappointing outlook for the holiday quarter on November 1.
Facebook (FB) shares continued to struggle, losing 5.6% this week, amid ongoing negative publicity surrounding the social network. CEO Mark Zuckerberg was reportedly not happy with COO Sheryl Sandberg over the handling of the Cambridge Analytical scandal, according to a WSJ report. Also in the report, Mr. Zuckerberg's newly-adopted, aggressive leadership style has not fared well with key executives, some of whom have resigned.
Conversely, the real estate (-1.5%) and utility (-1.4%) sectors were the only groups to finish with weekly losses under 2.0%.
This week featured a list of earnings reports from notable retailers. Reports from Lowe's (LOW), Target (TGT), Kohl's (KSS), L Brands (LB), and Ross Stores (ROST) reflected ongoing concerns over gross margin pressures, elevated inventory levels, disappointing same-store sales, and included some cautious guidance. On the other hand, retailers Urban Outfitters (URBN), Best Buy (BBY), Foot Locker (FL), and Gap (GAP) released more positive reports. Separately, Deere (DE) missed top and bottom line estimates.
In other corporate news, a U.S. appeals court refused to stop generic versions of Johnson & Johnson's (JNJ) prostate-cancer drug Zytiga from entering the market, according to Bloomberg. Also, Chinese authorities approved United Tech's (UTX) acquisition of Rockwell Collins (COL) for $140/share in cash and stock.
U.S. Treasuries ended the week on a mixed note. The 2-yr yield added three basis points to 2.83%, and the 10-yr yield decreased two basis points to 3.05%. Meanwhile, the U.S. Dollar Index increased 0.4% to 96.94
Overseas, the Asia-Pacific Communications Summit concluded on Sunday without the release of a joint communique due to the ongoing trade disagreement between United States and China. On a related note, U.S. Trade Representative Robert Lighthizer released a report on China's intellectual property practices, alleging that China has not altered its "unfair, unreasonable, and market-distorting practices" that led to the imposition of tariffs. China's Shanghai Composite lost 3.7% this week.
Elsewhere, Chairman of Renault-Nissan-Mitsubishi Carlos Ghosn was arrested in Japan for alleged financial violations. Nissan voted to remove Mr. Ghosn from his Chairman post on Thursday.
Cyclical Sectors Help Lift S&P 500
21-Nov-18 16:30 ET
Dow -0.95 at 24463.69, Nasdaq +63.43 at 6972.46, S&P +8.04 at 2650.07
https://www.briefing.com/investor/markets/stock-market-update/2018/11/21/cyclical-sectors-help-lift-s-and-p-500.htm
[BRIEFING.COM] The S&P 500 found some reprieve on Wednesday with a slim gain of 0.3%, with cyclical sectors mounting a rebound effort. The benchmark index was up as much as 1.1% but fumbled most of its gains in the last hour of trading. Wednesday's session did feature some lower-than-usual volume with U.S. markets closed on Thursday for Thanksgiving Day.
Meanwhile, the Nasdaq Composite gained 0.9%, and the Russell 2000 gained 1.3%, and the Dow Jones Industrial Average finished flat.
The S&P sectors that outperformed the broader market were energy (+1.6%), communication services (+1.0%), consumer discretionary (+1.0%), materials (+0.8%), industrials (+0.7%), and information technology (+0.6%).
Energy companies rose in tandem with WTI crude rebounding 1.8% to $54.38/bbl. Crude shrugged off ongoing supply concerns that have recently pressured oil prices; on Wednesday, the U.S. Energy Information Administration reported a ninth consecutive weekly build in crude with a higher-than-expected build of 4.9 million barrels last week. Crude cut its weekly losses to 3.7% but is still roughly 30.0% lower from last month's four-year high.
Transport stocks also had a solid showing, as the Dow Jones Transportation Average rose 1.5%. Airline stocks outperformed with no specific catalyst, but relatively lower oil prices and an anticipated 30.5 million people flying this Thanksgiving weekend, according to CNBC, helped support the group. The average, however, is still down 2.1% this week.
The battered FANG group traded on a mixed note on Wednesday in what has been a woeful quarter for the bunch. Facebook (FB 134.82, +2.39, +1.8%), Alphabet (GOOG 1037.61, +11.85, +1.2%), and Amazon (AMZN 1516.73, +21.27, +1.4%) finished with comfortable gains, while Apple (AAPL 176.78, -0.20, -0.1%) and Netflix (NFLX 262.13, -4.85, -1.8%) finished lower.
Conversely, the defensive-oriented real estate (-0.1%), health care (-0.5%), consumer staples (-0.8%), and utility (-1.5%) sectors, which have largely outperformed this month, underperformed the broader market on Wednesday. The four groups were the only ones to close in the red.
Earnings were mostly positive with retailers Foot Locker (FL 52.96, +6.87, +14.91) and Gap (GPS 25.81, +1.15, +4.7%) reporting above-consensus bottom lines. Conversely, Deere (DE 141.88, +3.36, +2.4%) missed both top and bottom line expectations, but still traded higher amid an upside outlook. Deere's worldwide sales of agriculture and turf equipment are forecast to be up about 3.0% in 2019.
In other corporate news, Dow component Johnson & Johnson (JNJ 141.99, -4.46) fell 3.1% after a U.S. appeals court refused to stop generic versions of its prostate-cancer drug Zytiga from entering the market, according to Bloomberg. Of note, the company did hit an all-time high in the previous session.
Separately, U.S. Treasuries edged lower, pushing yields higher across the curve. The 2-yr yield increased three basis points to 2.82%, and the 10-yr yield added one basis point to 3.06%. The flattening of the yield curve helped keep the financial sector (+0.1%) in check, as lenders rely on the difference between what they can charge for deposits and what they can make on loans. Meanwhile, the U.S. Dollar Index shed 0.1% to 96.73.
Overseas, equity indices in the Asia-Pacific region closed Wednesday on a mixed note. U.S. Trade Representative Robert Lighthizer released a report on China's intellectual property practices, alleging that China has not altered its "unfair, unreasonable, and market-distorting practices" that led to the imposition of tariffs. China's Shanghai Composite added 0.2%. In Europe, the major indices closed on a higher note with Germany's DAX (+1.6%) leading the advance.
Reviewing the smorgasbord of data investors received on Wednesday, which included Existing Home Sales for October, Durable Orders for October, weekly Initial Claims and Continuing Claims, the Conference Board's Leading Economic Index for October, the final reading of the University of Michigan Index of Consumer Sentiment for November, and the weekly MBA Mortgage Applications Index:
Existing home sales increased 1.4% month-over-month in October to a seasonally adjusted annual rate of 5.22 million (Briefing.com consensus 5.20 million). The October reading represented the first month-over-month increase in seven months. Total sales were 5.1% lower than the same period a year ago.
The key takeaway from the report is that even with the October increase, the level of sales remains at levels from late 2016 as higher mortgage rates and a limited supply of lower-priced homes weigh.
Durable Goods orders for October decreased 4.4% (Briefing.com consensus -2.6%) after decreasing a revised 0.1% (from +0.8%) in September. Excluding transportation, durable goods orders increased 0.1% (Briefing.com consensus +0.4%) after a revised 0.6% decrease (from +0.1%) in September.
The key takeaway from the report is that the headline decline was driven by a drop in aircraft orders while motor vehicle and parts orders increased modestly.
Initial claims for the week ending November 17 increased by 3,000 from last week's revised rate of 221,000 (from 216,000) to 224,000 (Briefing.com consensus 215,000). Continuing claims for the week ending November 10 decreased by 2,000 from last week's revised level of 1.670 million (from 1.676 million) to 1.668 million.
The key takeaway from the report is that even with the upward revision to last week's reading, claims remain not far above multi-decade lows. This week's miss is likely the result of economists basing their estimates on last week's unrevised reading.
The Conference Board's Leading Economic Index increased 0.1% in October (Briefing.com consensus 0.1%) after increasing a revised 0.6% (from 0.5%) in September.
The key takeaway from the report is that the Conference Board believes that while the Leading Index still points to robust growth in early 2019, the rapid pace of growth may have already peaked. The Conference Board expects longer-term growth to moderate around 2.5%.
The final reading of the University of Michigan Index of Consumer Sentiment for November ticked down to 97.5 (Briefing.com consensus 98.3) from 98.3 in the preliminary reading.
The key takeaway from the report is that the modest downtick was due to changes in sentiment among different income earners. Those in the bottom third of the income distribution reported an increase in sentiment while those in the top third of the income distribution reported a decrease in sentiment. There was no change in sentiment among Democrats and Republicans after the midterm election.
The weekly MBA Mortgage Applications Index showed a decrease of 0.1% to follow the prior decline of 3.2%.
Looking ahead, the market will be closed on Thursday and will close early on Friday (1:00 PM ET). Investors will not receive any notable economic data for the rest of the week.
Nasdaq Composite +1.0% YTD
Dow Jones Industrial Average -1.0% YTD
S&P 500 -0.9% YTD
Russell 2000 -3.1% YTD
Cyclical Sectors Lead Broader Market Lower; Energy Struggles
20-Nov-18 16:30 ET
Dow -551.80 at 24464.64, Nasdaq -119.65 at 6909.03, S&P -48.84 at 2642.03
https://www.briefing.com/investor/markets/stock-market-update/2018/11/20/cyclical-sectors-lead-broader-market-lower-energy-struggles.htm
[BRIEFING.COM] The S&P 500 tumbled again on Tuesday with a loss of 1.8%, as economic growth concerns weighed, especially on energy, retail, and technology stocks. Tuesday's losses wiped out yearly gains for the benchmark index, which is now down 1.2% in 2018.
The Dow Jones Industrial Average lost 2.2%, the Nasdaq Composite lost 1.7%, and the Russell 2000 lost 1.8%.
There is a palpable sense of real angst about the market's prospects as market commentary is beginning to emphasize the growing risk of a bear market. Commentary has included rising recession risk; widening corporate credit spreads; forecasting message of the sharp losses in cyclical sectors and former leadership stocks/sectors; lack of both gains and buy-the-dip success in November, which call into question the prospects of a seasonal rally; and burgeoning calls to bolster defensive positioning in investment portfolios.
S&P sectors that underperformed the broader market on Tuesday were the cyclical energy (-3.3%), consumer discretionary (-2.2%), information technology (-2.2%), industrials (-2.1%), and financial (-2.1%) sectors.
WTI crude, which has been pressured by ongoing supply concerns, dropped 6.9% to $53.44/bbl and extended its decline to 30.5% from its October 3 high. Furthermore, oil prices were pressured on Tuesday after some speculation that Saudi Arabia might not force an oil production cut now after U.S. President Donald Trump defended the U.S.'s relationship with Saudi Arabia amid the killing of Jamal Khashoggi. President Trump stated, in regards to Saudi Arabia, "They have worked closely with us and have been very responsive to my requests to keeping oil prices at reasonable levels – so important for the world."
Prices for oil and its derivative products factor prominently in the operating budgets of transportation companies, so the sharp drop should presumably be a positive development for the stocks. However, the weakness in transport stocks, evidenced by the Dow Jones Transportation Average losing 3.1%, resonates as a vote of weakening confidence in the economic outlook.
In the retail space, earnings reports from Lowe's (LOW 86.15, -5.20, -5.7%), Kohl's (KSS 64.45, -6.55, -9.2%), Target (TGT 69.03, -8.12, -10.5%), L Brands (LB 28.43, -6.12, -17.7%), and Ross Stores (ROST 82.64, -8.55, -9.4%) reflected ongoing concerns over gross margin pressures, elevated inventory levels, disappointing same-store sales, and included some cautious guidance. On the other hand, Best Buy (BBY 63.63, +1.33, +2.1%) and Urban Outfitters (URBN 36.58, +0.97, +2.7%) reported upbeat reports. Nevertheless, the SPDR S&P Retail ETF (XRT 44.00, -1.51) lost 3.3%.
The widely-held FANG group finished off their session lows, with the exception of Apple (AAPL 176.98, -8.88), which tumbled 4.8% to enter bear market territory. Apple has now fallen 23.7% from its October 3 record close. Netflix (NFLX 266.98, -3.62, -1.3%) and Amazon (AMZN 1495.46, -16.83, -1.1%) also closed on a lower note. Conversely, Facebook (FB 132.43, +0.88, +0.7%) and Alphabet (GOOG 1025.76, +5.76, +0.6%) added modest gains to help pare the communication services sector's (-1.3%) losses.
The Philadelphia Semiconductor Index ticked higher after falling 3.9% on Monday, finishing higher by 0.2%. Notable chipmaker NVIDIA (NVDA 149.08, +4.38) gained 3.0%% amid a positive tweet from Citron Research that said, "This is the first time in 2 years [NVIDIA] offers an appealing risk-reward to investors."
On the other hand, the defensive-oriented utilities (-0.5%) and health care (-1.0%) sectors outperformed the broader market, though still finished in the red.
In other corporate news, a Wall Street Journal report indicated that Walgreens Boots Alliance (WBA 79.79, -2.13, -2.6%) and Humana (HUM 307.22, -3.18, -1.0%) are in preliminary talks to take stakes in each other.
Separately, U.S. Treasuries were quiet for most of the day, with the benchmark 10-yr yield decreasing one basis point to 3.05%, and the U.S. Dollar Index rose 0.7% to 96.85 to reverse a recent trend that knocked the index from its yearly high.
Overseas, equity markets showed little reprieve, mirroring the negative trading disposition on Wall Street. China's Shanghai Composite led the Asia-Pacific region lower with a loss of 2.1%, and Germany's DAX led European markets lower with a loss 1.6%.
Reviewing Tuesday's economic data, which included Housing Starts and Building Permits for October:
Housing starts increased 1.5% month-over-month in October to a seasonally adjusted annual rate of 1.228 million units (Briefing.com consensus 1.230 million) from an upwardly revised 1.210 million (from 1.201 million) in September. Building permits slipped 0.6% to a seasonally adjusted annual rate of 1.263 million (Briefing.com consensus 1.260 million) from an upwardly revised 1.270 million (from 1.241 million) in September.
The key takeaway from the report, however, is that there wasn't any strength in single-unit permits or starts, which were down 0.6% and 1.8%, respectively, month-over-month and down 0.6% and 2.6%, respectively, year-over-year.
The Housing Starts and Building Permits report might have passed the consensus estimate headline test, certainly when taking revisions into account, yet it isn't a report that should be seen as assuaging concerns about the softness in housing market activity. If anything, it plays right into those concerns with the year-over-year declines for total permits (-6.0%) and total starts (-2.9%).
Looking ahead, investors will receive a big batch of economic data on Wednesday: Durable Orders for October, Existing Home Sales for October, weekly Initial Claims and Continuing Claims, the Conference Board's Leading Economic Index for October, the final reading of the University of Michigan Index of Consumer Sentiment for November, and the weekly MBA Mortgage Applications Index.
Nasdaq Composite +0.1% YTD
Dow Jones Industrial Average -1.0% YTD
S&P 500 -1.2% YTD
Russell 2000 -4.3% YTD
Tech Rout Leads Broader Market Lower
19-Nov-18 16:25 ET
Dow -395.78 at 25016.44, Nasdaq -219.40 at 7028.68, S&P -45.54 at 2690.87
https://www.briefing.com/investor/markets/stock-market-update/2018/11/19/tech-rout-leads-broader-market-lower.htm
[BRIEFING.COM] The S&P 500 tumbled 1.7% on Monday, as a rout in widely-held tech stocks led the broader market lower. A lack of leadership and the continued inclination to sell into strength have translated into a lack of buying interest.
Meanwhile, the Dow Jones Industrial Average dropped 1.6%, the Nasdaq Composite dropped 3.0%, and the Russell 2000 dropped 2.0%.
The S&P information technology sector (-3.8%) was the main problem on Monday. It has been prone to liquidation efforts that have aimed to reduce exposure to a crowded sector running into concerns about a cyclical slowdown, valuations, and increased regulatory scrutiny. The tech group underperforms the 11 S&P sectors in November with a monthly loss of 5.5%.
Apple (AAPL 185.86, -7.67, -4.0%) shares took a hit after a Wall Street Journal report indicated the company cut its production orders for all three new iPhones it launched in September. Regarding the iPhone XR, Apple reportedly slashed its production plan by up to a third of the approximately 70 million units it had asked some suppliers to produce between September and February. Apple stock has been under pressure since providing a disappointing outlook for the holiday quarter on November 1.
Negative sentiment surrounding Apple trickled down to its suppliers and chip stocks in general. Suppliers Qorvo (QRVO 63.15, -3.17, -4.8%), Lumentum (LITE 39.44, -3.08, -5.0%), and Skyworks Solutions (SWKS 70.76, -2.19, -3.0%), all of which cut their guidance this month over presumed weakened demand for iPhones, greatly underperformed. Similarly, the Philadelphia Semiconductor Index posted a loss of 3.9%, in which NVIDIA (NVDA 144.70, -19.73) extended its post-earnings decline with a steep loss of 12.0%.
Facebook (FB 131.55, -7.98, -5.7%), Netflix (NFLX 270.60, -15.61, -5.5%), Alphabet (GOOG 1020.00, -41.49, -3.9%), and Amazon (AMZN 1512.29, -81.12, -5.1%) also suffered notable losses, helping pull the communication services (-2.6%) and consumer discretionary (-2.7%) sectors lower.
Facebook shares continued to struggle amid on-going negative publicity surrounding the social network. CEO Mark Zuckerberg was reportedly not happy with COO Sheryl Sandberg for the reaction to the Cambridge Analytical scandal, according to a WSJ report. Also in the report, Mr. Zuckerberg's newly-adopted, aggressive leadership style has not fared well with key executives, some of whom have resigned.
Conversely, the utilities (+0.5%) and real estate (+0.3%) sectors helped provide some comfort for the broader market, and the heavily-weighted financial space outperformed, settling near its unchanged mark. The oil-sensitive energy group (-0.1%) found some reprieve from WTI crude rising 1.4% to $57.31/bbl, which held onto a rebound effort after what many saw as a short-term oversold condition in crude prices last week.
In other news, CNBC reported that China regulators approved Dow component Walt Disney's (DIS 115.42, -0.77, -0.7%) acquisition of 21st Century Fox (FOXA 48.91, +0.75, +1.6%) on Monday. China's unconditional approval joins conditional agreements already made from the U.S. and EU, though the deal still needs regulatory consent from several more countries.
Separately, Treasuries advanced amid the market sell-off, extending the recent decline in yields. The 2-yr yield lost three basis points to 2.77%, and the 10-yr yield lost two basis points to 3.06% -- 19 basis points lower from its November high. Also, the U.S. Dollar Index declined 0.3% to 96.21.
Overseas, the Asia-Pacific Communications Summit concluded on Sunday without the release of a joint communique due to the ongoing trade disagreement between United States and China. Elsewhere, Chairman of Renault-Nissan-Mitsubishi Carlos Ghosn was arrested in Japan for alleged financial violations.
In Europe, British Prime Minister Theresa May said that removing her from her post would lead to a delay in Brexit, making talks more difficult. Nevertheless, Brexit drama has yet to become a major issue for the U.S. stock market.
Reviewing Monday's sole economic report, the NAHB Housing Market Index for November:
The NAHB Housing Market Index for November came in at 60 (Briefing.com consensus 68), down from 68 in October. That's the lowest reading since August 2016, according to CNBC.
A number above 50 still denotes a positive outlook, yet the sharp drop fed into concerns about rising mortgage rates driving a weakening in housing market activity as they create affordability constraints for prospective home buyers.
Looking ahead, investors will receive Housing Starts and Building Permits for October on Tuesday.
Nasdaq Composite +1.8% YTD
Dow Jones Industrial Average +1.2% YTD
S&P 500 +0.6% YTD
Russell 2000 -2.5% YTD
InvestmentHouse - Watching For That Elusive Year-end Rally (Weekend Newsletter)
news.investmenthouse.com
VOLUME: NYSE +18%, NASDAQ -2%. Expiration, so the higher volume on NYSE did
not mean much. Interestingly, NASDAQ trade remained lower and just below
average.
ADVANCE/DECLINE: NYSE +1.1:1, NASDAQ flat.
After a decent look on DJ30 and SOX Thursday as the indices actually held a
lead, they struggled on Friday. Yes there were reasons for the struggle
(earnings, Fed angst, trade ups and downs) but the point is the same: the
market struggles when it is out in front.
Not a selloff, not a rollover, but the slow action continues to show a
market that has a very hard time gaining traction when it tries to move
higher.
Of course, it was Friday, an expiration at that, and the market rarely
(rarely) makes bottoms on Friday. Thus, while there are some very
interesting patterns setting up and some bumping at entries, they are still
in Missouri, still have to 'show me' the moves. Friday was interesting in
that respect, but this coming week is more to the point of serious moves.
That does not mean there are not stocks in good position. This back and
forth, frustratingly feckless upside has started to yield some decent
patterns. Not many are breaking higher from them, but Friday showed some
tantalizing possibilities as some of these good patterns bumped entry
points.
While those growth-ish patterns try to set up or play footsie with entry
points on low volume, some of the true market leaders started upside again.
MCD, VZ, JNJ, KO to name a few.
Still, there is promise in growth. Software remains in good patterns.
Despite the chip carnage thanks to NVDA and AMAT earnings, INTC and XLNX
jumped upside. Glad we had positions on three: NVDA downside (and a nice
135% gain), INTC and XLNX upside. Some good, some bad, some ugly. There
are some that are trying to be good: LSI, MLNX, ON, MCHP, PLAB. SIMO and
KLAC are trying to bounce off selling. There was some buying in chips to
end expiration despite NVDA and AMAT, and you recall, some have opined that
the chips would need to help out if a year end rally is to emerge. We will
see if the chip bid is present this coming week and if this very important
market direction group can step up and provide some much-needed leadership.
ECONOMY/NEWS
Fed Vice Chair speaks: the economy DOES matter.
More lip service or a true concern? Friday Vice Chair Clarida made the
rounds on the financial stations and had some very important comments -- if
true. That is the question: the Powell Fed has nodded toward deference to
the yield curve and other important indicators before only to STILL have the
Powell edict from the last rate hike. But, hope springs eternal . . .
usually for fools.
Nonetheless, Clarida offered a tantalizing olive branch: interest rates were
close to neutral AND at this point the Fed should be data dependent. Did
the ice just crack after Powell's deep freeze comments?
Others chimed in.
The WSJ published an op ed agreeing with Trump: the Fed should reconsider a
December rate hike.
Cramer on CNBC continues his campaign for a kinder, gentler Fed. Cramer
notes that he is now the senior to most of those on the Fed, has seen 11
bear markets or something like that, and thus he knows more than those on
the Fed.
I have to agree. This is exactly what I have discussed in my rants about
the ivory tower Fed members who cling to theories they are told in school
are the very basis of economics. But in the real world they mean nothing.
The don't work in real life situations. Why? Because their theories are
wrong! I guess that is another way of saying Cramer's 2007 rant 'they know
nothing!'
Real world cause and effect is the true test of any theory. The Phillips
Curve has only worked for six months out of the entirety of economic
history. In the 1970's the Fed and PC disciples could not understand why
their policies appeared only to exacerbate the slow growth, high inflation,
high unemployment situation -- a situation the Phillips Curve predicted
could not exist. Never did they consider their theories were simply wrong.
It was like chairman Mao in China in the 1960's: the policies did not work,
hundreds of millions were dying from starvation, so . . . ramp them up even
more because SURELY communism really worked. In reality, not.
Thus, being data dependent is a start. At least that does not lead to
Mao-like results if you are willing to look at what is happening and adjust
accordingly. The PROBLEM remains, however: the fundamental theories being
followed are simply wrong. It is like trying to fix a car with an
electrical problem by replacing the head gasket.
Sadly, that means the best the Fed can do is cause no harm by staying out of
the way and letting interest rates do what they will. At worst it can stall
an otherwise normal pause in an economic expansion. Even worse, and
unfortunately the usual logical effect from its actions, it can then drive
the economy into recession.
THE MARKET
CHARTS
Thursday I talked about symmetry in some of the pullbacks, particularly DJ30
and SOX, as an indication of a possible attempt at a year end rally. Friday
did not help much, but at least it did not do a lot of harm.
DJ30: After a nice test lower below the 200 day SMA and recovery Thursday,
Friday was a bit more upside, but not a lot of power. Some of the market
leaders that recently tested started higher, and that pushed up DJ30, e.g.
MCD, JNJ, KO. It is still showing a hold at the 200 day SMA, filled the gap
from the 10/30 reversal, and is in good position to move higher into
yearend. New highs? Who knows? They don't look probable at this point,
but you play a bounce if it continues and if it keeps going, well okay then.
SOX: No way NVDA and AMAT helped but even so, SOX kept the losses within
reason. As noted, stocks such as XLNX and INTC did indeed make their own
way Friday, closing nicely higher. They are joined by many others in decent
patterns. That leaves SOX with a gap fill, a good move Thursday, and still
in position for a move higher. It is the number of decent patterns we see
that makes that an intriguing prospect. We are already in XLNX and INTC and
could have some other chip positions early in the week.
NASDAQ: Same position as Thursday. The October 30 gap is filled, NASDAQ
reversed from a lower pullback low Thursday. That leaves it in position to
move higher, but it simply does not have the pattern and thus far not shown
the leadership that DJ30 has. Now that cold change with some software and
chip stocks moving higher, but those stocks are going to have to show that
move.
SP500: Reached higher to the 20 day EMA Friday, continuing the Thursday
upside reversal. Gap filled, reversal. Inverted head and shoulders and a
CNBC contributor was noting Friday. Gee, where have you been? Now we if it
has anything or at least can follow DJ30.
SP400, RUTX: Similar to NASDAQ, SP500, putting in a lower low on this leg
Thursday, reversing, adding a bit of upside Friday. They have their own
inverted head and shoulders patterns so we see if they can deliver upside.
LEADERSHIP
Dow-type leaders: Remain leaders with some starting upside Friday, e.g.
MCD, JNJ, VZ, KO, MRK. Still look very good with others in position: WBA,
AXP
Chips: INTC, XLNX moving well for us. ENPH still looks ready, just has not
pulled the trigger. MLNX, LSI, ON, MCHP, PLAB -- many good looking patterns
starting to move higher. It took them a long time but there are some
buyers.
China: Still showing much improved action, trying to break the 5+ month
declines. SOHU started higher Friday as did HTHT as well. SINA, JD, QIWI
and BABA look solid to move higher.
Food: MCD jumped upside Friday, bouncing off support. MKC starting back
upside. CMG still looks good, looking for a new upside move this week. POST
showed a strong upside break Friday. KO, PEP moving higher. Gotta eat,
even in economic weakness.
Telecom: VZ remains a leader, jumping almost 2% Friday after a short
lateral consolidation. HLIT started higher, struggled Friday, but staged a
good recovery. CIEN still looks solid to bounce higher.
Software: TWLO took a breather Friday after a good Thursday upside break.
VMC had a good week. DATA, VRSN still look good to move higher. SYMC
paused after a good Thursday move. FFIV, ADBE, NOW are problematic. MSFT
needs work.
Drugs: LLY, MRK posting good moves.
Transports: Airlines are not bad but nothing else here looks very good.
Machinery: Just not many good patterns.
MARKET STATS
DJ30
Stats: +123.95 points (+0.49%) to close at 25413.22
Nasdaq
Stats: -11.16 points (-0.15%) to close at 7247.87
Volume: 2.46B (-1.99%)
Up Volume: 1.21B (-640M)
Down Volume: 1.18B (+547.54M)
A/D and Hi/Lo: Advancers led 1.03 to 1
Previous Session: Advancers led 2.07 to 1
New Highs: 33 (+13)
New Lows: 145 (-55)
S&P
Stats: +6.07 points (+0.22%) to close at 2736.27 NYSE Volume: 1.049B
(+17.48%)
Up Volume: 582.823M (+14.239M)
Down Volume: 449.376M (+143.945M)
A/D and Hi/Lo: Advancers led 1.11 to 1
Previous Session: Advancers led 1.33 to 1
New Highs: 40 (+19)
New Lows: 182 (-59)
SENTIMENT
VIX: 18.14; -1.84
VXN: 24.38; -1.67
VXO: 19.94; -1.57
Put/Call Ratio (CBOE): 0.94; +0.09
Bulls and Bears:
Bulls held relatively steady after a serious dive from the low sixties to
low forties. Bears actually shrank. Just not a lot of convergence between
the two right now to show really bottoming action, BUT bulls have dropped
off significantly, and that is some upside impetus.
Bulls: 42.9 versus 42.5
Bears: 19.0 versus 19.8
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 42.9 versus 42.5
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: 19.0 versus 19.8
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: 3.065% versus 3.116%. Bonds certainly rallied the past 10 sessions,
moving close to the 50 day MA.
Historical: the last sub-2% rate was in November 2016 (1.867%). 3.116%
versus 3.127% versus 3.147% versus 3.186% versus 3.239% versus 3.228% versus
3.222% versus 3.201% versus 3.22% versus 3.146% versus 3.149% versus 3.119%
versus 3.089% versus 3.079% versus 3.126% versus 3.111% versus 3.1692%
versus 3.20% versus 3.196% versus 3.1779% versus 3.209% versus 3.165% versus
3.158% versus 3.167% versus 3.146% versus 3.169 versus 3.206% versus 3.233%
versus 3.189% versus 3.183% versus 3.061% versus 3.087% versus 3.061% versus
3.052% versus 3.048% versus 3.048% versus 3.085% versus 3.066% versus 3.068%
versus 3.076% versus 3.057% versus 2.99% versus 3.00% versus 2.972% versus
2.963% versus 2.977% versus 2.937%
EUR/USD: 1.14172 versus 1.13308. Euro rallied on the week after making a
lower low Monday.
Historical: 1.13308 versus 1.13264 versus 1.13124 versus 1.12348 versus
1.13475 versus 1.1364 versus 1.14329 versus 1.14228 versus 1.14090 versus
1.13881 versus 1.14019 versus 1.13394 versus 1.13455 versus 1.13760 versus
1.14042 versus 1.13757 versus 1.3972 versus 1.14682 versus 1.14626 versus
1.1538 versus 1.14556 versus 1.14961 versus 1.1578 versus 1.15906 versus
1.15592 versus 1.15901 versus 1.15324 versus 1.4966 versus 1.4916 versus
1.1598 versus 1.15164 versus 1.14762 versus 1.15517 versus 1.15774 versus
1.16038 versus 1.16357 versus 1.17501 versus 1.17658 versus 1.17476 versus
1.17486 versus 1.17772
USD/JPY: 112.831 versus 113.585. After a strong three weeks, dollar peaked
last week against yen and fell to close at the 50 day EMA.
Historical: Last below 109 in June 2018: 113.585 versus 113.576. Was at 110
three weeks back.
Oil: 56.68, 0.00. Rallied modestly Wednesday to Friday after a massive
Tuesday drop that ended a 3 week move straight down. Not much of a bounce,
just a weak relief move thus far.
Gold: 1223.00, +8.00. Moved up through the 50 day M Friday after finding a
higher low early week.
MONDAY
Last week saw a bit of thaw in the Fed. There is also a lot of talk about
the trade issues with the US and China sparring. Some said there were
indications of a deal in the offing, but that is just wishful thinking.
Indeed, this weekend VP Pence and Xi traded jabs in their speeches at a
summit, Pence saying that the US could even double its tariffs if China does
not accede to US positions on trade between the two nations. So much for
trade being an upside catalyst this coming week.
It is Monday after expiration, and this one was a mixed expiration with
gains not that solid and losses not that bad. That at least leaves Monday
an open book as often an upside expiration is met with a weaker Monday.
The market continues to struggle to find consistent traction. Last week
outside of Thursday any upside was met with selling. Indeed, after the
prior Wednesday follow through, all the market did was sell. Thursday put a
better spin in DJ30 and SOX, and Friday they survived the NVDA/AMAT earnings
with DJ30 seeing some of its recent leaders resume upside moves after a
test.
Leadership is still the missing link. A follow through is great in that it
sets the stage for a rally. Then, of course, there has to be a rally, and
that only happens if there are stocks in good patterns to take the baton
after the initial bounce pushed everything upside in relief. The up and
down (mostly down) action since then has helped build a few more patterns,
and thus some decent prospects in chips, software, and even China stocks.
If Thursday is to mean anything, if the follow through is to mean anything,
then these other areas are going to have to contribute to a new move higher.
Otherwise the move fizzles and rolls back over.
We have several new upside plays on the report to go along with several
already on. We will see which groups if any can make the moves. Perhaps
they all join in; that would make for a good end of year rally.
These are some good setups. That does not mean they become good moves.
They still have to show them and hold them. If so, we will pick up more for
a move higher to yearend. We are not predicting that, but we are ready to
play if the setups become real breakouts.
Have a great weekend!
Broader Market Gets Lift from More Trade Chatter; Chip Stocks Weigh
16-Nov-18 16:30 ET
Dow +122.95 at 25412.22, Nasdaq -11.16 at 7248.08, S&P +6.07 at 2736.41
briefing.com
[BRIEFING.COM] The S&P 500 chipped in a 0.2% gain on Friday after President Donald Trump again signaled China's desire to make a deal on trade. Disappointing guidance from chipmakers, however, kept gains in check. The Dow Jones Industrial Average gained 0.5%, the Nasdaq Composite lost 0.2%, and the Russell 2000 gained 0.2%. For the week, the S&P 500 declined 1.6%.
Speaking from the White House, President Trump reiterated his claim that China wants to make a trade deal. He said that China sent a "large" list of things they're willing to do, but the list is not yet in-line with the President's standards. Nevertheless, the market, desperate for a positive solution on trade, reacted positively to the comments.
Also, a dovish perspective from Fed Vice Chair Richard Clarida on Friday helped ease some early angst.
Mr. Clarida thinks the Fed is getting closer to a neutral rate, which is a somewhat contrasting view from Fed Chair Jerome Powell in October who said the Fed is still a "long way from neutral." The Fed-sensitive 2-yr yield subsequently dropped six basis points to 2.80%, and the benchmark 10-yr yield lost four basis points to 3.07%. The U.S. Dollar lost 0.5% to 96.46.
Proving strong support for the broader market were the real estate (+1.4%), utilities (+1.3%), energy (+1.1%), materials (+1.0%), and health care (+1.0%) sectors, which combine for roughly 30% of the S&P 500's market capitalization.
Conversely, the top-weighted information technology sector shed 0.1%, though recouped most of its losses largely due to resiliency from Apple (AAPL 193.53, +2.12, +1.1%). Discouraging guidance from NVIDIA (NVDA 164.43, -37.96, -18.8%) and Applied Materials (AMAT 35.40, +0.38, +1.1%) weighed on the sector early. Weaker-than-expected chip demand, which left NVIDIA with excess inventory, led to fourth quarter revenue and EPS guidance that was well below current consensus estimates. Applied Materials also lowered its top and bottom line guidance below consensus but was able to add some gains. The Philadelphia Semiconductor Index lost 1.2%.
Facebook (FB 139.53, -4.32) weighed on the communication services sector (-0.4%) with a loss of 3.0%. On-going negative publicity surrounding the company has helped pull the stock back to its lowest level since April 2017. Also, Amazon (AMZN 159.41, -26.03, 1.6%) and retail companies dragged on the lagging consumer discretionary sector (-0.5%).
Retail companies continued to struggle after Nordstrom (JWN 50.93, -8.06, -13.7%) and Williams-Sonoma (WSM 53.76, -6.80, -11.2%) released mixed earnings reports. Nordstrom reported a significant one-time charge that knocked EPS lower by $0.28, and its revenue and its full-price comparable sales figures were on the softer side. Williams-Sonoma guided its revenue to the low end of Wall Street estimates. Both companies beat earnings expectations, though. The SPDR S&P Retail ETF (XRT 46.46, -0.65) lost 1.4% today and 4.5% this week.
Separately, WTI crude added 0.1% to $56.52/bbl, extending its rebound effort to its third straight session after snapping a 12-session losing streak.
Overseas, reports from the United Kingdom indicated that the 1922 Committee received 48 letters needed to trigger a vote of no-confidence in Prime Minister Theresa May. UK's FTSE shed 0.4%, and the British pound rose 0.4% to 1.2830 against the dollar, which is far from a frantic move in the market that should be most impacted by Brexit fears.
Reviewing Friday's economic data, which included Industrial Production and Capacity Utilization for October and Net Long-Term TIC Flows for August:
Industrial production increased 0.1% in October (Briefing.com consensus +0.3%) following a downwardly revised 0.2% increase (from +0.3%) in September. The capacity utilization rate dipped to 78.4% from an upwardly revised 78.5% (from 78.1%) in September, which was the highest rate since January 2015.
The key takeaway from the report is that manufacturing output increased for the fifth straight month despite a big drop in motor vehicle assemblies, which underscores solid activity otherwise for the manufacturing base.
Looking ahead, investors will receive the NAHB Housing Market Index on Monday.
Nasdaq Composite +5.0% YTD
Dow Jones Industrial Average +2.8% YTD
S&P 500 +2.3% YTD
Russell 2000 -0.5% YTD
Week In Review: Stocks Lose Ground Over Continuing Growth Concerns
Wall Street tumbled this week, with consumer discretionary and information technology stocks leading the retreat.
Concerns over peak earnings growth continued to linger, and a further breakdown in oil prices also weighed on investor sentiment. Brexit reentered the mix this week, and, as always, U.S.-China trade headlines were plentiful. The S&P 500 lost 1.6%, the Dow lost 2.2%, the Nasdaq lost 2.2%, and the Russell 200 lost 1.4%.
Within the tech space (-2.5%), Apple (AAPL) got off to a rough start after two more suppliers, Lumentum (LITE) and Qorvo (QRVO), cut their guidance. Disappointing guidance from chipmakers NVIDIA (NVDA) and Applied Materials (AMAT) also weighed on the sector, with NVIDIA plunging nearly 20% on Friday.
Meanwhile, a host of retailers reported earnings this week, including Walmart (WMT), Macy's (M), Home Depot (HD), and Nordstrom (JWN) to name a few. The reports generally showed better-than-expected profits, but shares sold off in response nonetheless. The SPDR S&P Retail ETF (XRT) lost 4.5%, while the consumer discretionary sector lost 3.8%.
The oil-sensitive energy space (-2.1%) fell in tandem with WTI crude, which dropped 6.1% to $56.52/bbl and extended its losing streak to 12 sessions before bouncing back.
Saudi Arabia announced it would reduce its oil exports in December by 500,000 barrels a day due to a seasonal slowdown in demand, but President Trump rebuked that decision on Twitter. There were also reports that OPEC and non-OPEC allies could be entertaining a plan to cut production by 1.4 million barrels per day in 2019. However, OPEC cut its 2019 oil demand forecast for the fourth consecutive month.
In Washington, Congresswoman Maxine Waters, who is set to take over the House Financial Services Committee this January, vowed that the days of weakening bank regulations will be coming to an end. Ms. Waters' comments should not have been seen as a surprise as it was understood this would likely be the case following the midterm election results. However, a knee-jerk sell off in the financial space, which finished the week lower by 1.3%, suggested otherwise.
Conversely, outperforming the broader market were the lightly-weighted real estate (+0.8%), materials (+0.4%), and the heavily-weighted health care (-1.1%) spaces.
Elsewhere, U.S. Treasuries saw heightened demand amid market turbulence and a softer-sounding perspective from Fed Vice Chair Richard Clarida. Mr. Clarida conceded on Friday that he thinks the Fed is getting closer to a neutral rate, which is a dovish stance compared to Fed Chair Jerome Powell's "long way from neutral" comments from last month. The 2-yr yield lost 13 basis points to close at 2.80%, and the 10-yr yield lost 12 basis points to close at 3.07%.
This week saw the market bounce on any U.S.-China trade development no matter if the news was new or repetitive.
A Financial Times report suggested China and the U.S. are trying to reach a trade truce ahead of the G-20 meeting at the end of the month, but clarification from the U.S. Trade Representative's office said that the next round of tariffs for China are not on hold. President Donald Trump chimed in that China is open to a trade deal, though a list of concessions reportedly presented from China before did not mention structural reforms that have been demanded by President Donald Trump.
At the very least, National Economic Council Director Larry Kudlow did confirm that the U.S. and China have resumed trade discussions.
Overseas, UK Prime Minister Theresa May received cabinet approval for her draft withdrawal statement for Brexit. However, Brexit secretary Dominic Raab, and several other ministers, resigned after the approval, and reports indicate that the 1922 Committee received 48 letters needed to trigger a vote of no-confidence in Prime Minister Theresa May. The vote could take place next week.
Trade Optimism, Apple Lead Broader Market Higher
15-Nov-18 16:25 ET
Dow +208.77 at 25289.27, Nasdaq +122.64 at 7259.24, S&P +28.62 at 2730.34
https://www.briefing.com/investor/markets/stock-market-update/2018/11/15/trade-optimism-apple-lead-broader-market-higher.htm
[BRIEFING.COM] The S&P 500 gained 1.1% on Thursday to snap a five-session losing streak. U.S.-China trade optimism and strength from tech stocks, particularly Apple (AAPL 191.41, +4.61, +2.5%), contributed to the broader market overcoming its morning struggles.
The Dow Jones Industrial Average gained 0.8%, the Nasdaq Composite gained 1.7%, and the Russell 2000 gained 1.4%.
More news surrounding U.S-China trade developments helped fuel an afternoon rally. A Financial Times report suggested China and the U.S. are trying to reach a trade truce ahead of the G-20 meeting at the end of the month. This should not be seen as anything particularly new, though, since similar reports were out earlier in the week.
Commerce Secretary Wilbur Ross chimed in that he believes the G-20 meeting will be a 'big picture' meeting and does not expect a deal by end of the year. Nevertheless, the positive response caught some participants off guard and probably prompted some short-covering action. The trade-sensitive industrials sector finished with gain of 1.3%.
Also, the market already had some some support leading up to the news from the information technology (+2.5%), energy (+1.5%), financials (+1.4%), and materials (+1.4%) sectors.
Apple showed some resiliency after entering the session with a monthly loss of 14.7%. Morgan Stanley defended the stock, saying that it is currently a buying opportunity; the company also sees a price target of $253/share and is 'Overweight' on the stock. Also within the tech space, chipmakers put on a good showing, as the Philadelphia Semiconductor Index gained 3.3%, extending its winning streak to three sessions.
Within the financials group, heavyweights JPMorgan Chase (JPM 110.07, +2.74, +2.6%) and Bank of America (BAC 27.90, +0.69, +2.5%) helped lift the sector. Of note, Warren Buffet's Berkshire Hathaway (BRK.B 217.38, +1.35, +0.6%) disclosed it initiated new positions in some financial companies including JPMorgan and also increased its positions in Bank of America and other notable financial companies.
Conversely, the utilities and real estate sectors underperformed with respective losses of 0.8% and 0.9%. Utilities component PG&E (PCG 17.74, -7.85) weighed on the sector after sinking 30.7% to follow yesterday's 21.8% plunge. Of note, natural gas, which utility companies use for generating electric power, pulled back 15.6% to $4.05/MMBtu after yesterday's 17.1% spike.
Homebuilders had a rough day after KB Home (KBH 17.61, -3.19, -15.3%) lowered its fourth quarter guidance and reported quarter-to-date orders to be down 14%. The iShares Dow Jones US Home Construction ETF (ITB 30.37, -0.74) lost 2.4%, extending deeper into bear market territory for the year with a 2018 loss of 30.5%. Negative investor sentiment carried over to home improvement retailers Home Depot (HD 177.36, -2.54, -1.4%) and Lowe's (LOW 93.68, -1.23, -1.3%), which helped keep the consumer discretionary sector (unch) in check.
In earnings, Dow components Wal-Mart (WMT 99.54, -1.99, -2.0%) and Cisco Systems (CSCO 46.77, +2.44, +5.5%) reported upbeat reports but finished mixed. Wal-Mart beat earnings estimates and raised its 2019 fiscal year guidance, and Cisco beat top and bottom lines estimates.
In other markets, U.S. Treasuries gave up early gains, returning yields to their unchanged marks. The benchmark 10-yr yield finished flat at 3.12%. WTI crude rose for the second straight session, adding 0.5% to $56.44/bbl, though is still well-off its October 3 high of $76.90/bbl. Also, the EIA's weekly crude oil inventory report showed that U.S. crude stockpiles rose by a higher-than-expected 10.3 million barrels last week -- marking the eighth straight week of crude inventory builds.
Elsewhere, political uncertainty continued to play a factor in European markets. Brexit secretary Dominic Raab, and several other ministers, resigned a day after UK Prime Minister Theresa May received cabinet approval for her draft withdrawal statement. The resignations put pressure on Ms. May's leadership position and the fate of the Brexit plan in the British Parliament. The British pound fell 1.7% to 1.2777.
Also, press reports indicated that Italian League economic adviser Borghi is making waves about Italy possibly leaving the eurozone if the Italian League wins a majority in the next election.
Reviewing Thursday's batch of economic data, which included Retail Sales for October, weekly Initial and Continuing Claims, Empire Manufacturing Survey for November, Import and Export Prices for October, Philadelphia Fed Index for November, and Business Inventories for September:
Total retail sales increased 0.8% (Briefing.com consensus +0.5%) following a downwardly revised 0.1% decline (from +0.1%) in September. Excluding autos, retail sales jumped 0.7% (Briefing.com consensus +0.5%) following an unrevised 0.1% decline in September.
The key takeaway from the report is that it reflects healthy consumer spending activity that will provide a positive input for Q4 GDP forecasts. Core retail sales, which exclude auto, gas station, building equipment and materials, and food services sales, jumped 0.3%.
Initial claims for the week ending November 10 increased by 2,000 to 216,000 (Briefing.com consensus 214,000). Continuing claims for the week ending November 3 increased by 46,00 to 1.676 million.
The key takeaway from the report is that the weekly increases did very little to alter trends in the four-week moving average for both series, which remain near historic lows and indicative of a tight labor market.
Import prices increased 0.5% in October. Excluding fuel, they were up 0.2%. Export prices increased 0.4%. Excluding agricultural exports, they were up 0.5%.
The key takeaway from the report is that nonfuel import prices remain tame, up just 0.7% year-over-year, versus 1.4% for the 12-months ending October 2017.
The Empire Manufacturing Survey for November increased to 23.3 (Briefing.com consensus 20.0) from 21.1 in October, bolstered by an increase in the index for shipments, inventories, the number of employees, and prices paid.
The key takeaway from the report, which uses 0.0 as the dividing line between expansion and contraction, is that manufacturing activity in the New York Fed region continues to run at a good pace.
The Philadelphia Fed Index for November fell to 12.9 (Briefing.com consensus 20.5) from 22.2 in October, as most component indexes fell back from stronger levels.
The key takeaway from the report is that manufacturing growth slowed in the Philadelphia Fed region in November, yet it still remains in an expansion mode with a reading above 0.0.
Looking ahead, investors will receive Industrial Production and Capacity Utilization for October and Net Long-Term TIC Flows for August on Friday.
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Stocks Fall on Apple Weakness, Congressional Regulatory Reminder
14-Nov-18 16:30 ET
Dow -205.99 at 25080.50, Nasdaq -64.48 at 7136.60, S&P -20.60 at 2701.72
https://www.briefing.com/investor/markets/stock-market-update/2018/11/14/stocks-fall-on-apple-weakness-congressional-regulatory-reminder.htm
[BRIEFING.COM] The S&P 500 lost 0.8% in another volatile session on Wednesday. The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 0.9%, and the Russell 2000 lost 0.8%.
Stocks rallied at the open after the October CPI reading showed consumer prices rose 0.3% as expected last month, but soon fell back amid continued Apple (AAPL 186.80, -5.43) weakness and following a regulatory reminder from Congresswoman Maxine Waters.
Ms. Waters, who is set to take over the House Financial Services Committee this January, vowed that the days of weakening regulations will be coming to an end. Ms. Waters' comments should not be seen as a surprise, though, as it was understood this would likely be the case following the midterm election results.
In conjunction, a drop in interest rates did not bode well for the heavily-weighted financials sector (-1.4%). The 2-yr yield lost two basis points to 2.86%, and the 10-yr yield lost three basis points to 3.12%. The two yields have now lost seven basis points each this week.
Meanwhile, in the tech space (-1.3%), Apple dropped 2.8%, extending its monthly losses to 14.7%, after being downgraded to 'Neutral' from 'Buy' at Guggenheim on Thursday. Chip stocks, however, extended Tuesday's rebound, pushing the Philadelphia Semiconductor Index higher by 0.4%.
The lightly-weighted utilities sector (-1.1%) was another notable laggard, with PG&E (PCG 25.59, -7.13) plunging 21.8% after acknowledging it could be subject to significant liability in excess of insurance coverage that would be material to its financial condition if its equipment is found to be the cause of the Camp Fire in northern California. A spike in natural gas prices, which rose 17.1% to $4.80/MMBtu, also weighed on the sector, as utility companies use natural gas for generating electric power.
At the opposite end of the sector standings, the communication services space finished with a gain of 0.5%. Facebook (FB 144.22, +2.06, +1.5%), Alphabet (GOOG 1043.66, +7.61, +0.7%), and Comcast (CMCSA 38.29, +0.57, +1.5%) provided strong support for the group.
Meanwhile, an uptick in oil prices helped keep the energy sector (-0.1%) near its flat line. WTI crude rose 0.8%, settling at $56.14/bbl, to end a 12-session losing streak.
In earnings, Macy's (M 33.22, -2.57) fell 7.2% despite beating profit estimates and raising its earnings guidance for its fiscal 2019 year. Cannabis stocks Canopy Growth (CGC 34.30, -4.18, -10.9%) and Tilray (TLRY 102.34, -9.21, -8.3%) also dropped after reporting. Canopy missed revenue estimates, while Tilray beat earnings estimates but its revenue was at the low end of its upside pre-announcement.
Of note, at 6:00 PM ET, Fed Chairman Jerome Powell and Dallas Fed Bank President Robert Kaplan are expected to speak on global economic issues in Texas.
In Brexit news, UK Prime Minister Theresa May announced that her cabinet has approved the draft withdrawal agreement, but that draft is still subject to British Parliament and EU approval. The pound added 0.2% against the dollar to 1.2996.
Reviewing Wednesday's economic data, which included the Consumer Price Index for October and the weekly MBA Mortgage Applications Index:
The all items index for consumer prices increased 0.3% month-over-month in October while the all items index, excluding food and energy, increased 0.2%. Both were in-line with the Briefing.com consensus estimate.
The key takeaway from the report is that it points to a firming in consumer inflation, which fits the Federal Reserve's inclination to raise rates again in December.
The weekly MBA Mortgage Applications Index fell 3.2% after dropping 4.0% in the prior week.
Looking ahead, investors will receive a flurry of economic data on Thursday: Retail Sales for October, weekly Initial and Continuing Claims, Empire Manufacturing Survey for November, Import and Export Prices for October, Philadelphia Fed Index for November, and Business Inventories for September.
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Energy Stocks Weigh on Broader Market as Crude Drops
13-Nov-18 16:30 ET
Dow -100.69 at 25286.49, Nasdaq +0.01 at 7201.08, S&P -4.04 at 2722.32
https://www.briefing.com/investor/markets/stock-market-update/2018/11/13/energy-stocks-weigh-on-broader-market-as-crude-drops.htm
[BRIEFING.COM] The S&P 500 coughed up a morning rebound effort to close Monday with a loss of 0.2%. The benchmark index had climbed as high as 1.0% amid early U.S.-China trade optimism, but energy stocks eventually led the broader market lower as oil prices tanked.
Meanwhile, the Dow Jones Industrial Average lost 0.4%, the Nasdaq Composite finished flat, and the Russell 2000 lost 0.3%.
WTI crude fell 7.0% to $55.67/bbl, extending its losing streak to 12 straight sessions and settling at its lowest level since November 2017. Crude extended losses in the wake of OPEC's monthly supply report, in which it cut its 2019 oil demand forecast for the fourth consecutive month. Likewise, the oil-sensitive energy sector dropped 2.4%, and energy component Haliburton (HAL 32.27, -1.89) surrendered 5.5%.
With Tuesday's losses, the S&P 500 energy sector is down 13.9% since the start of October while WTI crude has plummeted 27.6% from its October 3 high. Falling oil prices have been a major factor with the sector's performance, as investors have called earnings prospects into question.
Nevertheless, leading the S&P sector standings on Tuesday were the financials (+0.6%), industrials (+0.5%), and utilities (+0.4%) sectors. The trade-sensitive industrials group had a relatively strong performance after National Economic Council Director Larry Kudlow confirmed that the U.S. and China have resumed trade discussions.
The information technology sector added a slim gain of 0.1% but traded as high as 1.8%. Apple (AAPL 192.23, -1.94) lost 1.0% amid another guidance warning from one of its suppliers, Qorvo (QRVO 63.65, -0.15, -0.2%), which cut its guidance due to "recent demand changes for flagship smartphones." The Philadelphia Semiconductor Index added 1.4% to follow the prior session's drop of 4.4%.
Separately, Boeing (BA 349.51, -7.52, -2.1%) was pressured by a Wall Street Journal report, which cited safety experts alleging Boeing withheld information about a new flight-control feature that may have contributed to the Lion Air crash in October.
In earnings, Dow component Home Depot (HD 179.00, -0.43, -0.2%) was unable to provide support to the blue-chip average despite an upbeat report. The home improvement retailer beat profit estimates and raised its earnings guidance for its fiscal year.
Elsewhere, U.S. Treasuries jumped, pushing yields lower across the curve. The 2-yr yield lost five basis points to 2.88%, and the 10-yr yield lost four basis points to 3.15%. Meanwhile, the U.S. Dollar Index decreased 0.4% to 97.19.
Overseas, global markets edged mostly higher on Tuesday with China's Shanghai Composite (+0.9%) and Germany's DAX (+1.3%) showing relative strength.
Reviewing Tuesday's economic data, which included the NFIB Small Business Optimism Index for October and the Treasury Budget for October:
The NFIB Small Business Optimism Index for October (Briefing.com consensus 108.0) decreased to 107.4 from last month's reading of 107.9.
The Treasury Budget for October showed a deficit of $100.5 billion versus a deficit of $63.2 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the October deficit cannot be compared to the $119.1 billion surplus for September.
The budget deficit over the last 12 months has totaled $817.3 billion
Looking ahead, investors will receive the Consumer Price Index for October and the weekly MBA Mortgage Applications Index on Wednesday.
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