Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Apple, Chip Stocks Lead Market Sell-Off
12-Nov-18 16:25 ET
Dow -602.12 at 25387.18, Nasdaq -206.03 at 7201.07, S&P -54.79 at 2726.36
https://www.briefing.com/investor/markets/stock-market-update/2018/11/12/apple-chip-stocks-lead-market-selloff.htm
[BRIEFING.COM] The S&P 500 fell 2.0% on Monday, as Apple (AAPL 194.17, -10.30, -5.0%) and semiconductor companies dragged on the broader market. The rout in the information technology sector (-3.5%) underpinned the benchmark index's retreat below its 200-day moving average (2762.39) and wiped out monthly gains for the tech-sensitive Nasdaq Composite, which lost 2.8% on Monday.
Also, the Dow Jones Industrial Average lost 2.3%, and the Russell 2000 lost 2.0%.
The market decline was triggered by Apple supplier Lumentum (LITE 37.50, -18.45, -33.0%) cutting its guidance due to a large, unnamed customer requesting to reduce shipments of laser diodes for 3D sensing. It is widely assumed that Apple is the customer in question, as it accounted for 30% of LITE's fiscal 2018 net revenue and uses laser diodes for its iPhone Face ID technology. This marks the second Apple supplier in as many weeks to have issued guidance warnings.
Chip stocks, subsequently, posted heavy losses, as the Philadelphia Semiconductor Index dropped 4.4%. Unsurprisingly, Apple chip suppliers Qorvo (QRVO 63.80, -4.35, -6.4%), Skyworks Solutions (SWKS 72.84, -3.82, -5.0%), and Cirrus Logic (CRUS 35.64, -5.74, -13.9%) underperformed. Meanwhile, notable chipmaker NVIDIA (NVDA 189.54, -16.13) erased yearly gains with a loss of 7.8%, and Advanced Micro (AMD 19.03, -2.00) lost 9.5%, though still sports a sizable yearly gain of 85.1%.
The lack of investor confidence in growth stocks also manifested itself in the other FANG names. Facebook (FB 141.55, -3.41, -2.4%), Alphabet (GOOG 1038.63, -27.52, -2.6%), and Netflix (NFLX 294.07, -9.40, -3.1%) weighed on the communication services (-1.5%) sector, and Amazon (AMZN 1636.85, -75.58, -4.1%) led the consumer discretionary sector (-2.3%) lower.
Conversely, real estate (+0.2%) was the only sector to finish with gains on Monday. The utilities (unch) and consumer staples (-0.7%) sectors also showed relative strength.
Of note, former Dow component General Electric's (GE 7.99, -0.59) struggles continued with a loss of 6.9%. CEO Larry Culp said the company's biggest priority is to bring down leverage levels and has plenty of opportunity to do that through asset sales. Also, Dow component Goldman Sachs (GS 206.05, -16.60) fell 7.5%. The investment management company is reportedly being pressed by Malaysia for a full refund of around $600 million over alleged fraudulent activity regarding the 1MDB investment fund Goldman Sachs set up for it.
In energy, Saudi Arabia announced it will reduce its oil exports in December by 500,000 barrels a day due to a seasonal slowdown in demand. The world's largest oil exporter also thinks a 1 million barrel per day cut by oil producers from October production levels might be necessary. United States President Donald Trump, in turn, tweeted his opposition to OPEC's desire to cut oil production, saying that oil prices should be lower based on supply. President Trump's tweet dampened an early WTI crude rebound, which backpedaled 0.5% to settle at $59.84/bbl.
Separately, the bond market was closed on Monday in observance of Veterans Day, and investors did not receive any notable economic data.
Elsewhere, Asian markets added slim gains with China's Shanghai Index showing relative strength (+1.2%). China-based e-commerce giant Alibaba (BABA 142.82, -2.03) recorded the biggest online shopping day in history on Sunday after it tallied $30.8 billion in sales. Shares slipped 1.4% on Monday, though. In Europe, the major indices closed on a lower note with Germany's DAX (-1.9%) leading the retreat.
Looking ahead, investors will receive the NFIB Small Business Optimism Index for October and the Treasury Budget for October on Tuesday.
Nasdaq Composite +4.3% YTD
Dow Jones Industrial Average +2.7% YTD
S&P 500 +2.0% YTD
Russell 2000 -1.1% YTD
InvestmentHouse - PPI at a 6-Year High (Weekend Newsletter)
https://news.investmenthouse.com/2018/11/the-daily-part-1-of-3-11-10-18_10.html
- Friday finds no bids again as Wednesday follow through so far stands
by itself.
- PPI at a 6 year high with prices +2.9% year/year
- Trade worries, declining oil, low capital investment, rising prices
are not signals of an economy heading higher.
- SP500, DJ30 in excellent tests, NASDAQ needs work.
- This week we see if potential leaders can step up to support the
past week's follow through session.
Friday saw stocks trade lower wire to wire. The session started lower and
trended lower in a very orderly decline into the afternoon session. There
was a lot of 'what the heck happened?' commentary given the Wednesday surge
and the utter failure to produce any upside Thursday or Friday. Plenty of
concern and worry the market was going to give up the entire break higher --
it did so on NASDAQ, filling the Wednesday gap and more at the session low.
A spurt of upside started 2 hours out from the close, bouncing the indices
nicely off the session lows. Stocks lost some steam in the last 15 minutes
or else the recovery would have looked pretty decent versus 1%+ losses.
SP500 -25.82, -0.92%
NASDAQ -123.98, -1.65%
DJ30 -201.92, -0.77%
SP400 -1.03%
RUTX -1.82%
SOX -1.85%
NASDAQ 100 -1.67%
VOLUME: NYSE +13%, NASDAQ -2%. NYSE trade moved up to average; some more
selling but not heavy. NASDAQ trade faded as it sold off. Not a massive
selloff.
ADVANCE/DECLINE: NYSE -3:1, NASDAQ -2.1:1. Fairly hefty downside breadth.
When all was done for the session the general notion is the rebound was
rejected and the selloff continues. Perhaps, but the index patterns,
particularly large cap NYSE -- even NASDAQ 100 -- despite falling, held
together. The action was more a test of the Wednesday follow through.
DJ30 tapped the 50 day SMA on Friday's low, holding much of the move. SP500
tapped the 200 day SMA and rebounded nicely.
NASDAQ 100 filled much of the Wednesday gap, essentially giving up the move
before rebounding. Very similar to the test of the last surge. NASDAQ did
give up the Wednesday move but also rebounded to close. Volume remained
lower as it did on Thursday, and the pattern is holding together.
SOX, SP400, and RUTX also tested for a second session, but also worked well
on the right shoulder to their own inverted head and shoulders patterns, the
same pattern all indices are showing.
Yes the post-Wednesday move was not a continuation, but instead a pullback.
Was it a rollover? Not as of the Friday close. It was more of a test or
consolidation of the follow through, very clearly so on DJ30 and SP500.
True, NASDAQ gave up the Wednesday move, but it also bounced, preserving the
pattern, still holding support, bouncing above it intraday.
I am not trying to justify an upside move. No, I am just analyzing what is
happening in the market with all indices still showing upside patterns even
after two days of downside post-follow through session.
No doubt: the indices will have to generate leadership to make a follow
through worth something, and a lot of big NASDAQ names are toilet worthy.
At the same time some look great, e.g. VRSN, INTC, MSFT, FEYE, XLNX, AVGO,
FFIV -- if they come around further, NASDAQ can garner more upside.
The real leaders, however, remain in the NYSE large caps and a few other
sectors, e.g. retail. WMT, MCD, JNJ, WBA et al continue higher. Even V,
down on the day, still looks great. Rather clearly, these stocks are
leading well. Can they do so without many of the NASDAQ big names and can
the entire market move with them?
Those are the questions this coming week as the stock indices try to finish
the quick test of the follow through and break higher once more. I am not
saying it has to happen, but the follow through, some good patterns in the
indices, some good leadership groups, and the seasonal influence are good
reasons not to wholly discount a continued move higher after this follow
through test to end the week. This happens all the time in follow throughs,
and it behooves you to let it play out, AND . . . play the stocks that stand
out with their strength.
NEWS/ECONOMY
No doubt the stock market and all financial markets are facing headwinds. I
and others have discussed the Fed extensively. Some say one more hike and
then the Fed should pause. I say the market is speaking about that and it
wants the Fed to back off. Or, just be data dependent with no unnecessary
and frankly arbitrary 'hike beyond neutral' moves. Get to equilibrium (and
hopefully you will know it when you see it), and then let the economy work.
As I noted before, 1.5 years of recovery in NO WAY makes up for the 10 years
of terrible economic activity. People are just, just, just now starting to
feel better and the recovery has not spread out to everyone yet. Why then,
oh great Fed, do you want to overly slow the economy before everyone feels
some benefit?
There is also trade, but I see that as more of a large cap issue, and those
companies have enjoyed ALL the breaks the past 15 years at the detriment of
the smaller businesses. So we don't buy a bunch of crappy Chinese aluminum
in favor of good US aluminum? Some industries are of national importance,
and that is the way it is. We will survive with that -- there are other
problems that are FAR more burdensome such as massive entitlement issues.
Friday Mr. Navarro gave a somewhat fire and brimstone speech about trade and
what the administration wants to accomplish with China. It led many to
conclude no deal with China was coming anytime soon. Perhaps, but is not
this Trump's way of operating, i.e. making it look as if no deal is
possible?
Earnings are basically done though some big ones are out this coming week.
Lots of top line misses even as bottom line earnings rose 29% versus the 23%
expected. The top line miss surge, however, is a worrisome element that
won't go away if the economy remains as is. It is in a slow patch despite
what the lagging jobs report showed. The Fed is slowing the economy in a
slow time period, and the risk is it turns things worse. The top line miss
surge is a red flag, a canary, that something is amiss. Be data dependent,
not stubborn.
Oil is tanking. Some say it is supply only. Not totally, no. Yes the US
is producing a lot of oil, but this kind of dive in price is not supply
alone, at least not supply because the US is producing more. It also
involves the LACK OF USE by the rest of the world thanks to the fading
economies not needing as much.
Prices jumped for producers (2.9% year/year for final demand), led mainly by
gasoline (+7.6%). With the oil plunge that gasoline spike will cease, but
you cannot ignore the prices. Of course, many who believe in the Phillips
Curve (and that includes the Fed) will say they are the reason the Fed
SHOULD rise.
But that is not the case. Prices rise in a slowing economy. That does not
make sense to some, but it really makes perfect sense in economic reality:
output is slowing on the supply side -- economic reports show capital
investment slowing sharply. At the same time jobs are still ramping up as
jobs lag the economy. Thus, you have less output from the supply side but
steady demand. That is a recipe for rising prices, the very definition of
inflation. The Fed hiking into a slowing economy only exacerbates the
problem, further slowing the supply side, limiting output, and thus driving
up prices as more money (wages +3.1% year/year in October) chases fewer
goods and services. The irony: yet again, the Fed creates the very thing it
fears, i.e. the 'wage-led' inflation.
All in all, these factors show an economy that is struggling enough to be in
trouble if the Fed keeps pushing. Too much and you get a further market
crash in 2019, followed by recession. Always, always happens. That makes
2019 that gets interesting, as they say. For now, we are concerned with the
move to year end and how this 2-day pullback of the follow through session
plays out.
THE MARKET
LEADERSHIP
True leadership remains limited in certain areas, e.g. certain retail, food,
some drugs. Other areas, particularly growth, are trying to pitch in but
keep shooting themselves in the foot. Some software looks great, but they
have yet to show the recovery. Some chips even show promise. A few
financials. More need to show up.
Retail: WMT, TGT, COST, ROST, DG, ULTA remain solid.
Drugs: JNJ remains solid while LLY and PFE look ready to move higher again.
RGEN broke nicely higher and needs a test. ILMN is looking quite
interesting as it tests a move higher.
Food: KR enjoyed a great week as did MCD, MKC, KO, PEP.
Software: MSFT looks solid, testing a Wednesday breakout. FEYE ditto.
FFIV is testing a nice breakout, coming back to the 50 day SMA. DATA
testing its earnings breakout surge. CRM is testing the 200 day SMA in a
decent pattern. NOW is testing the 200 day SMA similar to CRM.
SCAANN: SQ broke higher Wednesday ahead of earnings, sold to a doji Friday
at support. CRM testing. AAPL up then down. AMZN broke over the 200 day
Wednesday, tested to the 200 day SMA Friday. NFLX lower again. NVDA
announces results next week, fading this week.
FB fell out of its lateral consolidation. GOOG testing a break higher
through Wednesday. Okay, will see if a decent pattern breaks upside.
Telecom: VZ continued upside on the week. VRSN is in a nice test of its
earnings gap upside on volume.
Financial: V in a very nice test of its gap higher. JPM is at the 200 day
SMA in a decent pattern. Important time for it. BAC so-so. C broke lower
on volume Friday from a two week bear flag rise.
MARKET STATS
DJ30
Stats: -201.92 points (-0.77%) to close at 25989.30
Nasdaq
Stats: -123.98 points (-1.65%) to close at 7406.90
Volume: 2.42B (-1.63%)
Up Volume: 562.97M (-435.73M)
Down Volume: 1.83B (+400M)
A/D and Hi/Lo: Decliners led 2.95 to 1
Previous Session: Decliners led 1.17 to 1
New Highs: 43 (-32)
New Lows: 127 (+36)
S&P
Stats: -25.82 points (-0.92%) to close at 2781.01 NYSE Volume: 931.814M
(+13.22%)
Up Volume: 276.613M (-14.423M)
Down Volume: 636.566M (+110.661M)
A/D and Hi/Lo: Decliners led 2.09 to 1
Previous Session: Decliners led 1.12 to 1
New Highs: 60 (-15)
New Lows: 109 (+41)
SENTIMENT
VIX: 17.36; +0.64
VXN: 24.27; +1.41
VXO: 18.09; +1.18
Put/Call Ratio (CBOE): 1.11; +0.14
Bulls and Bears:
Bulls are on an impressive dive from the low sixties to the low forties.
Straight down. Bears are up but held steady on the week. Bulls are willing
to converge, bears are not there yet. Stocks selling after bulls in the
sixties is normal. They have bounced from here before, but in 2015 and
again in 2016 they fell to the mid-twenties, crossing over with bears.
This now gets at least interesting. Bulls tumbled 6.2 points, now well below
50. Perhaps that is the dam breaking and negative sentiment will ramp. It
is noteworthy that the market rebounded in the aftermath. Bears mad a
significant move, at least for the bears.
Bulls: 42.5 versus 44.3
Bears: 19.8 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: 42.5 versus 44.3
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: 19.8 versus 19.8
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: 3.186% versus 3.239%. This is an interesting turn. Bonds sold to
the early October low, then started to work laterally. Friday they broke
higher toward the 20 day EMA. Trying to bottom and rally. Bonds rallying
would be another indication of economic issues.
Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.13475 versus 1.1364. Euro rallied to test the 50 day EMA on the
Thursday high and reversed. Friday it bombed lower to the late October low.
Historical: 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 vs 1.16833 versus 1.16692 versus 1.16858 versus
1.16226 versus 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus
1.15534 versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus
1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus
1.15390 versus 1.15709 versus 1.158 versus 1.1487
USD/JPY: 113.91 versus 113.72. The dollar broke higher Thursday and
Friday, moving out of its 6 week double bottom with handle pattern.
Historical: Last below 109 in June 2018: 113.72 versus 113.641 versus
113.419 versus 113.244 versus 113.204 versus 112.81 versus 112.877 versus
112.876 versus 112.58 versus 111.89 versus 112.391 versus 112.091 versus
112.427 versus 112.680 versus 112.527 versus 112.385 versus 112.553 versus
112.558 versus 111.848 versus 112.222 versus 112.076 versus 112.158 versus
113.01 versus 113.12 versus 113.706 versus 113.894 versus 114.383 versus
113.642 versus 113.690 versus 112.734 versus 112.981 versus 112.811 versus
112.575 versus 112.448 versus 112.247 versus 112.369 versus 111.849 versus
112.06 versus 111.81 versus 111.491 versus 111.608 versus 111.192 versus
111.064 versus 110.680
Oil: 60.19, -0.48. Undercut 60.00 on the low. Impressive 6 week selloff.
Gold: 1208.60, -16.50. Sharp break lower, closing below the 50 day SMA and
below the 4 week range.
MONDAY
There is plenty of news along with some earnings though the latter is
tailing off now. CPI, Retail Sales, some regional PMI's, Industrial
Production -- plenty for investors and the Fed to ponder.
A follow through then two sessions testing. SP500, DJ30 very nice orderly
tests, NASDAQ a bit shakier on the test, with SOX, RUTX and SP400 working on
patterns, trying to catch up to the large cap indices.
The question is whether they even try to catch up and if there is anything
to catch. In other words, will the move, follow through be damned, fail and
head back down or will the Thursday and Friday that caused so much worry and
concern give way to a resumption of the upside.
Again, there are patterns to lead, some already leading, others in position
to help out. We have some positions working in the former, with some of the
latter on the report, ready to enter. There are some others we are looking
to as possibilities to lead and will be ready in the event they do make the
break upside.
Have a great weekend!
S&P 500 Pulls Back from Midterm Election Spike
09-Nov-18 16:30 ET
Dow -201.92 at 25989.30, Nasdaq -123.98 at 7407.10, S&P -25.82 at 2781.15
https://www.briefing.com/investor/markets/stock-market-update/2018/11/9/s-and-p-500-pulls-back-from-midterm-election-spike.htm
[BRIEFING.COM] The S&P 500 lost 0.9% on Friday, with the pullback suggesting a natural consequence of an overreaction to this week's election spike. The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 1.7%, and the Russell 2000 lost 1.8%. For the week, the S&P 500 advanced 2.1%.
Outperforming the broader market on Friday were the defensive-oriented consumer staples (+0.5%), real estate (+0.1%), and utilities (+0.1%) sectors. Conversely, FANG stocks within the lagging communication services (-1.5%), consumer discretionary (-1.5%), and information technology (-1.7%) sectors underperformed. Netflix led the FANG group lower with a loss of 4.6%. Apple (AAPL 204.47, -4.02), Amazon (AMZN 1712.43, -42.48), Alphabet (GOOG 1066.15, -16.25), and Facebook (FB 144.96, -2.91) bared losses between 1.5% and 2.4%.
Chip stocks dragged on the lagging tech sector, as key Apple supplier Skyworks Solutions (SWKS 766.66, -6.74) fell 8.1% after it issued below-consensus top and bottom line guidance for its fiscal first quarter. Its guidance has extended a trend within the semiconductor industry that has warned of slowing chip demand. The Philadelphia Semiconductor Index lost 1.9%.
In other corporate news, Walt Disney (DIS 118.00, +2.00, +1.7%) rose after an upbeat earnings report, while General Electric (GE 8.58, -0.52, -5.7%) took a hit after JPMorgan cut its price target on the stock to $6 from $10. In response, the former Dow component responded that it is a "fundamentally strong company with a sound liquidity position," according to a CNBC report.
Demand for Treasuries increased amid the equity setback, pushing yields lower across the curve. The 2-yr yield lost four basis points to 2.93%, and the 10-yr yield lost five basis points to 3.19%. For the week, the 2-yr yield added two basis points, while the 10-yr yield shed two basis points.
Separately, WTI crude, which is the U.S. benchmark for oil, fell 0.9% to settle at $60.16/bbl. Friday's loss has extended its decline to 21.8% from its Oct 3 four-year high. On a related note, the oil-sensitive energy sector lost 0.4% on Friday.
In economic data, the Producer Price Index (Briefing.com consensus +0.2%) for October was released on Friday morning, showing a higher-than-expected increase of 0.6%. The core reading, which excludes the volatile prices of food and energy, also came in above consensus (+0.5% actual vs +0.2% Briefing.com consensus). The headline pressures stoked concerns about pass-through inflation to consumers and, in turn, helped to strengthen the Fed's case for additional rate hikes.
In trade news, White House National Trade Council Director Peter Navarro made some combative comments against CEOs for pushing President Trump to make a trade deal with China and stated a trade deal will be on the president's terms. Separately, President Trump has reportedly been telling associates that he wants to replace Commerce Secretary Wilbur Ross by the end of the year.
Overseas, China reported just a 0.2% rise in its Consumer Price Index on Friday, which was in-line with estimates but significantly below last month's increase of 0.7%. Its softening inflation has continued to fuel concerns over a slowing Chinese economy.
Reviewing Friday's economic data, which included the Producer Price Index for October, the preliminary reading of the University of Michigan Consumer Sentiment Index for November, and the Wholesale Inventories report for September:
The Producer Price Index for final demand jumped 0.6% in October (Briefing.com consensus +0.2%) while the index for final demand, less food and energy, rose 0.5% (Briefing.com consensus +0.2%). Those increases left the index for final demand up 2.9% year-over-year, versus 2.6% in September, and the index for final demand, less food and energy, up 2.6% year-over-year, versus 2.5% in September.
The key takeaway from the report is that it will stoke concerns about pass-through inflation to the consumer, which have already been stoked by numerous companies during the third quarter earnings-reporting period talking about higher input costs and increasing prices.
The preliminary University of Michigan Index of Consumer Sentiment for November held quite steady, edging down to 98.3 (Briefing.com consensus 98.0) from the final reading of 98.6 for October.
The key takeaway from the report is that stock market sell-off in October had no real impact on consumer sentiment, which was rooted more in favorable views about income expectations and job growth that are key drivers of consumer spending.
Wholesale inventories increased 0.4% in September (Briefing.com consensus 0.3%) on top of a downwardly revised 0.9% increase (from 1.0%) in August.
The key takeaway from the report is that sales are increasing year-over-year at a faster rate than inventories, which can be a precursor to improved pricing power for wholesalers.
Looking ahead, investors will not receive any economic data on Monday.
Nasdaq Composite +7.3% YTD
Dow Jones Industrial Average +5.1% YTD
S&P 500 +4.0% YTD
Russell 2000 +0.9% YTD
Week in Review: Fed Policy Statement Not Enough to Derail U.S. Midterm Gains
The S&P 500 rose 2.1% this week, but had to weather a late week sell-off after the latest policy statement from the Federal Reserve humbled an upbeat reaction to the midterm elections. Neither outcome was a surprise, but they were representative of recent market volatility. The Dow Jones Industrial Average and the Nasdaq Composite also finished the week higher, adding 2.8% and 0.7%, respectively. The Russell 2000 added 0.1%.
The midterm elections produced a split Congress with the Democrats taking control of the House and the Republicans retaining control of the Senate. The prevailing assumption in the market was that a newly divided Congress would preserve market-friendly policies, namely the tax cut and deregulation efforts. In addition, investors took delight in the fact that the stock market has historically done well in years with a Republican president and split Congress.
The Fed released its policy statement on Thursday, in which it decided to leave the fed funds rate unchanged as expected. The central bank noted that it expects further rate hikes that are consistent with sustained economic growth, strong labor market conditions, and inflation near its symmetric 2% target over the medium term, but omitted October's sell-off and U.S.-China trade developments from its policy statement. Those omissions were a clear, between-the-lines message that the FOMC remains poised to raise rates for a fourth time this year in December.
In the stock market, the health care (+4.0%), real estate (+3.6%), and utility (+3.1%) groups led the way. Of note, health care has surpassed the information technology (+1.4%) and consumer discretionary (+2.0%) sectors for the top spot in the yearly sector standings with a 2018 gain of 12.4%. For comparison, tech is up 10.7%, and consumer discretionary is up 10.9%.
Conversely, the communication services sector was the only group to finish in negative territory with a weekly loss of 0.2%.
In earnings, some notable companies that had upbeat reports included Berkshire Hathaway (BRK.B), CVS (CVS), Eli Lilly (LLY), Humana (HUM), and Walt Disney (DIS). On the other hand, Skyworks Solution (SWKS) led chip stocks lower on Friday after it issued below-consensus Q1 earnings and revenue guidance. Skyworks, which is an Apple (AAPL) supplier, warned of slowing chip demand, continuing a disappointing trend out of the semiconductor industry.
On a related note, Japan's Nikkei Asian Review reported that Apple decided to cancel a production increase in its newest low-end iPhone XR. However, the Nikkei also said that demand for the older generation iPhone 8 and iPhone 8 Plus has been higher than expected. Nevertheless, the report corroborated fears over the company reaching peak iPhone sales.
In politics, Attorney General Jeff Sessions resigned his post effective immediately per President Trump's request. Pot stocks initially surged in response to his resignation, as his adamant anti-marijuana stance has been seen as a roadblock to advancing the national discussion for legalization. However, pot stocks pulled back as replacement names currently being floated are against marijuana legalization; acting Attorney General Matthew Whitaker has a mixed record on the issue.
Looking at other markets, U.S. Treasuries had a volatile week, and closed near last week's levels. This week, the 2-yr yield decreased two basis points to 2.91%, and the 10-yr yield added two basis points to 3.21%.
Also of note, WTI crude lost 4.8% this week, entering bear market territory and extending its decline from last month's four-year high. U.S. President Donald Trump granted temporary wavers on Monday to eight countries who import oil from Iran after the U.S.'s energy sanctions on the OPEC member were officially reimposed.
Stocks Slip on Heels of Expected FOMC Rate Decision
08-Nov-18 16:30 ET
Dow +10.92 at 26191.22, Nasdaq -39.87 at 7531.08, S&P -7.06 at 2806.97
https://www.briefing.com/investor/markets/stock-market-update/2018/11/8/stocks-slip-on-heels-of-expected-fomc-rate-decision.htm
[BRIEFING.COM] The S&P 500 slipped 0.3% on Thursday on the heels of the Federal Open Market Committee's (FOMC) decision to leave the fed funds rate unchanged as expected. The benchmark index traded slightly below its flat line leading up to the Committee's statement release, and sharply dropped to session lows before recouping some losses.
Meanwhile, the Dow Jones Industrial Average was unchanged, the Nasdaq Composite lost 0.5%, and the Russell 2000 lost 0.3%.
In its statement, the FOMC said it expects further gradual rate hikes that are consistent with sustained economic growth, strong labor market conditions, and inflation near its symmetric 2% target over the medium term. The one hitch, if it can be called that, is that the FOMC statement acknowledged business fixed investment has moderated.
The Fed's statement didn't derail expectations for another rate hike in December, which would be the fourth hike in 2018, with the CME FedWatch Tool putting the chances at 77.8%, down slightly from 80.8% on Wednesday.
Consequently, the yield on the Fed-sensitive 2-yr Treasury note jumped four basis points to 2.97% -- its highest level since June 2008. Also, the benchmark 10-yr yield added two basis points to 3.23%, and the U.S. Dollar Index rose 0.7% to 96.68.
Back to the stock market, over half of the 11 S&P sectors finished with losses on Thursday, possibly manifesting Wednesday's post-midterm spike as an overreaction.
The energy sector (-2.2%) led the retreat and is now the second worst-performing group this quarter. The oil-sensitive group has fallen in tandem with WTI crude, which dropped another 2.4% on Thursday to $60.68/bbl, further distancing itself from the four-year high it hit in October.
Communication services was the next worst-performing group with a loss of 0.9%. High-growth names like Facebook (FB 147.87, -3.66, -2.4%), Alphabet (GOOG 1082.40, -10.99, -1.0%), and Netflix (NFLX 317.92, -9.58, -2.9%) led the sector lower.
Conversely, the rate-sensitive, and heavily-weighted, financials sector had a relatively strong performance with a gain of 0.3%. The gain was a continuation of the relative strength financials have recently had, part of it coming from the renewed rise in Treasury yields.
In the latest batch of Q3 earnings reports, lower guidance overshadowed better-than-expected profits for many names. For instance, Perrigo (PRGO 62.88, -12.26, -16.3%), Qualcomm (QCOM 58.05, -5.16, -8.2%), Wynn Resorts (WYNN 99.02, -14.97, -13.1%), Square (SQ 75.23, -7.46, -9.0%), and D.R. Horton (DHI 34.22, -3.37, -9.0%) all beat earnings estimates but bared significant losses after lowering profit or revenue guidance below consensus.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report:
Initial claims for the week ending November 3 decreased by 1,000 to 214,000 (Briefing.com consensus 213,000) while continuing claims for the week ending October 27 decreased by 8,000 to 1.623 million.
The key takeaway from the report is that it is supportive of the Federal Reserve's rate-hike bias.
Looking ahead, investors will receive the Producer Price Index for October, the preliminary reading of the University of Michigan Consumer Sentiment Index for November, and the Wholesale Inventories report for September on Friday.
Nasdaq Composite +9.1% YTD
Dow Jones Industrial Average +6.0% YTD
S&P 500 +5.0% YTD
Russell 2000 +2.8% YTD
Stocks Jump with Midterm Elections Producing Split Congress
07-Nov-18 16:25 ET
Dow +545.29 at 26180.30, Nasdaq +194.79 at 7570.95, S&P +58.44 at 2814.03
https://www.briefing.com/investor/markets/stock-market-update/2018/11/7/stocks-jump-with-midterm-elections-producing-split-congress.htm
[BRIEFING.COM] The S&P 500 confidently finished with a gain of 2.1% on Wednesday with the benchmark index now up 6.4% since its close on October 29. Wednesday's advance follows the conclusion of U.S. congressional midterm elections that produced a split Congress.
The prevailing assumption in the market was that a newly divided Congress would preserve market-friendly policies, namely the tax cut and deregulation efforts. U.S. President Donald Trump also mentioned on Wednesday bipartisan efforts to work with the Democrats in the House on infrastructure, trade, and lowering drug costs.
Meanwhile, the Dow Jones Industrial Average gained 2.1%, the Nasdaq Composite gained 2.6%, and the Russell 2000 gained 1.7%.
All 11 S&P 500 sectors finished in positive territory with the consumer discretionary (+3.1%), health care (+2.9%), and information technology (+2.9%) groups leading the sector standings with strong gains. Health care companies rose with the belief that a split Congress would also make it unlikely that it will fully repeal the Affordable Care Act. On a related note, heavily-weighted health care component Humana (HUM 353.98, +22.17) jumped 6.7% after it reported above-consensus earnings and raised its guidance.
Also, the tech sector welcomed a strong showing from its top-weighted components. Apple (AAPL 209.95, +6.18, +3.0%), Microsoft (MSFT 111.96, +4.24, +3.9%), Visa (V 144.78, +3.99, +2.8%), and MasterCard (MA 208.24, +9.09, +4.6%) all provided the sector a much-needed lift. Within the consumer discretionary group, Amazon (AMZN 1755.49, +112.68) carried the sector with an impressive gain of 6.9%.
Conversely, the defensive-oriented real estate (+1.1%), utilities (+1.1%), and consumer staples (+0.6%) sectors underperformed the broader market, though still finished with healthy gains. Heavyweight utilities component Southern (SO 47.01, +1.34) rose 2.9% after it beat earnings expectations.
In other earnings, some smaller, but well-known, companies that had notable post-earnings performances were Etsy (ETSY 50.01, +9.58, +23.7%), Office Depot (ODP 3.41, +0.66, +24.0%), Michael Kors (KORS 49.05, -8.40, -14.6%), and Groupon (GRPN 2.92, -0.35, -10.6%). Etsy and Office Depot both beat earnings and raised their guidance; Michael Kors beat earnings estimates but lowered its fiscal Q3 guidance below consensus, and Groupon missed earnings expectations.
Of note, pot stocks surged after Attorney General Jeff Sessions resigned his post effective immediately per President Trump's request. Mr. Sessions was an influential critic of legalizing marijuana and served as roadblock to advance the national conversation. Well-known cannabis companies Tilray (TLRY 139.60, +32.74) and Canopy Growth (CGC 46.07, +3.48) rose 30.6% and 8.2%, respectively.
Cannabis stocks were already on the rise after several more states voted to legalize recreational or medical marijuana. Michigan became the 10th state to legalize its recreational use, and Utah and Missouri passed initiatives to join 31 other states that already legalize its medical use.
In other markets, U.S. Treasuries finished roughly flat with the 10-yr yield unchanged at 3.21%. Also, the U.S. Dollar decreased 0.2% to 96.10. Separately, WTI crude lost 0.9% to settle at $61.65/bbl, extending its recent decline to nearly 20.0% from its four-year high last month. The Energy Information Administration reported a weekly crude inventory build of 5.8 million barrels last week, marking the seventh consecutive week of stockpile builds.
Reviewing Wednesday's economic data, which included the weekly MBA Mortgage Applications Index and the Consumer Credit report for September:
The weekly MBA Mortgage Applications Index showed a decline of 4.0%, a decrease from the prior week's decline of 2.5%.
Total outstanding consumer credit increased by $11.0 billion in September after increasing an upwardly revised $22.8 billion (from $20.1 billion) in August.
The key takeaway from the report is that it reflects a deceleration in credit expansion that could contribute to concerns about the U.S. economy hitting/nearing peak growth.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the FOMC Rate Decision for November on Thursday.
Nasdaq Composite +9.7% YTD
Dow Jones Industrial Average +5.9% YTD
S&P 500 +5.3% YTD
Russell 2000 +3.0% YTD
Stocks Gain in Broad-Based Advance on Election Day
06-Nov-18 16:25 ET
Dow +173.31 at 25635.01, Nasdaq +47.11 at 7376.16, S&P +17.14 at 2755.59
https://www.briefing.com/investor/markets/stock-market-update/2018/11/6/stocks-gain-in-broadbased-advance-on-election-day.htm
[BRIEFING.COM] The S&P 500 added 0.6% for a second consecutive day on Tuesday, as investors awaited results from the U.S. congressional midterm elections. It was a largely broad-based performance, as all 11 S&P sectors finished in positive territory.
Also, the Nasdaq Composite gained 0.6%, the Dow Jones Industrial Average gained 0.7%, and the Russell 2000 gained 0.6%.
The stock market opened flat but perhaps found strength from reports indicating that the market has performed well in midterm election years that resulted in a divided Congress. Though results will not be made clear until the early hours, most polls show the Democrats regaining control of the House, while Republicans are expected to retain majority control of the Senate.
Positive trade chatter from China also contributed to Tuesday's gains, with China's Vice President Wang Qishan reiterating China's readiness to discuss a trade resolution with the United States. Likewise, the trade-sensitive materials (+1.5%) and industrial (+1.1%) sectors led the broader market higher.
In earnings, results were mostly positive with CVS (CVS 77.90, +4.21) climbing 5.7% after it reported above-consensus profits. Eli Lilly (LLY 105.90, -4.24) also beat earnings estimates but lost 3.9%, while Booking Holdings (BKNG 1949.46, +78.34) gained 4.2% despite missing earnings estimates. Booking's results were above its prior guidance, though. Also, an honorable mention goes to health care company Mylan N.V. (MYL 36.43, +5.06) after it surged 16.1% after it reported better-than-expected earnings.
Separately, WTI crude dropped 1.5% to settle at $62.19/bbl after U.S. President Donald Trump granted temporary waivers on Monday to eight countries that import oil from Iran. The decision fueled an already weakening oil market that has seen crude prices decline nearly 20.0% from its recent four-year high in October. Despite the drop in crude, the oil-sensitive energy sector ticked higher by 0.3%, although it was down as much as 0.8% intraday.
In the bond market, U.S. Treasury yields inched higher with the 2-yr yield adding two basis points to 2.92% and the 10-yr yield increasing one basis point to 3.21%. Yields have been gradually reascending to multi-year highs after declining at the end of October. Also, the U.S. Dollar Index remained unchanged at 96.30.
In Europe, the major indices closed on a lower note with the Euro Stoxx 50 losing 0.3%. UK's FTSE led the decline with a loss of 0.9%.
Reviewing Tuesday's sole economic report, the Jobs Openings and Labor Turnover Survey for September:
The September Job Openings and Labor Turnover Survey showed that job openings decreased to 7.009 million from a revised 7.293 million (from 7.136 million) in August.
Looking ahead, investors will receive the weekly MBA Mortgage Application Index and the Consumer Credit report for September on Wednesday.
Nasdaq Composite +6.9% YTD
Dow Jones Industrial Average +3.7% YTD
S&P 500 +3.1% YTD
Russell 2000 +1.3% YTD
S&P 500 Gains in Subdued Session on Monday
05-Nov-18 16:30 ET
Dow +190.87 at 25461.70, Nasdaq -28.14 at 7329.05, S&P +15.25 at 2738.45
https://www.briefing.com/investor/markets/stock-market-update/2018/11/5/s-and-p-500-gains-in-subdued-session-on-monday.htm
[BRIEFING.COM] The S&P 500 gained 0.6% on a subdued Monday, as investors remained cautious ahead the U.S. congressional midterms elections on Tuesday. Technology stocks largely underperformed, but a strong showing from financial companies helped offset tech losses.
Meanwhile, the tech-sensitive Nasdaq Composite lost 0.4%, though finished well off its session lows, the Dow Jones Industrial Average gained 0.8%, and the Russell 2000 was unchanged.
The S&P 500 opened flat but ticked higher throughout the day, especially in the last couple hours of trading. Nevertheless, weakness from the consumer discretionary (-0.2%), information technology (-0.2%), and communication services (-0.3%) sectors kept gains in check.
Apple (AAPL 201.59, -5.89, -2.8%) resumed its post-earnings Friday decline after a report from Japan's Nikkei Asian Review corroborated fears over the company reaching peak iPhone sales. The newspaper indicated that Apple decided to cancel a production increase in its newest low-end iPhone XR; however, the Nikkei also said that demand for the older generation iPhone 8 and iPhone 8 Plus has been higher than expected.
Also, U.S. President Trump said in an interview with Axios that his administration is looking into antitrust violations by Facebook (FB 148.68, -1.67, -1.1%), Alphabet (GOOG 1040.49, -17.70, -1.7%), and Amazon (AMZN 1627.80, -37.73, -2.3%). Likewise, Facebook and Alphabet weighed on the communication sector, while Amazon dragged on the consumer discretionary sector. Of note, a WSJ report stated that Amazon has decided to split its second headquarters into two locations, as its sources stated the decision was rooted in allowing the company to recruit enough tech talent.
Conversely, leadership from the financials sector (+1.4%) helped underpin Monday's advance. Heavily-weighted Berkshire Hathaway (BRK.B 216.24, +9.67) climbed 4.7% after the conglomerate holding company nearly doubled its Q3 operating earnings to $6.88 billion from $3.44 billion in the same quarter last year.
Other top-performing sectors on Monday were real estate (+1.7%), energy (+1.6%), utilities (+1.4%), and consumer staples (+1.2%).
Elsewhere, U.S. energy and financial sanctions on Iran were officially reimposed at midnight, though the U.S. issued temporary waivers to eight countries on Monday. The waivers are meant to provide the countries time to seek alternatives to Iranian oil and help prevent oil prices from de-stabilizing. WTI crude fell 1.0% to $63.12/bbl.
In China, President Xi reiterated his plans to continue to open China's markets to the world in a keynote speech at the China International Import Expo in Shanghai.
Reviewing Monday's only piece of economic data, the ISM Non-Manufacturing Index for October:
The ISM Non-Manufacturing Index for October checked in at 60.3% (Briefing.com consensus 58.8%). That was down slightly from 61.6% in September, which was the highest reading for the composite index since its inception in 2008.
The key takeaway from the report is that business activity in the non-manufacturing sector is still strong, as the October deceleration can be interpreted at this juncture as a natural slowing following some solid acceleration since July when the index registered 55.7%.
Looking ahead, investors will receive the JOLTS - Job Openings report on Tuesday.
Nasdaq Composite +6.2% YTD
Dow Jones Industrial Average +3.0% YTD
S&P 500 +2.4% YTD
Russell 2000 +0.8% YTD
InvestmentHouse - Jobs Report Shows Best Wage Growth in 10 Years (Weekend Newsletter)
https://news.investmenthouse.com/2018/11/the-daily-part-1-of-3-11-3-18_4.html
MARKET SUMMARY
- Stocks try for four straight, cannot hold the move.
- Jobs report solid, shows best wage growth in 10 years. Finally some
money is made again and the Fed wants to tamp it right back down.
- China trade, Fed blamed. The point: market still struggles on news.
- Four day bounce stalls for now as we wait for the various scenarios
to play out.
Friday looked to be a surefire continuation of the upside move that began
Tuesday, even with AAPL's iPhone unit miss. That would have been a follow
through session as it would have occurred on the fourth session following a
reversal -- if volume and the price gains held. It didn't and thus Friday
was no follow through. It was disappointing in that it gave up a nice gain,
but it was not a failure either. After three days of fairly solid upside
the market could not hold an early move and lost some ground. Not the end
of the line in and of itself. It can pause, even fade a session or two,
refresh itself, and then provide the follow through. Or not. If the bounce
was going to fail, this certainly was a point to do just that as the rebound
thus far matched the first relief bounce that failed.
As for AAPL, of course, there will never be another such miss on units --
no, not because AAPL will never miss, it just won't give sales numbers
anymore. For the past three quarters iPhone sales have varied 1% --
stagnation? -- so AAPL figured why release them any longer. Looking at the
trend, it would appear $1000 AAPL phones have hit the saturation point. It
seems that there is only so much appetite for hugely expensive phones that
break just as easily as $200 phones. All the same, AAPL sold $62.9B of
iPhones, gear, and services in Q3. Those are not garbage numbers.
AAPL was down 6.6%, but stocks overall gapped upside when futures opened.
The jobs report hit and was nicely better than expected. Stocks backed off
from morning highs but held upside into the open. Except for NASDAQ at -34.
Stocks opened higher then tailed off, trending lower below the 15 minute
moving average into early afternoon. Positives turned to negatives. The
old high to low. An afternoon bounce pushed RUTX and SP400 slightly
positive and took the large cap indices off their lows, but it was no great
recovery.
SP500 -17.31, -0.63%
NASDAQ -77.07, -1.04%
DJ30 -109.91, -0.43%
SP400 0.04%
RUTX 0.19%
SOX -1.50%
NASDAQ 100 -1.47%
VOLUME: NYSE -4.5%, NASDAQ +7%. A bit of churn or distribution as NASDAQ
bumped the 20 day EMA and sold back. Strongest volume of the week and it was
on a reversal session. That suggests the sellers still have strength.
ADVANCE/DECLINE: NYSE -1.3:1, NASDAQ +1.1:1
NEWS/ECONOMY
Why the high to low? Blame Chinese trade, or lack thereof. Trump tweeted
the other day about his great conversation with Xi, and today reports were
that Trump asked his cabinet to draw up a trade deal with China. Surely
that meant a deal was imminent and it would be great and the world would
live happily ever after. No. Larry Kudlow later stated that there was no
new movement with China; the administration was simply doing what you do --
prepare for what you want to accomplish.
Next was jobs. 250K topped the 190K expected and the 118K August (from
134K).
The numbers were all good.
Wages +0.2%, +3.1% year/year. This is a 10 year high. The jobs mix is very
good versus the prior 8 years and the low pay menial jobs created during
those years. Thus you get better wage growth. Manufacturing jobs that were
gone forever, construction jobs, mining -- these are high wage jobs.
Participation: 62.9% versus 62.7%. More people getting back to work.
Where the jobs are:
Manufacturing 32K, +296K this year, roughly 1,000 jobs per day.
Construction 33K
Professional and business services 35K
Healthcare 36K
Transportation, warehousing 24K
Mining 5K
Retail 2K
Leisure and hospitality: 42K. Even with the hurricane, the rest of the
country picked up the slack and more. When it was expected this category
would decline, it surged. It would appear that people have no qualms
spending their Pelosi labeled 'crumbs' they have received from the tax
reform bill.
This is all good news, and the market saw it as such and thus feared it. It
is also important to remember that jobs are a lagging indicator. It is
similar to crowing about last year's Super Bowl win the following season
when your team is now 4-5.
THE MARKET
What does the data -- and the market's reaction to it -- mean?
This just shows how this market is still led around by the nose based upon
the story du jour. Trade, Fed, earnings or earnings, Fed, trade. The Fed,
however, appears dominant with a subtitle called 'midterm elections' that
need to be resolved.
There can be no better indication the markets are still controlled by the
Fed when good news causes stocks to sell. Futures were up early before the
jobs report. The report itself was nothing huge. It was very solid,
blowing past expectations. Futures faded, however, on the report. NASDAQ
was +2 PJ (pre-jobs), but fell to -34 before the open. Stocks opened higher
then trended lower all session. Good news equals continued Fed intervention
equals no reason to fight a Fed that always gets it wrong.
Wage growth, something sought after and the lack thereof lamented for a
decade, is finally moving higher. What should be fantastic news is feared.
So desired but when we start achieving it so feared because . . . the Fed
will do its best to ruin it. Perhaps that is not its intention -- perhaps
it is -- but the history is painfully clear. From a long line of ivory
tower, Phillips Curve worshipping self-styled intellects, e.g. Mr. Broaddus
in the early 2000's to today's Fed members, when we finally enjoy just a
taste of job and wage growth, they want less. Trust me: after 10 years of
less, less is not more. People finally are starting to feel good so let's
crush down that spirit.
Thus, when participation in the jobs market jumped, wages rose 3.1%
annually, the jobs mix was very good -- high paying jobs versus the minimum
wage pay scale jobs of the prior administration -- stocks fall.
The reason, restated: In America, a supposedly republic democracy based on a
free enterprise system, we have turned control of and therefore the value of
our money and our wealth to a group of unelected people who have no clue
even what the real rate of interest is (as Powell admitted a month ago). Yet
this group is trying to set rates above some unknown real rate. Why go to
all the trouble? Just have some chimps from the zoo toss darts at a board
with numbers on it to set the rate. I doubt there would be much drop in
performance. The Fed has morphed into a micromanager of economics versus a
backstop in times of severe market distress. And thus we are forced to hang
on the statements of each member.
And that brings you back to the market's reaction. It is still uncertain of
the path it should take because it has unknowns in the Fed, but at this
juncture I would say the unknowns are NOT whether the Fed will continue
hiking but whether the Fed will react to the slowing economic data. In
other words, the Fed will keep hiking unless something breaks.
The market appears to be acting accordingly as Friday it was unable to hold
what would have been a fourth consecutive session of gains. DJ30 tapped the
50 day EMA on the high and faded to a loss. SP500 and NASDAQ stopped at the
20 day EMA and faded gains to losses.
The first relief move from the selling lasted four sessions. This move is
stronger in terms of volume and breadth, but on the fourth day it lost
ground.
This is where this move makes its first decision of the four scenarios laid
out Thursday. It can roll over here and put in a third leg of selling,
something the pattern shows as a possibility as well as some big names such
as AMZN and NFLX that have rebounded to resistance after sharp selling.
This could also be just a pause after three good upside sessions, a pause to
refresh and continue higher to the 200 day SMA for SP500 and NASDAQ. SP500
was not too far off that level on the Friday high. That is the second
scenario where it its that level, takes a breather while mostly holding the
move, then delivers a follow through.
Third is it stalls and fades to fill the Wednesday upside gap, scares
everyone it is heading down again, then reverses upside with a strong follow
through session of 2+% on a major index with strong volume.
Or you go for number 4, the flat out rollover after a bit more upside. That
certainly fits Friday: a start higher, a rally farther upside, then a
rollover to give the upside back and turn negative.
CHARTS
That said, DJ30 still looks good with a tap at the 200 day SMA on the low
and a rebound off that. It can still set up an inverted head and shoulders
pattern from this setup. It can also still sell off.
NASDAQ is still below the 200 day SMA and less than inspiring with that
large gap from Wednesday below.
SP500 moved closer to the 200 day SMA and turned. It is more like NASDAQ
than DJ30 and has that large gap sitting out there as well. Lots of
resistance.
SOX is not bad. It can idle for a couple of sessions, form a right shoulder,
then be ready to move farther upside. Likely no breakout, but it is setting
up to move and its stocks rallied well on the week. If they take 2 to 3 days
to test that break higher, they will present good buying opportunities. A
group to watch.
SP400 is showing a doji at the 20 day EMA. For this group they must prove
they can make a break higher. They were positive Friday . . .
RUTX shows the same action as SP400, the old doji at the 20 day EMA.
Massively weak, lots to prove, but it too was positive Friday.
LEADERSHIP
SCAANN: A few good most need work. SQ moved up to the 50 day EMA and the
peak of the first bounce; a pause would help the pattern. CRM faded from
the 20 day EMA; still not a great pattern. AMZN doji at the 200 day SMA.
Still bearish. AAPL gapped below the October range. NFLX touched the 20
day EMA and faded. Similar to AMZN. NVDA a lower volume move to the 20 day
EMA.
Retail: WMT held the 10 day EMA and bounced. ULTA recovered nicely with a
3.3% gain. ROST attempting a bounce off the 10 day EMA test, still solid.
DG was off but trending higher. HD, LOW still in the dumpster. FOSL up
again Friday. Still a better group.
Drugs: The winners are narrowing sharply. JNJ still solid but AMGN tanked
after earnings. MRK in a decent test, PFE trying to hang on at the 50 day
MA. Some smaller issues, however, look better, e.g. IMMU.
Telecom: VZ testing after a good break higher. S gapped upside on the week
but still needs work. QCOM looks very interesting still.
Precious metals: Still showing bids. HMY trying to bounce from the 200 day
but AU, ABX look solid.
Semiconductors: A solid week, and with some testing these could be good
entries. INTC faded Friday but is in very good position. If XLNX test this
move it would be a good play. MLNX has a strong week and needs a test.
BRKS is moving though needs some more development. QRVO soared through the
200 day SMA pre-AAPL but then gave that move up afterward. Will see if it
can hold here and set up another upside attempt.
MARKET STATS
DJ30
Stats: -109.91 points (-0.43%) to close at 25270.83
Nasdaq
Stats: -77.06 points (-1.04%) to close at 7356.99
Volume: 2.9B (+7.01%)
Up Volume: 1.41B (-850M)
Down Volume: 1.42B (+983.73M)
A/D and Hi/Lo: Advancers led 1.06 to 1
Previous Session: Advancers led 3.48 to 1
New Highs: 44 (+5)
New Lows: 77 (-1)
S&P
Stats: -17.31 points (-0.63%) to close at 2723.06 NYSE Volume: 985.98M
(-4.40%)
Up Volume: 422.321M (-314.105M)
Down Volume: 551.655M (+261.667M)
A/D and Hi/Lo: Decliners led 1.33 to 1
Previous Session: Advancers led 3.02 to 1
New Highs: 27 (-1)
New Lows: 85 (+11)
SENTIMENT
VIX: 19.51; +0.17
VXN: 26.65; +0.53
VXO: 22.56; +1.31
Put/Call Ratio (CBOE): 0.93; +0.08
Bulls and Bears:
This now gets at least interesting. Bulls tumbled 6.2 points, now well below
50. Perhaps that is the dam breaking and negative sentiment will ramp. It
is noteworthy that the market rebounded in the aftermath. Bears mad a
significant move, at least for the bears.
Bulls: 44.3 versus 50.5
Bears: 19.8 versus 19.0
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: 44.3 versus 50.5
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: 19.8 versus 19.0
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: 3.22% versus 3.146%. Bonds tanked Friday below the early October
low on a stronger jobs report. Bonds are acting as if things are normal,
more or less, with rates rising as economic data was strong.
Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.13881 versus 1.14019. Euro continues trend lower against the
dollar.
Historical: 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 vs 1.16833 versus 1.16692 versus 1.16858 versus
1.16226 versus 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus
1.15534 versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus
1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus
1.15390 versus 1.15709 versus 1.158 versus 1.1487
USD/JPY: 113.204 versus 112.81. Breaking higher from a short 6 week double
bottom with handle.
Historical: Last below 109 in June 2018: 112.81 versus 112.877 versus
112.876 versus 112.58 versus 111.89 versus 112.391 versus 112.091 versus
112.427 versus 112.680 versus 112.527 versus 112.385 versus 112.553 versus
112.558 versus 111.848 versus 112.222 versus 112.076 versus 112.158 versus
113.01 versus 113.12 versus 113.706 versus 113.894 versus 114.383 versus
113.642 versus 113.690 versus 112.734 versus 112.981 versus 112.811 versus
112.575 versus 112.448 versus 112.247 versus 112.369 versus 111.849 versus
112.06 versus 111.81 versus 111.491 versus 111.608 versus 111.192 versus
111.064 versus 110.680
Oil: 63.14, -0.55. Undercut the June lows as oil sold steadily all week
after a rebound to test the 200 day SMA failed.
Gold: 1233.30, -5.30. Gold broke higher off the 50 day MA Thursday, faded
modestly Friday. Not bad action, suggesting a rally coming.
Apple, Conflicting Trade News Drag Market Lower
02-Nov-18 16:30 ET
Dow -109.91 at 25270.83, Nasdaq -77.06 at 7357.19, S&P -17.31 at 2723.20
https://www.briefing.com/investor/markets/stock-market-update/2018/11/2/apple-conflicting-trade-news-drag-market-lower.htm
[BRIEFING.COM] Stocks fell on Friday following conflicting U.S.-China trade reports and softer-than-expected sales guidance from Apple (AAPL 207.48, -14.74, -6.6%). Futures rallied overnight on a Bloomberg report indicating U.S. President Trump asked his cabinet to draft a trade deal, but stocks eventually fell into negative territory after White House officials denied the report.
The S&P 500 lost 0.6%, the Dow Jones Industrial Average lost 0.4%, and the Nasdaq Composite lost 1.0%. Small caps outperformed, with the Russell 2000 adding 0.2%. All four major indices closed solidly higher for the week, adding between 2.4% and 4.3% apiece.
Director of the United States National Economic Council Larry Kudlow confirmed in a CNBC interview that the cabinet was not asked by President Trump to draw up a trade plan for China. Later, as stocks traded at session lows, President Trump reiterated his belief to reporters that the U.S. will reach a trade deal with China. This led stocks to cut their losses in late afternoon trading.
In earnings, Apple raised some red flags after forecasting weaker-than-expected sales for the holiday quarter and announcing it will no longer provide unit-sales data for the iPhone, iPad, and Mac moving forward. The company did beat both top and bottom line estimates though.
On the other hand, energy Dow components Exxon Mobil (XOM 81.95, +1.28, +1.6%) and Chevron (CVX 114.73, +3.56, +3.2%) rose after both reported above-consensus earnings. The energy sector showed relative strength, but still lost 0.1%. On a related note, WTI crude extended its recent downward trend, losing 0.9% to $63.20/bbl and reaching its lowest level since April.
Highlighting Friday's batch of economic data was the influential Employment Situation report for October, which showed a nonfarm payrolls increase of 250,000, higher than the Briefing.com consensus of 190,000. Also, as expected, average hourly earnings increased 0.2%, and the unemployment rate remained at 3.7%.
In short, the strong jobs report validated labor market trends that will keep the Federal Reserve on a tightening path. The CME FedWatch Tool indicated a 80.7% chance of another Fed rate hike in December, up from a 74.5% chance the previous day. The Fed will meet next week, but no rate hike is expected.
Treasuries sold-off with equities on Friday, pushing yields notably higher across the curve. The Fed-sensitive 2-yr yield and benchmark 10-yr yield spiked seven basis points each to 2.91% and 3.21%, respectively, compared to 2.81% and 3.08% yields last week. Also, the U.S. Dollar Index added 0.2% to 96.48.
Reviewing Friday's economic data, which included the Employment Situation report for October, the Trade Balance report for September, and the Factory Orders report for September:
October nonfarm payrolls increased by 250,000 while the Briefing.com consensus expected an increase of 190,000. The prior month's increase was revised to 118,000 from 134,000. Nonfarm private payrolls rose by 246,000 while the Briefing.com consensus expected an increase of 185,000. The previous month's increase was unrevised at 121,000. Average hourly earnings increased 0.2% (Briefing.com consensus +0.2%), while the previous month's increase was unrevised at 0.3%. The average workweek was reported at 34.5 (Briefing.com consensus 34.5). The unemployment rate remained at 3.7% in October (Briefing.com consensus 3.7%).
The key takeaway from the October employment report is that it is consistent with labor market trends that will keep the Federal Reserve on a tightening path
The Trade Balance Report for September showed a widening in the trade deficit to $54.0 billion (Briefing.com consensus -$53.4B) from a downwardly revised $53.3 billion (from -$53.2 billion) in August.
The key takeaway from the report is the same as last month in that it has yet to confirm the tariff actions are succeeding in cutting the trade deficit with China specifically and in general.
Factory orders increased 0.7% in September (Briefing.com consensus +0.4%) following an upwardly revised 2.6% increase (from +2.3%) in August. Excluding transportation, orders were up 0.4% for the second straight month.
The key takeaway from the report was the understanding that shipments of nondefense capital goods excluding aircraft -- the component that factors into GDP forecasts -- declined for the second straight month.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for October on Monday.
Nasdaq Composite +6.6% YTD
Dow Jones Industrial Average +2.2% YTD
S&P 500 +1.9% YTD
Russell 2000 +0.8% YTD
Week-In-Review: Stocks Stage Rebound Following October Sell-Off
The S&P 500 staged a rebound effort this week, tallying a 2.4% weekly gain. The continued expectation that the market was due for a bounce-back after last month's sell-off, compounded with mostly upbeat earnings and easing trade tensions underpinned the rally. As for the other major averages, the blue-chip Dow Jones Industrial Average gained 2.4%, the tech-sensitive Nasdaq Composite gained 2.7%, and the small-cap Russell 2000 gained 4.3%.
Cyclical sectors were largely the best-performing groups this week, with the lightly-weighted materials sector (+6.1%) and the heavily-weighted financials (+4.4%) sectors leading the advance. The consumer discretionary sector (+4.0%) also had a notable gain. On the downside, utilities was the only group to settle in the red, losing 0.6%.
U.S.-China trade tensions eased this week, with U.S. President Trump saying that he had a "long and very good conversation" with China's President Xi, adding that the two leaders will be getting together at the upcoming G-20 summit in Argentina. There were some conflicting reports as to whether Mr. Trump has asked his cabinet to begin drafting a trade deal, but the president did say he thinks a deal will eventually be reached.
On the earnings front, Facebook's (FB) third quarter report was "good enough" to temper negativity surrounding the stock, helping to ease growth-related worries. Apple (AAPL), on the other hand, raised some red flags after forecasting softer-than-expected revenue guidance for the holiday quarter and announcing that it will no longer provide unit-sales data for the iPhone, iPad, and Mac.
Other notable companies to report earnings this week included Pfizer (PFE), Coca-Cola (KO), Chevron (CVX), Exxon Mobil (XOM), General Motors (GM), eBay (EBAY), T-Mobile US (TMUS), DowDuPont (DWDP), and Starbucks (SBUX), all of which beat estimates. Conversely, results from General Electric (GE), Kellogg (K), Spotify (SPOT), and Wayfair (W) came in below consensus.
In M&A news, IBM (IBM) acquired Red Hat (RHT) over the weekend for an all-cash offer of $190 per share; that represents a 63% premium over Red Hat's October 26 closing price.
Highlighting this week's batch of economic data was the Employment Situation report for October. Nonfarm payrolls increased by 250,000, higher than the Briefing.com consensus of 190,000, while average hourly earnings increased 0.2% as expected. The unemployment rate remained at a nearly 50-year low of 3.7%. The key takeaway from the report is that it is consistent with labor market trends that will keep the Federal Reserve on a tightening path. The U.S. Federal Reserve will be meeting next week, but no rate hike is expected until December.
Overseas, European and Asian stocks rose with Wall Street this week. In Germany, Chancellor Angela Merkel announced that she won't be seeking re-election as head of the CDU, following disappointing results for her party in a regional election. Her plan, however, is to remain Chancellor until 2021. Meanwhile, the Bank of England and the Bank of Japan released their latest policy decisions, keeping interest rates unchanged.
Favorable Trade-Related Tweet Sends Stocks Higher
01-Nov-18 16:30 ET
Dow +264.98 at 25380.74, Nasdaq +128.16 at 7434.25, S&P +28.63 at 2740.51
https://www.briefing.com/investor/markets/stock-market-update/2018/11/1/favorable-traderelated-tweet-sends-stocks-higher.htm
[BRIEFING.COM] The S&P 500 added 1.1% for a third straight day of gains on Thursday, as a favorable trade-related tweet by U.S. President Trump lifted stocks from their early downtrend. The benchmark index briefly turned negative in the early going before comfortably trading in positive territory for most of the session.
The Dow Jones Industrial Average gained 1.1%, the Nasdaq Composite gained 1.8%, and the Russell 2000 outperformed with a gain of 2.2%.
U.S. President Trump tweeted that he had a "long and very good conversation" with China's President Xi, adding that discussions have been moving along nicely with meetings being scheduled at the upcoming G-20 summit in Argentina. According to a Reuters report, China President Xi confirmed he spoke with President Trump over the phone, expressing his willingness to meet with Mr. Trump at the G-20 summit, hopeful for a stable relationship with the U.S.
Cyclical sectors took the news in stride, as the materials (+3.0%), consumer discretionary (+2.2%), and industrial (+1.7%) groups finished atop the sector standings. The lightly-weighted materials sector was also largely helped by its top-weighted component, DowDuPont (DWDP 58.27, +4.35, +8.1%), beating earnings estimates.
Similarly, chipmakers had a noteworthy performance with the Philadelphia Semiconductor Index jumping 4.6%. The index was pummeled in last month's sell-off, though it has leaped over 10% since its Monday close. Outperformers within the group were Advanced Micro (AMD 20.22, +2.01, +11.0%), On Semiconductor (ON 18.40, +1.40, +8.2%), and Micron (MU 40.12, +2.40, +6.4%).
On the other hand, the utilities (-0.5%) and communication services (+0.1%) sectors greatly underperformed the broader market. The communication services sector was weighed down by underwhelming performances from Alphabet (GOOG 1070.00, -6.77, -0.6%), AT&T (T 30.49, -0.19, -0.6%), and Verizon (VZ 56.05, -1.04, -1.8%). On a related note, employees at Google staged an office-wide walkout to protest the company's handling of sexual misconduct.
In other earnings, music streaming platform Spotify (SPOT 141.16, -8.53) lost 5.7% after it reported a Q3 operating loss above guidance. The company also slightly lowered its fourth quarter monthly active user (MAU) and premium subscriber guidance, which did not bode well for a stock trading in a very competitive space.
Also, e-commerce home decor store Wayfair (W 96.16, -14.15) disappointed investors with a loss of 12.8% after it reported significantly lower-than-expected revenue. The good news for investors, however, is that demand remained strong, and Wayfair upheld Q4 revenue to be in-line with consensus.
Separately, U.S. Treasuries ticked higher on Thursday, pushing the 2-yr yield down four basis points to 2.84% and the 10-yr yield down two basis points to 3.14%. The slight flattening of the yield curve kept gains in check for the rate-sensitive financials sector (+0.5%), as lenders depend on the difference between what they pay for deposits and what they earn on loans.
Overseas, the Bank of England unanimously voted to leave rates unchanged at 0.75% as expected on Thursday. Additionally, the central bank lowered its growth forecasts for 2018 and 2019 by 0.1% in each year to 1.3% and 1.7%, respectively. In Asia, major indices finished mostly higher, with Hong Kong's Hang Seng outperforming with a gain of 1.8%. China's Shanghai Composite ticked 0.1% higher.
Reviewing Thursday's batch of economic data, which included the October ISM Manufacturing Index, the preliminary Q3 Nonfarm Productivity and Unit Labor Costs report, the weekly Initial and Continuing Claims report, and the September Construction Spending report:
The ISM Manufacturing Index for October checked in at 57.7% (Briefing.com consensus 59.0%) versus 59.8% in September. It is important to note that the September reading was close to an 18-year high.
The key takeaway from the report is that the pullback is most likely a natural slowing of activity following what has been an impressive acceleration in manufacturing activity on a national level. That point notwithstanding, the deceleration in what has been one of the hottest sectors will feed into the peak-growth narrative that has been prominent of late.
Third quarter productivity increased 2.2% (Briefing.com consensus 2.1%) on the heels of an upwardly revised 3.0% (from 2.9%) in the second quarter. Unit labor costs rose 1.2% (Briefing.com consensus 1.1%) following a downwardly revised 1.1% decline (from -1.0%) in the second quarter.
The key takeaway from the report is that productivity is picking up. The third quarter increase was double the prior 10-quarter average increase of 1.1%. Faster productivity is a springboard for a better standard of living.
Initial claims for the week ending October 27 decreased by 2,000 to 214,000 (Briefing.com consensus 213,000). Continuing claims for the week ending October 20 decreased by 7,000 to 1.631 million, which is the lowest level since July 28, 1973.
The key takeaway from the report is that the low level of initial and continuing claims remains indicative of a tight labor market.
Total construction spending in September was little changed from August (Briefing.com consensus +0.2%) following an upwardly revised 0.8% increase (from +0.1%) in August.
The key takeaway from the report is the recognition that there was no growth in public construction spending in September.
Looking ahead, investors will receive the Employment Situation report for October, the Trade Balance for September, and Factory Orders for September.
Nasdaq Composite +7.7% YTD
Dow Jones Industrial Average +2.7% YTD
S&P 500 +2.5% YTD
Russell 2000 +0.6% YTD
S&P 500 Ends Bruising October with Back-to-Back Gains
31-Oct-18 16:25 ET
Dow +241.12 at 25115.76, Nasdaq +144.25 at 7306.09, S&P +29.11 at 2711.88
https://www.briefing.com/investor/markets/stock-market-update/2018/10/31/s-and-p-500-ends-bruising-october-with-backtoback-gains.htm
[BRIEFING.COM] The S&P 500 advanced 1.1% on Wednesday, securing a second straight day of gains to end a bruising October with a monthly loss of 6.9%. Mega-cap technology stocks were in control from the get-go, following Facebook (FB 151.79, +5.57, +3.8%) releasing its third quarter earnings report the previous evening.
The tech-sensitive Nasdaq Composite surged 2.0%, reducing its monthly loss to 9.2%, while the Dow Jones Industrial Average gained 1.0% to reduce its monthly loss to 5.1%. Small caps underperformed, with the Russell 2000 adding 0.3% to bring its monthly loss to 10.9%.
Facebook's "good enough" earnings report tempered negativity surrounding the stock, and its positive price action proved infectious for the other FANG stocks. Facebook beat earnings expectations and increased its revenue growth outlook, easing nerves after the social network warned of growth-deceleration last quarter. Of note, Facebook is still down 30.2% from its July 25 record close.
Alphabet (GOOG 1076.77, +40.56, +3.9%) and Netflix (NFLX 301.78, +15.97, +5.6%) joined Facebook with noteworthy gains on Wednesday, underpinning the strength in the communication services sector (+2.1%). Likewise, Apple (AAPL 218.86, +5.56, +2.6%) and Amazon (AMZN 1598.01, +67.59, +4.4%), respectively, provided strong support for the outperforming information technology (+2.4%) and consumer discretionary (+1.6%) sectors.
Also, the rate-sensitive and heavily-weighted financials sector outperformed the broader market with a gain of 1.4%. Top-weighted components JPMorgan Chase (JPM 109.02, +2.29) and Bank of America (BAC 27.50, +0.71) provided strong support with respective gains of 2.2% and 2.7%. Financials benefited from a slight steepening of the yield curve, with the 2-yr yield increasing four basis points to 2.88% and the 10-yr yield rising five basis points to 3.16%.
Conversely, underperforming sectors on Wednesday included the defensive-oriented consumer staples (-0.9%), utilities (-1.2%), and real estate (-1.4%) groups. These spaces were the only S&P sectors to finish in negative territory. The consumer staples and utilities sectors, however, were the only sectors to end October with gains, up 2.1% and 1.9%, respectively.
In other earnings, General Motors (GM 36.59, +3.05, +9.1%), eBay (EBAY 29.03, +1.61, +5.9%), T-Mobile US (TMUS 68.55, +4.63, +7.2%), and Automatic Data (ADP 144.08, +6.82, +5.0%) all sported healthy gains after reporting better-than-expected results. On the other hand, Kellogg (K 65.48, -6.38) lost 8.9% after missing bottom line estimates and lowering its adjusted earnings outlook.
Also contributing to the rally was end-of-the-month activity from fund managers and possibly some short-covering activity. There was an underlying expectation for fund managers to boost their portfolio equity weightings following this month's sell-off. Concurrently, it stands to reason that short sellers were covering their positions, as the market enters what is historically a favorable seasonal period.
Separately, WTI crude extended its recent decline, losing 1.3% to $65.31/bbl, reaching its lowest level since August. The U.S. Energy Information Administration reported a weekly crude oil inventory build of 3.2 million barrels, marking the sixth straight week inventories have risen.
International equity markets finished Wednesday on a higher note. In Asia, Japan's Nikkei gained 2.1% after the Bank of Japan made no changes to its policy stance, and China's Shanghai Composite added 1.4% to notch its second consecutive gain. Meanwhile, the Euro Stoxx 50 tallied a 1.6% gain with France's CAC (+2.3%) leading the advance.
Reviewing Wednesday's batch of economic data, which included the October ADP Employment Change report, the third quarter Employment Cost Index, and the weekly MBA Mortgage Applications Index:
The third quarter employment cost index increased 0.8% (Briefing.com consensus +0.7) versus 0.6% in the second quarter. Wages and salaries, which comprise about 70% of compensation costs, increased 0.9%, while benefit costs jumped 0.4%.
The key takeaway from the report is that it corroborates a trend of rising compensation costs for civilian workers that have been discussed by employers and which have kept the Federal Reserve on a tightening path.
The ADP National Employment Report showed an increase of 227,000 in October (Briefing.com consensus 180,000), and the September reading was revised to 218,000 (from 230,000).
The weekly Mortgage Applications Index showed a decrease of 2.5% versus an increase of 4.9% in the prior week.
Looking ahead, investors will receive a flurry of economic data on Thursday, including the October ISM Manufacturing Index, the preliminary Q3 Nonfarm Productivity and Unit Labor Costs report, the weekly Initial and Continuing Claims report, September Construction Spending, and Auto and Truck Sales for October.
Nasdaq Composite +5.8% YTD
Dow Jones Industrial Average +1.6% YTD
S&P 500 +1.4% YTD
Russell 2000 -1.6% YTD
Stocks Finish Strong in S&P 500 Rally
30-Oct-18 16:25 ET
Dow +431.72 at 24874.64, Nasdaq +111.36 at 7161.84, S&P +41.38 at 2682.77
https://www.briefing.com/investor/markets/stock-market-update/2018/10/30/stocks-finish-strong-in-s-and-p-500-rally.htm
[BRIEFING.COM] The S&P 500 gained 1.6% in Tuesday's session, in which it traded mostly in positive territory with all 11 S&P sectors closing higher. The notable gain reduces the benchmark index's month-to-date loss to 7.9% and puts it back into the green for the year (+0.3%).
Tuesday's price action in the S&P 500 oscillated with the volatility in large-cap technology stocks before finally taking a decisive swing upwards in the last hour of trading. The tech-heavy Nasdaq Composite, which had lost as much as 0.7% intraday, closed at its session high with a 1.6% gain.
Meanwhile, the Dow Jones Industrial Average added 1.8%, and the Russell 2000 added 2.0%.
The S&P 500's most heavily-weighted and battered information technology sector (+1.2%) kept the rally in check, as it was one of Tuesday's underperforming groups. Nevertheless, chipmakers supported the sector and outperformed the broader market, as the Philadelphia Semiconductor Index climbed 4.2%. Notable chipmaker NVDIA (NVDA 203.00, +17.38) jumped 9.4%.
Also providing the broader market some lift were the communication services (+2.5%), materials (+2.3%), energy (+2.3%), industrials (+2.0%), and consumer staples (+2.0%) sectors. Communication sector heavyweights Alphabet (GOOG 1036.21, +16.13, +1.6%) and Facebook (FB 146.22, +4.13, +2.9%) led the group higher, with Facebook rallying ahead of its earnings, which were due out following the closing bell.
Amazon (AMZN 1530.42, -8.46, -0.6%), however, continued to disappoint, as it was the only FANG member to post a loss. Shares of the e-commerce giant are down 25.0% from their September 4 record close.
In earnings, Dow components Pfizer (PFE 42.89, -0.34, -0.8%) and Coca-Cola (KO 47.63, +1.17, +2.5%) both reported better-than-expected profits. Pfizer, however, lowered its revenue guidance, while Coca-Cola reaffirmed its guidance. Additionally, former Dow component General Electric (GE 10.18, -0.98) fell 8.8% to its lowest level in nearly a decade after missing top and bottom line expectations and cutting its quarterly dividend from $0.12 per share to $0.01 per share.
Also, an honorable mention goes to Under Armour (UAA 23.23, +5.04) after it soared 27.7% following a better-than-expected earnings report.
In other markets, the U.S. Dollar Index climbed 0.4% to 97.00, touching its highest level since June 2017. Also, the yields on the 2-yr and 10-yr Treasury notes added two basis points each to 2.84% and 3.11%, respectively. Meanwhile, WTI crude decreased 1.2% to $66.24/bbl, hovering near a two-month low.
Overseas, Hong Kong's Hang Seng lost 0.9% on Tuesday, hitting a fresh low for the year, while China's Shanghai Composite gained 1.0% as the Chinese yuan reached its lowest level since mid 2008. Meanwhile, the Euro Stoxx 50 decreased 0.3% with Germany's DAX closing 0.4% lower.
Reviewing Friday's economic data, which included the Consumer Confidence Index for October and the Case-Shiller 20-City Index for August:
The Conference Board's Consumer Confidence Index, which revolves heavily around labor market and business conditions, increased to 137.9 in October (Briefing.com consensus 135.8) from a downwardly revised 135.3 (from 138.4) in September. The October reading is the highest since September 2000.
The key takeaway from the report is that strong employment growth continues to underpin favorable consumer attitudes about present-day conditions and the outlook.
The Case-Shiller 20-City Index for August rose 5.5% (Briefing.com consensus 5.9%), and the July increase was left unrevised at 5.9%.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index, the ADP Employment Change report for October, and the Q3 Employment Cost Index.
Nasdaq Composite +3.7% YTD
Dow Jones Industrial Average +0.6% YTD
S&P 500 +0.3% YTD
Russell 2000 -1.9% YTD
Stocks Extend October Losses Despite Strong Start
29-Oct-18 16:30 ET
Dow -245.39 at 24442.92, Nasdaq -116.92 at 7050.48, S&P -17.44 at 2641.39
https://www.briefing.com/investor/markets/stock-market-update/2018/10/29/stocks-extend-october-losses-despite-strong-start.htm
[BRIEFING.COM] The S&P 500 lost 0.7% in another volatile session on Monday, extending its monthly losses to 9.4%. Continued tech weakness shook investor confidence, and reports of another possible round of Chinese tariffs helped accelerate losses in the afternoon.
Stocks opened strong, with the S&P 500 trading as high as 1.8% early on, before gradually losing steam in the afternoon. Particular weakness in leadership stocks within the information technology (-1.8%), communication services (-1.6%), and consumer discretionary (-1.5%) sectors weighed heavily on the broader market.
Meanwhile, the Dow Jones Industrial Average lost 1.0%, the Nasdaq Composite lost 1.6%, and the Russell 2000 lost 0.4%.
The major averages were already at session lows, with the S&P 500 hovering near its unchanged mark, before the U.S.-China news broke out. Bloomberg reported that the White House is preparing to announce tariffs on all remaining Chinese imports if talks next month between U.S. president Donald Trump and Chinese president Xi Jinping fail to ease the trade war.
Nevertheless, the disappointing price action in technology stocks struck a chord with investors because there was an early assumption that the sector would rebound following IBM's (IBM 119.64, -5.15, -4.1%) acquisition of Red Hat (RHT 169.63, +52.95, +45.4%) for an all-cash offer of $190 per share -- a 63% premium over Red Hat's Friday closing price. The hefty premium had energized the market with speculation about additional merger and acquisition potential (and healthy premiums paid) following the steep markdown in prices.
The tech sector's rollover undermined investor confidence in a potential rebound. Facebook (FB 152.09, -3.28, -2.3%), Alphabet (GOOG 1020.08, -51.39, -4.8%) and Netflix (NFLX 284.97, -14.86, -5.0%) dragged the communication services sector lower, while consumer discretionary component Amazon (AMZN 1538.88, -103.93) extended its post-earnings losses, losing 6.3%. Also, the world's largest tech company, Apple (AAPL 212.24, -4.06), lost 1.9%.
Conversely, the heavily-weighted financials sector pared monthly losses with a relatively strong performance on Monday, adding 0.9%. The group, however, traded as high as 2.6% before trimming gains. The financial rally was helped by a calming of contagion risk concerns (for now) with Standard and Poor's maintaining its BBB investment-grade rating for Italy. Similarly, the defensive-oriented real estate (+1.6%), utilities (+1.4%), and consumer staples (+1.1%) sectors had strong performances on Monday, finishing atop the sector standings.
In other markets, Treasury yields closed slightly higher with the 2-yr yield and 10-yr yield adding one basis point each to 2.82% and 3.09%, respectively. Also, the U.S. Dollar Index increased 0.3% to 96.63, and WTI crude fell 1.1% to $66.85/bbl.
Overseas, German Chancellor Angela Merkel announced on Monday that she won't be seeking re-election as head of the CDU. The decision follows disappointing results over the weekend for her party in a regional election. Her plan, however, is to remain Chancellor until 2021, after which time she will not pursue any other political posts.
Meanwhile, in Asia, China is reportedly considering a 50% cut in its tax on car purchases. Shares of Ford Motor (F 9.28, +0.30) and General Motors (GM 33.13, +0.48) benefited from the reports, gaining 3.3% and 1.5%, respectively.
Reviewing Monday's economic data, which included Personal Spending, Personal Income, and the PCE Price Index for September:
Personal income increased 0.2% in September (Briefing.com consensus +0.4%) while personal spending jumped 0.4% (Briefing.com consensus +0.4%).
The PCE Price Index was up 0.1% (Briefing.com consensus +0.1%) while the core PCE Price Index, which excludes food and energy, increased 0.2% (Briefing.com consensus +0.1%).
The key takeaway from the report is the recognition that PCE price inflation decelerated to 2.0% year-over-year from 2.2% in August. Core PCE price inflation held steady at 2.0%. The inflation readings are on par with the Federal Reserve's longer run target, yet they haven't moved to such a degree that they are going to alter the Federal Reserve's current policy stance, which involves an expectation for further gradual rate hikes.
Looking ahead, investors will receive the Case-Shiller 20-City Index for August and the Consumer Confidence Index for October on Tuesday.
Nasdaq Composite +2.1% YTD
Dow Jones Industrial Average -1.1% YTD
S&P 500 -1.2% YTD
Russell 2000 -3.8% YTD
S&P 500 Tumbles as Amazon, Alphabet Disappoint
26-Oct-18 16:20 ET
Dow -296.24 at 24688.31, Nasdaq -151.12 at 7167.40, S&P -46.88 at 2658.83
https://www.briefing.com/investor/markets/stock-market-update/2018/10/26/s-and-p-500-tumbles-as-amazon-alphabet-disappoint.htm
[BRIEFING.COM] The S&P 500 lost 1.7% in a volatile session on Friday, in which it never touched positive territory. Disappointing earnings reports from Amazon (AMZN 162.81, -139.36, -7.8%) and Alphabet (GOOG 1071.47, -24.10, -2.2%) rattled a fragile market pestered by peak-earnings concerns.
The benchmark index briefly dipped into correction territory, characterized by a 10% pullback from a prior high, before it took a sharp turn upwards in late morning trading. Nevertheless, the comeback proved futile, as stocks eventually rolled over again. The 11 S&P 500 sectors all finished lower.
The Dow Jones Industrial Average lost 1.2%, the Nasdaq Composite lost 2.1%, and the Russell 2000 lost 1.1%.
A stronger-than-expected advance Q3 GDP reading (+3.5% actual vs +3.3% Briefing.com consensus) took a backseat in Friday's trading action to Amazon lowering its fourth quarter revenue guidance and Alphabet missing third quarter revenue expectations. The encouraging headline GDP figure, though, was tempered by the understanding that real final sales, which exclude the change in private inventories, increased just 1.4%, marking the slowest growth rate since the fourth quarter of 2016.
Amazon and Alphabet weighed heavily on the underperforming consumer discretionary (-3.6%) and communication services (-2.4%) sectors, as their disappointments filtered through to other growth stocks, which have been beaten down sharply this month on valuation concerns.
Facebook (FB 145.37, -5.58, -3.7%), Netflix (NFLX 299.83, -13.04, -4.2%), and Apple (AAPL 216.30, -3.50, -1.6%) also backpedaled from notable gains in the previous session, adding pressure to the communication services and information technology (-1.9%) sectors.
In other earnings news, Mohawk Industries (MHK 115.03, -36.04, -23.9%), Western Digital (WDC 44.19, -9.82, -18.2%), and Colgate-Palmolive (CL 59.58, -4.24, -6.6%) contributed to angst over future earnings growth.
Flooring manufacturing company Mohawk cited weakening demand, inflation, and pricing pressures for its lower outlook; Western Digital said customers are being more conservative, resulting in softening demand; and Colgate-Palmolive encountered profit margin pressures from higher raw material and packaging material costs.
Conversely, Dow component Intel (INTC 45.69, +1.38) easily beat consensus revenue and EPS estimates for the third quarter and issued fourth quarter guidance that exceeded analysts' average estimates. Shares of the chip maker finished 3.1% higher.
U.S. Treasuries prices rose, as the market turmoil drove some safe-haven positioning. The 2-yr yield decreased five basis points to 2.81%, and the 10-yr yield dropped six basis points to 3.08%. The U.S. Dollar Index traded 0.3% lower at 96.37, though not far from its two-month high.
Overseas, markets closed on a downbeat note amid the early negative price action in the U.S. market.
Reviewing Friday's economic data:
Real GDP increased at an annualized rate of 3.5% (Briefing.com consensus 3.3%) while the price deflator checked in at a lower-than-expected 1.7% (Briefing.com consensus 2.1%). Personal spending (PCE) was robust, up 4.0%, which was the strongest pace of growth since the fourth quarter of 2014. PCE contributed 2.69 percentage points to the change in real GDP.
The key takeaway from the report is that real final sales of domestic product, which subtracts the change in private inventories, were up just 1.4% -- the weakest growth rate since the fourth quarter of 2016.
The final October reading for the University of Michigan Index of Consumer Sentiment was 98.6, down slightly from the preliminary reading o 99.0 and the final September reading of 100.1.
The key takeaway from the report is that consumer sentiment has not been unduly affected by the stock market sell-off or the jump in interest rates. The outlook for consumers is still rooted in feelings about job security.
Looking ahead, investors will receive PCE Prices, Personal Income, and Personal Spending for September on Monday.
Nasdaq Composite +3.8% YTD
Dow Jones Industrial Average -0.1% YTD
S&P 500 -0.6% YTD
Russell 2000 -3.4% YTD
Upbeat Earnings Underpin S&P 500 Rebound
25-Oct-18 16:20 ET
Dow +401.13 at 24984.55, Nasdaq +209.93 at 7318.52, S&P +49.47 at 2705.71
[BRIEFING.COM] Stocks staged a welcome rebound on Thursday, but not before giving up some gains in the last hour. Reassuring earnings reports from high-profile and widely-held companies, and the underlying sense that market conditions had become oversold, underpinned the rally.
The S&P 500 climbed back into positive territory for the year, closing 1.9% higher on Thursday, as the consumer discretionary (+3.4%), information technology (+3.3%), and communication services (+2.7%) sectors posted strong gains to pace the broad market advance.
The Dow Jones Industrial Average gained 1.6%, the Nasdaq Composite gained 3.0%, and the Russell 2000 gained 2.2%.
Heavyweight Microsoft (MSFT 108.30, +5.98) powered the recently struggling information technology sector, closing 5.8% higher after reporting above-consensus top and bottom lines. In addition, the Dow component remained upbeat on its fiscal second quarter outlook. For the month, the information technology sector is still down 7.9%.
Tesla (TSLA 314.86, +26.36, +9.1%) and Twitter (TWTR 31.80, +4.26, +15.5%) provided ammunition for momentum stocks after comfortably exceeding earnings expectations. Tesla, in fact, surprised investors by turning a profit last quarter. Likewise, the FANG bunch put on a show, led by Amazon (AMZN 1782.17, +117.97) and Alphabet (GOOG 1095.57, +44.86) sporting gains of 7.1% and 4.3%, respectively, ahead of their earnings reports.
In the same spirit, Ford (F 8.99, +0.81, +9.9%), Visa (V 140.52, +6.26, +4.7%), Comcast (CMCSA 35.84, +1.72, +5.0%), American Airlines (AAL 32.37, +2.03, +6.7%), and Whirlpool (WHR 111.34, +7.07, +6.8%) all finished with healthy gains, capitalizing on better-than-expected earnings results.
Interestingly, the market did not pay any heed to some notable warnings from companies on Thursday like it has in recent sessions.
For instance, Advanced Micro Devices (AMD 19.27, -3.52, -15.5%) issued a revenue warning for the fourth quarter, and Southwest Air (LUV 49.91, -4.67, -8.6%) acknowledged that it is facing some higher-than-expected cost pressures. Despite the news, the Philadelphia Semiconductor Index and the Dow Jones Transportation Average, which house the respective companies, climbed 2.3% and 1.9% apiece.
U.S. Treasuries remained relatively quiet despite the renewed interest in stocks. The Fed-sensitive 2-yr yield was unchanged at 2.86%, while the benchmark 10-yr yield closed one basis point higher at 3.14%. In addition, the U.S. Dollar Index, which measures the dollar against six major currencies, rose 0.2% to 96.67, re-testing a two-month high. Elsewhere, WTI crude settled 0.9% higher at $67.33/bbl, extending its recent rebound after touching a two-month low.
Overseas, the European Central Bank (ECB) left its key interest rates unchanged, as expected. ECB President Draghi said the central bank will continue to monitor risks to the outlook but that the ECB has not talked about extending its quantitative easing program. European markets traded positively amid the news, as Italian budget angst momentarily faded into the background.
Reviewing Thursday's economic data:
Durable Goods orders for September increased 0.8% (Briefing.com consensus -1.8%) after a revised 4.6% increase (from 4.5%) in August. Excluding transportation, durable goods orders increased 0.1% (Briefing.com consensus 0.3%) after a revised 0.3% increase (from 0.1%) in August.
The key takeaway from the report is that the headline increase was driven by growth in transportation equipment orders and defense aircraft and parts orders while growth in other areas was more of a mixed bag.
Initial claims for the week ending October 20 increased by 5,000 to 215,000 (Briefing.com consensus 211,000). Continuing claims for the week ending October 13 decreased by 5,000 to 1.636 million, which is the lowest level since August 4, 1973.
The key takeaway from the report is that the trend of steadily decreasing initial and continuing claims has been uninterrupted by today's report.
Pending home sales for September increased 0.5% (Briefing.com consensus -0.2%)
Adv. International Trade in Goods for September were -$76.0 billion (Briefing.com consensus -$74.4 billion)
Adv. Retail Inventories for September +0.1%
Adv. Wholesale Inventories for September +0.3%
Looking ahead, investors will receive the consequential Advance Q3 GDP Report, which is the broadest measure of U.S. economic activity, with the supplementary Q3 GDP Deflator. Also, the final reading for the University of Michigan Index of Consumer Sentiment for October will be released.
Nasdaq Composite +6.0% YTD
S&P 500 +1.2% YTD
Dow Jones Industrial Average +1.1% YTD
Russell 2000 -2.3% YTD
S&P 500 Wipes Yearly Gains in Ugly Finish
24-Oct-18 16:30 ET
Dow -608.01 at 24583.42, Nasdaq -329.14 at 7108.59, S&P -84.59 at 2656.24
https://www.briefing.com/investor/markets/stock-market-update/2018/10/24/s-and-p-500-wipes-yearly-gains-in-ugly-finish.htm
[BRIEFING.COM] Stocks took another beating on Wednesday, with losses accelerating into the closing bell. The S&P 500 lost 3.1%, completely wiping out its gains for the year. The Dow Jones Industrial Average also fell into the red for the year, dropping 608 points, or 2.4%, and the Nasdaq Composite lost 4.4%.
There was little room to hide on Wednesday, as the communication services (-4.9%) and information technology (-4.4%) sectors led eight of the 11 S&P groups significantly lower. The only three sectors to advance were the defensive-oriented consumer staples (+0.5%), real estate (+1.1%), and utilities (+2.3%) groups.
Stocks initially opened flat, but soon began ticking lower before doing a nose dive in the late afternoon.
AT&T (T 30.36, -2.66, -8.1%) and Texas Instruments (TXN 92.01, -8.24, -8.2%) weighed on their respective communication services and information technology sectors with disappointing earnings reports on Wednesday. Telecom giant AT&T missed earnings expectations, citing its recent acquisitions and accounting changes. Likewise, chipmaker Texas Instruments reported below-consensus revenue and issued a Q4 earnings warning, acknowledging that demand has slowed for its products across most markets.
Texas Instruments' earnings warning weighed on chipmakers, as investors expressed concerns over a potential economic slowdown that could be prolonged if macro issues, like a trade war with China, worsen. STMicroelectronics (STM 13.69, -2.18) also fell, losing 13.7%, after lowering its guidance, and the Philadelphia Semiconductor Index dropped 6.6% -- now down 16.1% for the month.
However, Dow component Boeing (BA 354.65, +4.60, +1.3%) reported better-than-expected top and bottom lines and raised its earnings guidance, giving futures and the Dow a boost in early action. The defense company's upbeat report, however, was construed as company-specific news, as the Dow and industrials sector (-3.4%) quickly rolled over. Boeing closed a ways off its high (+4.2%).
Disappointing New Home Sales for September (553,000 actual vs 625,000 Briefing.com consensus) helped accelerate losses in the morning, and selling steepened after the Fed indicated in its Fed Beige Book for September that manufacturing prices continued to rise, attributed to tariffs. On a positive note, the Fed reported that economic activity grew at a modest to moderate pace.
Separately, Treasuries ended Wednesday on a higher note again, as the increase in demand for the "risk-free" assets continued to push yields down from recent multi-year highs. The Fed-sensitive 2-yr yield closed two basis points lower at 2.86%, and the benchmark 10-yr yield closed four basis points lower at 3.12%.
In politics, police intercepted bombs mailed to high-profile Democrats, including former President Barack Obama and former presidential candidate Hillary Clinton, as well as CNN.
Reviewing Wednesday's economic data, which included the weekly Mortgage Applications Index, the FHFA Housing Price Index for August, and New Home Sales for September:
New home sales declined 5.5% month-over-month in September to a seasonally adjusted annual rate of 553,000 (Briefing.com consensus 625,000). That was the weakest pace since December 2016 and it followed on the heels of a sharp downward revision for August to 585,000 (from 629,000).
The key takeaway from the report is that it underscores how demand is being impacted by rising mortgage rates. Median and average home prices were both down year-over-year, yet that didn't seem to provide much of a lift for new home sales.
FHFA Housing Price Index for August increased 0.3%, lower than the revised 0.4% increase in July (from 0.2%).
The weekly Mortgage Applications Index rose 4.9%.
Looking ahead, investors will receive on Thursday the Durable Goods Orders report for September, the weekly Initial Claims report, the advance readings for September International Trade in Goods, Retail Inventories, and Wholesale Inventories, and September Pending Home Sales.
Nasdaq Composite +3.0% YTD
S&P 500 -0.7% YTD
Dow Jones Industrial Average -0.6% YTD
Russell 2000 -4.4% YTD
S&P 500 Mounts Intraday Comeback Amid Disappointing Earnings, Foreign Developments
23-Oct-18 16:30 ET
Dow -125.98 at 25191.43, Nasdaq -31.09 at 7437.73, S&P -15.19 at 2740.83
https://www.briefing.com/investor/markets/stock-market-update/2018/10/23/s-and-p-500-mounts-intraday-comeback-amid-disappointing-earnings-foreign-developments.htm
[BRIEFING.COM] The S&P 500 closed Tuesday on stronger footing after tumbling as low as 2.2% in early morning trading. Discouraging price action in foreign markets and some disappointing earnings contributed to early negative sentiment, but the benchmark index gradually recouped intraday losses, finishing lower by 0.6%. There was a prevailing sense that the morning's sell-off had left the market in an oversold condition on a short-term basis.
Meanwhile, the Dow Jones Industrial Average lost 0.5%, the Nasdaq Composite lost 0.4%, and the Russell 2000 lost 0.8%.
Overseas, Asian and European indices closed notably lower on Tuesday with several developments causing concern. For instance, Japan's Nikkei lost 2.7%, as Japan's finance minister said he expects a planned sales tax increase next October to cause some disruptions. In Europe, Germany incited inflationary worries after reporting a 3.2% year-over-year increase in its Producer Price Index, and the EU rejected Italy's budget plan to increase its deficit spending to 2.4% of GDP in 2019. The Euro Stoxx 50 fell 1.5%.
Back on the home front, disappointing earnings reports from Dow components 3M (MMM 192.55, -8.81) and Caterpillar (CAT 118.98, -9.73) heightened worries that earnings growth may have peaked and weighed on the industrial sector, which lost 1.6%. 3M reported lower-than-expected top and bottom lines and also lowered its earnings guidance. Meanwhile, Caterpillar drew attention to higher material and freight costs, including tariffs. Shares of 3M lost 4.4%, and Caterpillar shares fell 7.6%.
Nevertheless, the relative strength in the communication services (+0.4%) and consumer discretionary (-0.1%) sectors provided some support, helping to fuel Tuesday's intraday rebound. Dow component McDonald's (MCD 177.15, +10.52, +6.3%) helped lift the consumer discretionary sector after it reported above-consensus top and bottom lines. Meanwhile, Verizon (VZ 57.21, +2.23, +4.1%) led the communication services sector higher after it reported better-than-expected earnings.
Also in earnings, aircraft manufacturing company United Tech (UTX 130.02, +3.62, +2.9%) reported above-consensus profit and revenue. Similarly, home construction company PulteGroup (PHM 22.40, +1.52, +7.3%) lifted housing stocks after it also surpassed top and bottom line expectations.
The oil-sensitive energy group was the worst-performing sector on Tuesday, losing 2.7%, after Saudi Arabia pledged to play a "responsible role" in the energy markets. Likewise, WTI crude responded, settling 4.2% lower at $66.53/bbl -- its lowest price since August.
In other markets, U.S. Treasuries had surged in the early going amid the equity sell-off, but lost some steam as the market rebounded, pushing yields up from intraday lows. The 10-yr yield finished three basis points lower at 3.17%, but was down as much as eight basis points. Meanwhile, gold, another safe-haven asset, climbed 1.0% to $1,236.80/oz, nearing a three-month high.
Investors did not receive any economic data on Tuesday. Looking ahead, investors will receive the weekly MBA Mortgage Applications Index, the FHFA Housing Price Index for August, New Home Sales for September, and the Beige Book for September on Wednesday.
Nasdaq Composite +7.7% YTD
S&P 500 +2.5% YTD
Dow Jones Industrial Average +1.9% YTD
Russell 2000 -0.6% YTD
S&P 500 Squanders Opening Gains Despite Strength in High-Growth Stocks
22-Oct-18 16:30 ET
Dow -126.93 at 25317.41, Nasdaq +19.60 at 7468.82, S&P -11.90 at 2756.02
https://www.briefing.com/investor/markets/stock-market-update/2018/10/22/s-and-p-500-squanders-opening-gains-despite-strength-in-highgrowth-stocks.htm
[BRIEFING.COM] The S&P 500 closed Monday 0.4% lower after squandering opening gains and trading mostly in negative territory throughout the day. Another round of disappointing investor response to earnings, possibly rooted in the belief that corporations are at, or near, peak earnings growth, dampened any attempt for a rebound.
As for the other major averages, the blue-chip Dow Jones Industrial Average lost 0.5% and the small-cap Russell 2000 lost 0.2%, while the tech-heavy Nasdaq Composite added 0.3%.
Stocks opened slightly higher on Monday following a positive performance in China, where the Shanghai Composite rallied 4.1%. The jump, which extended Friday's notable gain, came on the back of verbal intervention from Chinese officials aimed at restoring investor confidence. President Xi, for instance, vowed to provide unwavering support for the private sector.
In Europe, Moody's dropped Italy's debt rating to Baa3 from Baa2, yet that is still an investment-grade rating. The fact that Italy's debt was able to avoid a "junk" status helped underpin markets within the region for awhile, but European stocks eventually settled Monday in the red. Italy's MIB lost 0.6%, while the Euro Stoxx 50 dropped 0.7%.
Back on Wall Street, relative strength in high-growth names within the information technology (+0.8%), consumer discretionary (+0.5%), and communication services (unch) sectors kept losses in check on Monday. The FANG bunch had an overall strong showing. Facebook (FB 154.78, +154.78), Apple (AAPL 220.65, +1.34), Amazon (AMZN 1789.30, +25.27), and Alphabet (GOOG 1101.16) all posted gains between 0.4% and 1.4%. Looking ahead, notable companies within these spaces that will report earnings later this week include Alphabet, Amazon, and Microsoft (MSFT 109.63, +0.97, +0.9%).
Nevertheless, the heavily-weighted financials sector (-2.1%) led the S&P 500 lower. Several small banks mirrored their bigger bank peers by beating earnings estimates on Monday, but the positive results were unable to foster much buying interest for the group, which is now down 5.4% in October. In total, nine of eleven sectors finished Monday in the red.
The energy sector (-1.1%) was another notable laggard, with oilfield services provider Halliburton (HAL 36.40, -1.14) losing 3.0% after the company issued below-consensus guidance, which overshadowed its better-than-expected earnings. In addition, the materials (-0.9%), real estate (-1.4%), health care (-0.8%), and consumer staples (-0.8%) sectors all underperformed.
Also of note, toy-maker Hasbro (HAS 95.01, -3.03) lost 3.1% after it missed top and bottom line estimates, blaming the bankruptcy of Toys "R" Us for its declining revenue.
Looking at other markets, U.S. Treasuries were dormant, as the yields on the 2-yr and 10-yr notes remained unchanged at 2.90% and 3.20%, respectively; the U.S. Dollar Index ended 0.3% higher at 96.00; and West Texas Intermediate crude settled 0.1% higher at $69.42/bbl.
In Washington, President Trump said that his administration is working on a major middle-class tax cut to be introduced at the beginning of November.
Investors did not receive any economic data on Monday and will not receive any data on Tuesday.
Nasdaq Composite +8.2% YTD
S&P 500 +3.1% YTD
Dow Jones Industrial Average +2.4% YTD
Russell 2000 +0.3% YTD
S&P 500 Finishes Flat Despite Strong Start
19-Oct-18 16:25 ET
Dow +64.89 at 25444.34, Nasdaq -36.11 at 7449.22, S&P -1.00 at 2767.92
https://www.briefing.com/investor/markets/stock-market-update/2018/10/19/s-and-p-500-finishes-flat-despite-strong-start.htm
[BRIEFING.COM] The S&P 500 closed Friday at its flat line, a fitting end to a flat week; the benchmark index ended just 0.02% above last Friday's close. The session began with a bang, with the S&P 500 adding as much as 1.0%, following a positive overnight performance from Chinese markets and more upbeat earnings. However, sentiment soon shifted, prompting a slow and steady retreat from early highs.
As for the other major averages, the blue-chip Dow Jones Industrial Average added 0.3%, tech-heavy Nasdaq Composite lost 0.5%, and the small-cap Russell 2000 fumbled 1.2%.
China's Shanghai Composite rebounded from a four-year low on Friday, adding 2.9%, despite reporting a lower-than-expected GDP reading (+6.5% actual vs +6.6% consensus). Chinese officials made a collaborative effort to ease investor angst about liquidity risk and China's economic fundamentals.
On the earnings front, Procter & Gamble (PG 87.30, +7.06) and PayPal (PYPL 84.78, +7.30) jumped 8.8% and 9.4%, respectively, after beating earnings estimates. Procter & Gamble wowed investors with quarterly organic sales increasing 4% -- its highest increase since Q1 of its fiscal 2014 year. In addition, Dow component American Express (AXP 106.73, +3.89) enjoyed a healthy gain of 3.8% after besting earnings estimates and raising its profit guidance.
Within the S&P 500 sectors, investors played defense again. The consumer staples (+2.3%), utilities (+1.6%), and real estate (+1.0%) sectors finished atop Friday's leaderboard. Conversely, the consumer discretionary (-0.9%) and health care (-1.0%) sectors weighed on the broader market, and energy (-0.8%) and materials (-0.7%) also underperformed.
Looking at other markets, U.S. Treasuries ticked lower to conclude the week, pushing yields higher. The 2-yr yield and 10-yr yield each increased two basis points to 2.90% and 3.20%, respectively. For the week, the 2-yr yield added four basis points, and the 10-yr yield added three basis points. In addition, the U.S. Dollar Index fell 0.3% to 95.46.
In energy, WTI crude recouped some of its recent losses on Friday, settling 0.8% higher at $69.26/bbl. Still, the commodity remains near a one-month low.
Reviewing Friday's sole economic report, Existing Home Sales for September:
Existing home sales declined 3.4% month-over-month in September to a seasonally adjusted annual rate of 5.15 million (Briefing.com consensus 5.30 million), which is the lowest sales level since November 2015. Total sales were 4.1% lower than the same period a year ago.
The key takeaway from the report is that home sales activity was pressured by the limited supply of lower-priced homes and the affordability constraints presented by higher mortgage rates.
Looking ahead, investors will not receive any economic data on Monday.
Nasdaq Composite +7.9% YTD
S&P 500 +3.5% YTD
Dow Jones Industrial Average +2.9% YTD
Russell 2000 +0.4% YTD
Week In Review: Mixed Outing As Earnings Season Ramps Up
Stocks had a mixed outing this week after suffering heavy losses in the week prior. The benchmark S&P 500 finished flat, leaving its October loss at 5.0%, and the blue-chip Dow ticked up 0.4%. Conversely, the tech-heavy Nasdaq fell 0.6%, and the small-cap Russell 2000 lost 0.3%.
The third quarter earnings season ramped up this week after kicking off last Friday. Financial companies Goldman Sachs (GS), Morgan Stanley (MS), Bank of America (BAC), U.S. Bancorp (USB), Charles Schwab (SCHW), and BlackRock (BLK) reported mostly better-than-expected profits, helping to boost the S&P financial sector 0.8% higher.
Meanwhile, the health care sector rallied 0.5% after Dow components Johnson & Johnson (JNJ) and UnitedHealth (UNH) beat earnings estimates and issued above-consensus guidance.
Software giant Adobe Systems (ADBE) surged nearly 10% on Tuesday after it reaffirmed fourth quarter guidance and said it expects FY19 revenues to be up 20%. The information technology sector trailed the broader market this week overall though, losing 1.2%. Chipmakers were relatively weak, with the Philadelphia Semiconductor Index falling 2.2%.
Netflix (NFLX) was another notable name on this week's earnings calendar. The streaming media giant beat bottom-line estimates and reported higher-than-expected subscriber growth by adding nearly seven million new subscribers last quarter -- six million coming from overseas. However, shares fell later in the week on news that The Wall Street Journal is investigating the company's corporate culture.
Away from earnings, home-improvement retailers Home Depot (HD) and Lowe's (LOW) sold off on Wednesday following some disappointing housing data. Housing starts rose to a seasonally adjusted annualized rate of 1.201 million units in September, below the Briefing.com consensus estimate of 1.221 million, and building permits declined to a seasonally adjusted annualized rate of 1.241 million, also below the Briefing.com consensus estimate of 1.273 million.
Also of note, retailer Sears Holdings (SHLD) filed for Chapter 11 bankruptcy. While the news was not a surprise, it did generate a sentimental story line given the retailer's storied operating history.
The minutes from the September FOMC meeting were released on Wednesday, showing that officials generally agreed on the need for more gradual rate hikes. In addition, the minutes revealed that a number of officials saw the need to hike rates above levels expected to prevail over the long run. The probability of a December rate hike remains high, ticking up to 83.7% from 79.8% last week, according to the CME FedWatch Tool.
As for the 11 S&P 500 sectors, they finished the week pretty evenly mixed between green and red. Defensive groups like consumer staples (+4.3%), utilities (+3.1%), and real estate (+3.2%) were the top performers, while growth-sensitive groups like consumer discretionary (-2.0%), energy (-1.9%) and materials (-1.4%) finished at the bottom of the sector standings.
In other markets, U.S. Treasuries slipped this week, pushing yields higher; the yield on the benchmark 10-yr note climbed three basis points to 3.20%. The U.S. Dollar Index advanced 0.6% to 95.46, but WTI crude fell 2.9% to $69.26/bbl.
The disappearance and alleged murder of Washington Post columnist Jamal Khashoggi pressured U.S. Treasury Secretary Steven Mnuchin into pulling out of next week's Future Investment Initiative conference in Saudi Arabia. President Trump expressed confidence in intelligence reports that the murder was ordered by high-level Saudi officials, but stopped short of putting the blame on Saudi Arabia's crown prince Mohammed bin Salman.
Elsewhere overseas, China's Shanghai Composite touched a new four-year low this week due to investor concerns over slowing economic growth. On Friday, China reported 6.5% year-over-year GDP growth, less than the prior quarter's growth of 6.7% and less than the expected growth of 6.6%. Meanwhile, the Euro Stoxx 50 advanced 0.5% this week despite continued angst that the Italian budget situation could get nasty.
Additionally, Canada became the second country in the world to legalize marijuana on Wednesday, causing a sell-the-news reaction in weed stocks.
Stocks Slide Amid Global Growth Concerns
18-Oct-18 16:25 ET
Dow -327.23 at 25379.45, Nasdaq -157.56 at 7485.33, S&P -40.13 at 2768.92
https://www.briefing.com/investor/markets/stock-market-update/2018/10/18/stocks-slide-amid-global-growth-concerns-.htm
[BRIEFING.COM] The S&P 500 fell for the ninth time in the last 11 sessions on Thursday, losing 1.4%, as concerning global developments dampened buying interest. The benchmark index opened just modestly lower, but started extending losses soon thereafter. However, the S&P 500 did close a hair above its 200-day moving average (2768.02), a silver lining on a day hard-pressed for good news.
As for the other major averages, the Dow Jones Industrial Average lost 1.3%, the Nasdaq Composite lost 2.1%, and the Russell 2000 lost 1.8%.
The stock market opened slightly lower after disappointing news overseas. China's Shanghai Composite tumbled 2.9%, extending its yearly loss to nearly 25% and touching a four-year low, amid investor concerns over slowing economic growth. In addition, Japan's Nikkei fell 0.8% after the country reported its first year-over-year export decline (-2.1%) since November 2016. Meanwhile, burgeoning angst that the Italian budget situation could get nasty and upset global financial markets sent European indices lower.
Back to the home front, U.S. Treasury Secretary Steven Mnuchin added to the uncertainty when he announced that he would be pulling out of next week's Future Investment Initiative conference in Saudi Arabia. The decision comes as investigators seek answers over the disappearance and alleged murder of dissident Saudi journalist and Washington Post columnist Jamal Khashoggi.
In equities, the growth-stocks in the information technology (-2.0%) and consumer discretionary (-2.1%) sectors that have led this mature bull market did not provide any support on Thursday. The information technology sector relinquished its lead as the best-performing S&P 500 group year-to-date to health care, which was down 1.1% on Thursday. For comparison, the tech sector is still up 11.1% on the year, while health care is up 11.8%. The S&P 500 is higher by 3.6%.
Also, the industrials sector (-1.8%) was another notable laggard following some discouraging earnings and guidance. United Rentals (URI, 118.13, -1.30, -1.0%) topped third quarter expectations but lowered its free cash flow guidance. Meanwhile, Snap-On (SNA 151.47, -16.10, -9.6%) came up shy of third quarter revenue estimates, and Textron (TXT 57.49, -7.29, -11.3%) fell well short of third quarter earnings and revenue estimates.
In other corporate news, Dow component Travelers (TRV 125.14, -1.30) fell 1.0% despite reporting better-than-expected profits for the third quarter; Netflix (NFLX 346.71, -17.99) fumbled 4.9% after an NBC News report showed that the WSJ is investigating the company's corporate culture; and Philip Morris International (PM 87.52, +2.96, +3.5%) was one of the best-performing S&P 500 components after reporting upbeat third quarter results and reaffirming its guidance for the fiscal year.
Separately, Treasuries reclaimed their early losses amid Thursday's equity slide with the 2-yr yield and 10-yr yield settling unchanged at 2.88% and 3.18%, respectively. The 2-yr yield had climbed three basis points to 2.91%, briefly touching a 10-yr high in early morning trading. On a related note, the U.S. Dollar Index rose 0.4% to 95.69.
In energy, WTI crude extended Wednesday's slide, settling 1.4% lower at $68.71/bbl, marking a one-month low. The oil-sensitive energy sector closed 0.5% lower.
Reviewing Thursday's economic data, which included the weekly Initial Claims report, the Philadelphia Fed Index for October, and the Conference Board's Leading Economic Index for September:
Initial claims for the week ending October 13 dropped by 5,000 to 210,000 (Briefing.com consensus 212,000). Continuing claims for the week ending October 6 decreased by 13,000 to 1.640 million, which is the lowest level since August 4, 1973.
The key takeaway from the report is that it covered the week in which the survey for the October employment report was conducted. Accordingly, with the low level of initial claims, economists will have a basis to forecast another solid increase in nonfarm payrolls.
The Philadelphia Fed Index eased to 22.2 in October (Briefing.com consensus 20.0) from 22.9 in September. The dividing line between expansion and contraction for this regional manufacturing survey is 0.0.
The key takeaway from this report is that manufacturers remain optimistic about the outlook, as 48% of respondents expect business activity to increase over the next six months versus only 14% that expect declines.
The Conference Board's Leading Economic Index increased 0.5% in September (Briefing.com consensus +0.5%) after increasing an unrevised 0.4% in August.
The key takeaway from the report is that there was widespread strength in the basket of leading indicators. The strongest contribution came from average consumer expectations for business conditions (+0.14 percentage points), which should be constructive for consumer spending activity.
On Friday, investors will receive the Existing Home Sales report for September.
Nasdaq Composite +8.4% YTD
S&P 500 +3.6% YTD
Dow Jones Industrial Average +2.7% YTD
Russell 2000 +1.6% YTD
Stocks Close Flat, Near Session Highs
17-Oct-18 16:30 ET
Dow -91.74 at 25706.68, Nasdaq -2.79 at 7642.89, S&P -0.71 at 2809.05
https://www.briefing.com/investor/markets/stock-market-update/2018/10/17/stocks-close-flat-near-session-highs.htm
[BRIEFING.COM] The S&P 500 finished at its flat line on Wednesday following a volatile day of trading. A late morning surge in the financials sector (+0.9%) lifted the benchmark index from its early depths -- the S&P 500 was down as much as 1.0% -- and the release of the September FOMC minutes prompted another small bout of volatility in the afternoon.
As for the other major averages, the blue-chip Dow Jones Industrial Average lost 0.4%, the tech-heavy Nasdaq Composite remained unchanged, and the small-cap Russell 2000 lagged, losing 0.5%.
Stocks opened slightly lower following some disappointing September housing data. Housing starts rose to a seasonally adjusted annualized rate of 1.201 million units in September, below the Briefing.com consensus estimate of 1.221 million, and building permits declined to a seasonally adjusted 1.241 million, also below the Briefing.com consensus estimate of 1.273 million.
In addition, the weekly MBA Mortgage Applications Index declined 7.1% week-over-week.
The softer-than-expected data hit the consumer discretionary sector (-0.7%) in particular, with home improvement retailers Home Depot (HD 185.17, -8.41) and Lowe's (LOW 102.44, -3.54) dropping 4.3% and 3.3%, respectively. The two companies were also downgraded to 'Neutral' from 'Outperform' at Credit Suisse.
Nonetheless, the S&P 500 rebounded to its flat line largely due to the financial sector's sudden climb. Investors initially had a muted reaction to U.S. Bancorp's (USB 52.90, +1.93) better-than-expected earnings, but shares eventually started taking off, ending the day with a gain of 3.8%. Goldman Sachs (GS 228.28, +6.58, +3.0%) and Morgan Stanley (MS 47.19 , +1.25, +2.7%) also had strong performances, extending yesterday's post-earnings gains.
The minutes from the September FOMC meeting briefly caused the S&P 500 to stumble in late afternoon trading after showing that a number of participants agreed for the need for more gradual rate hikes, and that a number of participants saw a need to hike above the long-run level. Following the minutes, the probability of a December rate hike ticked up to 83.0% from 79.5% on Tuesday, according to the CME FedWatch Tool.
Also, Treasury yields ticked slightly higher following the minutes with the Fed-sensitive 2-yr yield and benchmark 10-yr yield each advancing two basis points to 2.88% and 3.18%, respectively. The U.S Dollar Index increased 0.6% to 95.31, touching a one-week high.
Relative weakness in the information technology sector (-0.5%) kept the bulls in check on Wednesday. IBM (IBM 134.05, -11.07) dragged on the sector, losing 7.6%, after missing revenue expectations. The Dow component remained upbeat, though, upholding its guidance and expecting its cloud technology to lift revenue moving forward.
In other earnings news, Netflix (NFLX 364.70, +18.30) climbed 5.3% after reporting higher-than-expected subscriber growth. The company added nearly seven million new subscribers last quarter, with six of the seven million coming from overseas. In addition, Netflix expects to add nine million more in the fourth quarter. The communication services sector, which houses Netflix, advanced 0.5%.
Separately, WTI crude dropped 3.1% to $69.65/bbl, hitting a one-month low, after EIA petroleum data showed a build of 6.5 million barrels in crude oil inventories for the week ended October 12. The oil-sensitive energy sector lost 0.7%, closing near the bottom of the sector standings.
Across the border, Canada became the second country in the world to legalize marijuana on Wednesday, causing a sell-the-news reaction in weed stocks. Widely-followed Tilray (TLRY 148.25, -10.13) lost 6.4%.
Reviewing Wednesday's economic data, which included the weekly MBA Mortgage Applications Index and the Housing Starts and Building Permits for September:
Mortgage applications declined 7.1% week-over-week and housing starts declined 5.3% in September, paced in part by a 0.9% decline in starts for single-family units.
Housing starts declined 5.3% in September to a seasonally adjusted annual rate of 1.201 million units (Briefing.com consensus 1221K), with single-family starts down 0.9% to 871,000. Building permits were down 0.6% to a seasonally adjusted annual rate of 1.241 million (Briefing.com consensus 1273K), although that was owed to a 9.3% decline in permits for buildings with five units or more. Single-family permits were up 2.9% to 851,000, which tied with March for the third-lowest annual rate this year.
The key takeaway from the September Housing Starts and Building Permits report is that the supply of new homes isn't picking up fast enough to meet the demand for new homes at more affordable price points. Accordingly, overall home sales activity will continue to be curtailed by affordability constraints.
On Thursday, investors will receive the weekly Initial Claims report, the October Philadelphia Fed Index, and the Conference Board's Leading Economic Index for September.
Nasdaq Composite +10.7% YTD
S&P 500 +5.1% YTD
Dow Jones Industrial Average +4.0% YTD
Russell 2000 +3.5% YTD
Stocks Rebound; S&P 500 Recrosses 200-Day MA
16-Oct-18 16:30 ET
Dow +547.87 at 25798.42, Nasdaq +214.75 at 7645.68, S&P +59.13 at 2809.76
https://www.briefing.com/investor/markets/stock-market-update/2018/10/16/stocks-rebound-s-and-p-500-recrosses-200day-ma.htm
[BRIEFING.COM] Stocks cruised considerably higher on Tuesday, ignited by strong earnings at the open and then fueled by a resurgence in the heavily-weighted information technology sector (3.0%) throughout the day. The S&P 500 rocketed through its 200-day moving average, closing 2.2% higher and reducing its October loss to 3.6%.
As for the other major averages, the Dow Jones Industrial Average jumped 2.2%, the Nasdaq Composite surged 2.9%, and the Russell 2000 advanced 2.8%. The Dow and the Nasdaq both closed above their 200-day moving averages, but the Russell 2000 did not.
Investor sentiment was buoyed after several financial and health care giants reported upbeat earnings.
Investment banks Goldman Sachs (GS 221.70, +6.48, +3.0%) and Morgan Stanley (MS 45.94, +2.47, +5.7%) helped boost the financial sector (+1.6%) after reporting better-than-expected top and bottom lines. Asset management firm BlackRock (BLK 408.00, -18.94, -4.4%) weighed on the sector, though, after missing revenue expectations. BlackRock's pain worsened when CEO Larry Fink said that the company saw more than $30 billion of institutional non-ETF index equity outflows that were driven by client de-risking. Mr. Fink added that he thinks clients will continue to de-risk.
Health care sector (+2.9%) components Johnson & Johnson (JNJ 136.56, +2.61, +2.0%) and UnitedHealth (UNH 272.57, +12.32, +4.7%) contributed to the group's strong performance after better-than expected results. The health care sector is the second-best performing group this year with a 2018 gain of 12.5%; tech leads with a gain of 13.9%.
The tech sector "returned to form" on Tuesday when investors flocked to the high-growth assets that some considered to be oversold on a short term basis. Adobe Systems (ADBE 260.67, +22.66) had a very strong performance after it reaffirmed fourth quarter guidance and said it expects FY19 revenues to be up 20%. The software company led the S&P 500 with a gain of 9.5%.
Likewise, chip stocks outperformed, as the Philadelphia Semiconductor Index climbed 3.3%. Notable gainers included Intel (INTC 45.94, +1.41, +3.2%), Qualcomm (QCOM 66.12, +1.95, +3.0%), and NVIDIA (NVDA 245.83, +10.45, +4.4%). However, today's impressive performance brings the PHLX Index's yearly gain to just 2.4%.
Adding to Tuesday's gains was the communication services (+2.3%) sector, led by FANG members Alphabet (GOOG 1121.28, +29.03, +2.7%), Facebook (FB 158.78, +5.26, +3.4%), and Netflix (NFLX 346.40, +13.27, +4.0%). Conversely, laggards in the all-green sector standings were energy (+0.9%), consumer staples (+1.1), and utilities (+1.2%). The defensive-oriented utilities sector remains the only sector in October with monthly gains (+2.1%).
Separately, other markets remained mostly dormant on Tuesday. Treasuries barely moved, subduing current fears of rising interest rates for now. The Fed-sensitive 2-yr yield added one basis point to 2.86%, while the benchmark 10-yr yield declined one basis point to 3.16%. The U.S. Dollar Index traded near its flat line (94.77), and WTI crude settled 0.1% higher at $71.91/bbl with investors keeping an eye on U.S.-Saudi-Arabia tensions. The CBOE Volatility Index (VIX) fell 16.1% to 17.87, retreating from last week's seven-month high.
Reviewing Tuesday's economic data, which included Industrial Production and Capacity Utilization for September, Jobs Openings for August, and the NAHB Housing Market Index for October:
Industrial Production rose 0.3% in September (Briefing.com consensus +0.3%), while the August increase was unrevised at 0.4%. Meanwhile, Capacity Utilization came in at 78.1% (Briefing.com consensus 78.2%), unchanged from unrevised reading of 78.1% in August.
The key takeaway from the report is that it revealed the strongest year-over-year growth rate in industrial production (+5.1%) since December 2010.
The NAHB Housing Market Index for October came in at 68 (Briefing.com consensus 67), up from 67 in September.
The August Job Openings and Labor Turnover Survey showed that job openings increased to 7.136 million from a revised 7.077 million (from 6.939 million) in July.
On Wednesday, investors will receive the weekly Mortgage Applications Index, Housing Starts and Building Permits for September, and the minutes from the September FOMC meeting.
Nasdaq Composite +10.8% YTD
S&P 500 +5.1% YTD
Dow Jones Industrial Average +4.4% YTD
Russell 2000 +4.0% YTD
Stock Market Relents (Again) to Selling Interest
15-Oct-18 16:25 ET
Dow -89.44 at 25250.55, Nasdaq -66.15 at 7430.93, S&P -16.34 at 2750.63
https://www.briefing.com/investor/markets/stock-market-update/2018/10/15/stock-market-relents-(again)-to-selling-interest.htm
[BRIEFING.COM] U.S. stocks oscillated around the S&P 500's flat line on Monday before whipping noticeably lower in the final hour of trading. Renewed weaknesses in the information technology (-1.6%) and financials (0.5%) sectors coupled with ongoing concerns about the global economic growth outlook kept follow-through buying interest from Friday's rally in check.
The S&P 500 lost 0.6% and closed below its 200-day moving average (2766.54), which is considered to be a key technical level. The tech-heavy Nasdaq Composite lost 0.9% and the Dow Jones Industrial Average lost 0.4%. Meanwhile, the small-cap Russell 2000 outperformed, climbing 0.6%.
The struggling tech sector, which has been a bull market leader, has been a primary laggard during the market's recent setback. Investors who dumped their riskier tech assets last week have yet to come back with conviction. There were a few attempts in today's session, yet the buying interest waned each time as investors continued to trade out of some of the largest and most widely-held stocks. The heavily-weighted S&P 500 sector is down 7.5% for the month.
Notable information technology components that were down on Monday included Apple (APPL 217.36, -4.75, -2.1%), Microsoft (MFST 107.60, -1.97, -1.8%), Visa (V 137.23, -2.83, -2.0%), and MasterCard (MA 200.32, -3.90, -1.9%).
Additionally, the financials sector was unable to impress investors again after an underwhelming response to Bank of America's (BAC 27.92, -0.54, -1.9%) better-than expected earnings report. Charles Schwab (SCHW 47.64, -1.37, -2.8%) also fell after reporting earnings that were in-line with top and bottom estimates.
Bank of America reportedly fell because of some disappointment over the performance of its investment banking business, yet there were general concerns hanging over the sector that banks might be close to, or at, peak earnings growth. The rate-sensitive sector is now down 4.6% this month and 5.8% this year, despite interest rates nearing multi-year highs.
Treasury yields remained near their starting levels. The 2-yr note yield ticked one basis point higher to 2.85%, and the 10-yr note yield rose two basis points to 3.16%.
Separately, United States-Saudi Arabia tensions brewed over the weekend following the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi. In response, President Trump threatened to impose sanctions on the world's largest oil producer if it was found to be guilty; however, President Trump said today that Saudi King Salman strongly denied to him any involvement in Mr. Khashoggi's disappearance.
Despite some underlying angst that the Saudi Arabian situation could boil over and potentially impact oil supplies, WTI crude prices were relatively subdued on Monday, settling 0.6% higher at $71.83/bbl.
In other corporate news, L3 Technologies (LLL 220.91, +25.13) rose 12.8% after announcing an all-stock merger of equals with Harris Corp. (HRS 173.25, +18.38, +11.9%). The combined company, L3 Harris Technologies, will be the 6th largest defense company in the U.S. and a top 10 defense company globally.
That merger news contributed to the relative strength of the industrials sector (+0.2%), which joined with the defensive-oriented consumer staples (+0.6%), real estate (+0.5%), and utilities (+0.4%) sectors to buck Monday's weakness in the broader market.
Separately, retailer Sears Holding (SHLD 0.31, -0.10, -23.8%) filed for Chapter 11 bankruptcy. That was not a surprise to the market, as it had been widely speculated, yet the news itself generated a sentimental story line given the retailer's storied operating history.
Reviewing Monday's flurry of economic data, which included Retail Sales for September, the Empire State Manufacturing Survey for October, total business inventories for August, and the Treasury Budget for September:
Retail sales were up just 0.1% in September (Briefing.com consensus +0.6%) after increasing 0.1% in August. Excluding autos, sales declined 0.1% (Briefing.com consensus +0.4%).
The key takeaway from the report is that core retail sales, which factor into GDP growth models, were up a solid 0.5%. Hence, the headline numbers were disappointing, yet this report will still factor favorably for Q3 real GDP growth prospects.
The Empire State Manufacturing Survey for October checked in at 21.1 (Briefing.com consensus 18.0), up from 19.0 in September.
The key takeaway from the report is that the strength was led by upticks in the indexes for new orders and shipments, which reflects good demand.
Total business inventories increased 0.5% in August, in-line with the Briefing.com consensus estimate, after increasing an upwardly revised 0.7% (from 0.6%) in July. Total business sales also increased 0.5% after increasing 0.2% in July.
The key takeaway from the report is that business sales continued to outpace inventory growth year-over-year, which is a favorable trend that carries the potential to lead to a better pricing environment for businesses.
The Treasury Budget for September showed a surplus of $119.1 billion versus a surplus of $7.9 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the September surplus cannot be compared to the $214.1 billion deficit for August.
The budget deficit for fiscal 2018 totaled $779.0 billion versus $665.8 billion in fiscal 2017.
On Tuesday, investors will receive the Industrial Production report for September, the JOLTS - Job openings survey for August, the NAHB Housing Market Index for October, and Net Long-Term TIC Flows for July.
Nasdaq Composite +7.6% YTD
S&P 500 +2.9% YTD
Dow Jones Industrial Average +2.2% YTD
Russell 2000 +1.1% YTD
InvestmentHouse - Relief Bounce -- Or More -- Starts (Weekend Newsletter)
https://www.investmenthouse.com/frblog.php
- Relief bounce -- or more -- starts
- Even with the upside the move shows its fragility when Kudlow questions a Trump/Xi meeting
- Thus far showing indications of a relief bounce -- but they all usually do
- Three possibilities off this bounce
- Some good moves, some not very good moves, small caps lag
- Playing this move, planning now for the next move.
Friday finally brought a bounce and some impressive percentage advances -- at least on some indices -- but it was not a sure bet.
Stocks gapped upside in relief. Each financial station or website gave credit to its pundit for calling the bounce. Massively oversold, down/up volume ratios, percentage down volume -- all were pretty extreme and it was just a matter of when the bounce triggered.
Even so, it was no done deal. Stocks gapped nicely with NASDAQ gapping to the 200 day MA, SP500 gapping just over, while DJ30 and NASDAQ 100 gapped nicely above that key level. RUTX, SP400, and SOX? Ha ha ha. They gapped upside for sure but they are so far over the hill from the 200 day they can barely see the hump.
Further, the bounce showed fragility. The prior day or two the talk was the Trump and Xi would meet at an upcoming gathering of many world leaders. Friday right around 11:00ET, Larry Kudlow said it was not '100% decided' that Trump and Xi will meet. The market did a Peter Pan over the next 1.5 hours, the Dow wiping away a 400 point gain and even turning negative, RUTX and SP400 turning red as well. The other indices did not hit red, but they gave up huge chunks of their gap gains, indeed the majority of the gains.
Stocks caught a bid on that selloff, however. Apparently still as oversold as of the Thursday close (and indeed most were), stocks bounced, tested into 2:30ET, then rallied straight up into the close. Sighs of relief, back slapping on the financial stations as their pundits were not to be humiliated -- at least not that day. All's well that ends well in the prepackaged media world I guess.
SP500 38.76, 1.42%
NASDAQ 167.83, 2.29%
DJ30 287.16, 1.15%
SP400 0.24%
RUTX 0.08%
SOX 1.97%
NASDAQ 100 2.77%. Definitely buy the 'names.'
VOLUME: NYSE -18%, NASDAQ -15%. Still strong, above average trade but also significantly lower than the selling. Selling still stronger than the buying, but that is not unusual in an initial bounce or a short covering bounce.
ADVANCE/DECLINE: NYSE 1.4:1, NASDAQ 1.5:1. Quite blah, also indicative of a short covering bounce. You would expect this in the first phase of a bounce, looking for strong upside breadth AFTER a test that holds and starts back up. THAT is the time you tell if there is real longer term buying versus the covering rally, where the baton is passed from the shorts covering to longer term buyers. It is disconcerting, however, that the small caps were so weak. I know, it is likely just the time in the expansion where they fade, but I was hoping for a lengthier expansion. Not that it cannot happen still.
So the financial stations and media were breathing sighs of relief Friday that the market bounced, fought off a selloff, then managed to recover much of the gains.
If only all was well. Nice bounce, one we are participating in with new positions, but it was not a rocket launch upside, and it will have to show if it can sustain the moves. Enough to certainly play the bounce, but then it has to show its mettle: a continued rally that never looks back, a test of the prior low and a new rebound, or a relief move that runs out of gas and then delves to lower lows.
No way any scenario was answered Friday. It was a strong day, then not, then was. Up, down, then up. If a dog found its way onto the NYSE trading floor and barked, half the traders would have passed out in fear.
I don't want to be mistaken. There were some very good moves on the day, moves that will make us money. That is wholly different from the market having put in a bottom and building off that. The market's life over the next 2 months is still a huge question mark.
That said, stocks such as AAPL, VMW, ULTA, NFLX, ADBE, AMZN, CRM, WBA posted very solid moves. At the same time, stocks such as CAT, UTX, ETN, C, JPM, SQ, NVDA did not. Many just did nothing as the lackluster breadth indicates.
Weak breadth, lower volume on the upside, up to down volume positive but not strong, small caps still very weak, volatile intraday action (not just all buyers). Defensive stocks did no harm to themselves (gold, utilities), just testing prior strong upside breaks. Not an upside endorsement. Then again, the market was sold and bounced back for nice gains. At least the relief bounce held, and afterhours futures were moving up very late.
The takeaway: it is a bounce from some very oversold conditions following very sharp, high volume selling. For now it is a bounce. We play it as a bounce and if it shows more, so be it.
What Rate for Rates?
The most interesting and important market news for the week was not a Trump/Xi meet and greet. Fed policy is THE issue. It is what drove much of the selling. Friday cleared up nothing, but then again, nothing really needs to be cleared up: the chairman has stated his stance and the President, in securing his position he is not to be blamed for any economic problems in the future, cut off the chairman's retreat from his stance.
Friday Mnuchin put a bit finer spin on the President's 'the Fed is crazy' label (one many very sage people believe though are loath to publicly admit OR don't want out because the status quo ensures their wealth), stating the Fed should not hike rates when inflation is under control. Kind of a play on the Larry Summers' 'don't hike until you see the whites of inflation's eyes' saying.
The Fed's Evans appeared on CNBC Friday morning, talking with the Fed's boy, CNBC's Steve Liesmann. Liesmann is one of those 'experts' who feigns to listen to the other side and weighs its arguments, but is really so died in the wool Keynesian and Phillips Curve that it is all an affront to anyone who has read a book on economic history.
Liesmann (how is that pronounced 'leaseman' when it is spelled 'liesman?') lobbed softballs to Evans, acting surprised when Evans said the Fed should get restrictive though as a true Phillips Curve apostle, Liesmann could barely contain the mirth he felt at Evans' words.
All of this begs the questions: Why does the Fed need to be restrictive at all (versus letting the economy determine neutral) and why do we need the parent Fed involved at all?
How does the Fed know what is right and not? Evans admitted the Fed did not know what is neutral or not. Indeed, all of the pundits and experts on Bloomberg, CNBC, Fox Business guffaw whenever the Fed prognosticates about neutral rates and how much money should be in the system -- the history of the Fed's actions so clearly shows how grotesquely wrong the Fed's theories and actions are. Yet, it is all accepted as if this is just how things are done -- in a supposedly free enterprise system. You CANNOT GET MORE centrally controlled than the Fed. Hell, the Fed was the ENVY of the USSR and China in its ability to dictate wealth levels and thus its ability to control the masses.
So the question: why restrictive policy at all? Why not let the market, when times are good, work? The Fed was created primarily to assist in times of crisis using twin goals of a stable currency and stable inflation (both are the same really) as its guide in resolving crises. Those goals have been twisted into what is now called its 'mandate.' By that very label alone the Fed's power was elevated to continual manipulation versus being present to assist when crises developed. Now every minor move in the markets and economy is in the Fed's purview. This even as the Fed says it is not concerned with or worried about day to day market events.
Who is the Fed trying to hoodwink? The entire history of the Fed shows that it is EXTREMELY worried about market events. Greenspan cut because of market worries. Bernanke put together policies that were the essence of central control -- in the name of crisis of course. Yellen showed she was her own 'man' early in her career as chair, the markets revolted, and she capitulated, becoming the best friend Goldman Sachs and company has ever had.
Reality has left the building.
Listening to all of this discussion -- apparently being held in Wonderland -- makes pragmatic, rational entrepreneurs and investors contemplate insanity. Who are they kidding? History proves the Fed has acted as the antithesis of one of its primary goals set forth buy Congress: a stable currency. The dollar has lost 97% of its value since the Fed's inception. An abject failure in meeting that goal. In so doing, the Fed has unequivocally failed in its second goal/mandate: preventing inflation. By devaluing the dollar to 3% of its pre-Fed value, the Fed has, by definition, increased inflation by thousands and thousands of percent.
100 years of destroying the dollar equals a 'stable currency.'
The 'experts' are lulled into their false beliefs by the frog in the saucepan analogy: over 100 years the Fed has let inflation run by devaluing the dollar, hiding behind the creation of massive vaults of debt as large as the Yellowstone volcano caldera and with the same eruptive capacity. They thus believe inflation is a normal occurrence, that the slow destruction of our currency is inevitable. If that is the case, why does an ounce of gold hold the same purchasing power as the time the Fed was created? That is value that the Fed cannot alter, and therein lies the proof the Fed has failed in its mandate.
Yet they pundits claim the Fed has succeeded in its mandate as there are no major disruptions in the markets and economy. Seriously? On top of the utter destruction of the dollar's value we still have market crashes, crises, massive economic upheaval. All with a dollar worth less and less, and all the while building more vaults to store debt.
Life without a Fed.
What about the alternative? What about letting markets figure it out? Markets always get back to equilibrium when there are imbalances, and they do it quickly as opposed to say the 1930's, the 1970's, and the 2000's. Moreover, there is no accumulated debt; the excesses are cleared and there is a start a neutral.
Moreover, there is no inflation. Inflation is an element of controlled economies. If you have free markets, money will move where it is needed. No bottlenecks in supply, and if any do occur they are temporary because money flows that way to quickly alleviate it. Makes sense: money cannot be made efficiently if there are bottlenecks. If those in the business do not do it, other entrants will.
I know, I know. I talked about Wonderland earlier, and the pundits and experts would say that is where I am deriving my argument. But of course they would: they are products of the very system that employs them. Educated in schools that teach government manipulation of markets -- in a free market system mind you -- is status quo and perfectly consistent with the theory of free markets. History does show that markets do reach extremes on their own but they also correct very quickly. The depression before the 1930's depression was over in a year. When the 'experts' got involved in the next one -- using a crisis to implement their government control beliefs -- it turned a quick down and up into a quick down and a decade-long depression. Who is in Wonderland?
You have to be willing to let markets work. Monarchies were horrid at it as are any governments that try to dictate markets. That is why the US is struggling so much of the time in the past 50 years, seeing flashes of flourishing when we back away from control in the form of manipulated taxation and regulation. The 1960's and 1980's are classic examples. The recent economic surge as well with its reduction in regulations and the tax cuts that are targeted to increase investment in the US. Let people keep their money, let them make the decisions on what to do with it, and it will be put to use in the most efficient ways. Instead, we allow our government to implement the ultimate control over us: controlling how much we have to invest via taxation, controlling what we can do in our lives via regulation, and controlling our wealth (and thus power) using the Federal Reserve. When we get too much wealth creation (and thus threaten the power establishment) as in the 1920's, 1980's and 1990's in the PC and internet boom, the Fed knocks back the economy and torpedoes much of the new wealth. Then, the cycle starts again until the next innovation is made. Anyone watch 'The Matrix?'
Sadly, what I hear when I talk to high school students today is a lack of understanding of our history, why we became a country and why we are different. It makes it very difficult in 45 minutes of discussion with a class to explain all of this in terms they will understand. How can you teach in 45 minutes what 12 years of school should have taught but did not? They are intrigued by keeping their money and having no one tell them what they can or cannot do, but you have to overcome the mindset that those things are provided by the government, not something they have a right to have and the government is there to make sure they are not taken away. That is an entirely divergent mindset and is why, as I said, people such as you cannot believe we hear the Fed governors say what they say, our Congress say what it says, schools say what they say, etc.
THE MARKET
CHARTS
SP500: Gapped over the 200 day SMA, sold off all but 1 point of the gain, then recovered to close right at the 200 day. Nice move, doji with tail, over key support. Okay, now we see if this was a turn back up for a bounce that started the bottoming process or just a continuation doji, i.e. continuing the selling.
DJ30: Gapped back over the 200 day MA as well, sold off below it and to negative by midday, then recovered to close with 2/3 of the gain at the high of the session. Holding the 200 day SMA is good. DJ30 can still be the market's rescue crew if it can hold the 200 day SMA and resume the upside. Four tests of support after jumping off the 200 day SMA in early July, now back to that level to test, and we will see if it is a reset of the uptrend at this support.
NASDAQ 100: Gapped back over the 200 day SMA, sold off below it intraday -- filling much of the gap -- then recovering above where it opened. Similar to DJ30, NASDAQ 100 moved up the 50 day MA after leaving the 200 day in April. It tested the 50 day 4 times in its uptrend and hitting new highs, then fell to the 200 day SMA to test. If the economics remain good, NDX will hold this level, either with a rally straight up or more likely with a test similar to April, rally to recover the 50 day MA, and continue the uptrend from there.
NASDAQ: Gapped upside just over the 200 day SMA, but after the selloff midday, NASDAQ could not close over the 200 day. Similar action as NASDAQ 100 in terms of the 50 day MA rally and now at the 200 day SMA again to test as in April. Not bad, showing a doji, still can continue the bounce higher but not getting much help from chips.
SP400: Same action intraday as the other indices, just less power as has been the case. Gapped upside, faded to a big loss, recovered to a modest gain, well off the opening gap point. Still way oversold but not showing nearly the strength of the larger caps.
RUTX: If you looked at RUTX in isolation you would see a tight doji after three weeks of sharp selling. The doji would suggest a rebound. It still can happen, but the other indices fared much better than the small caps. That shows the smaller stocks are still getting the Rodney Dangerfield no respect treatment.
SOX: Chips gapped upside, sold, recovered gains, but closed below the opening gap point. Holding December, February, and April lows, in great position to bounce higher in the 11 month range, but lagging the other indices.
LEADERSHIP
Some strong recoveries in name brand stocks that were blowtorched on the way down. It was interesting to note that gold stocks and utility stocks, more defensive groups, held their own, indicating their buyers remain firm and that the rebound is just a bounce.
Gold/Precious metals: SA continued upside with another good move. HMY and ABX tested good surges. PAAS tested a good upside break.
Drugs: Blitzed in the selling Wednesday and Thursday. PFE showed life Friday. Others not really, e.g. LLY, BMY, MRK. JNJ showing a doji over the 200 day SMA after a Thursday rip lower.
Metals: FCX' one day in the limelight was rudely met Friday as it sold off all the Thursday gain. AKS, SID not bad, and NUE looks ready to roll back up in its trading range, perhaps STLD as well.
Chips: Still sloppy at best even if SOX looks ready to roll back upside in its range. AVGO held the 50 day SMA with a modest bounce. AMD gapped over the 50 day MA but on low trade. LSCC still testing the 50 day EMA, losing ground Friday. NVDA gapped up to a doji at the 200 day SMA, not the best pattern. INTC continues sitting at the September low. How exciting.
Software: NOW gapped huge to the 10 day EMA. TTWO gapped and rallied to the 50 day MA. VMW gapped and rallied off the 200 day MA; nice. UIS moved up modestly, having held well in the selling. MSFT gapped to a doji below the 50 day EMA. FFIV still hanging out at the 200 day SMA and we still like it, though not a lot of pop Friday. CRM put in a big gap up to the 50 day MA. There is life here.
SCAANN: SQ gapped but weak. CRM solid upside gap. AAPL solid all through the selling, up Friday off the 50 day. NFLX bounced nicely off the 200 day test. AMZN gapped on big volume. NVDA was up but a doji below the 200 day SMA was not impressive.
Financial: JPM beat but after an upside gap was ripped lower. WFC still holding the Spring lows. C gapped upside on earnings but off that Thursday dive lower. Massively disappointing group.
Retail: ULTA posted an excellent gap and rally on strong volume. ROST still looks interesting. RH showed a pair of gaps to end the week. Lots of high volume buying. WMT gapped higher Tuesday, faded to test the 50 day MA as of Friday, showing a doji. Still solid. LULU looks as if it is ready to fail at the 50 day MA.
MARKET STATS
DJ30
Stats: +287.16 points (+1.15%) to close at 25339.99
Nasdaq
Stats: +167.83 points (+2.29%) to close at 7496.89
Volume: 2.67B (-15.24%)
Up Volume: 1.98B (+830M)
Down Volume: 651.31M (-1.329B)
A/D and Hi/Lo: Advancers led 1.51 to 1
Previous Session: Decliners led 2.67 to 1
New Highs: 18 (+4)
New Lows: 265 (-136)
S&P
Stats: +38.76 points (+1.42%) to close at 2767.13
NYSE Volume: 958.207M (-17.63%)
Up Volume: 603.078M (+417.396M)
Down Volume: 340.879M (-632.943M)
A/D and Hi/Lo: Advancers led 1.35 to 1
Previous Session: Decliners led 3.73 to 1
New Highs: 10 (+1)
New Lows: 396 (-130)
SENTIMENT
VIX: 21.31; -3.67. Hit 28.84 on the Thursday high, just below 27 on the Friday high. That topped the March high but nowhere near the 50 in February.
VXN: 24.69; -3.07
VXO: 21.16; -5.73
Put/Call Ratio (CBOE): 1.16; -0.02
Bulls and Bears:
A somewhat precipitous plunge after a 61.8 peak on this move. Right at the range of the prior drops starts, 50ish is the lows before a bounce. Bears actually fell 0.1.
Bulls: 56.3 versus 61.8
Bears: 18.5 versus 18.6
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: 56.3 versus 61.8
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: 18.5 versus 18.6
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: 3.167% versus 3.146%. After a rally off the fresh low, TLT faded Friday as yields moved up. Still in a big 7 week bond decline.
Historical: the last sub-2% rate was in November 2016 (1.867%). 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: 1.15592 versus 1.15901
Historical: 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 vs 1.16833 versus 1.16692 versus 1.16858 versus 1.16226 versus 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus 1.15534 versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus 1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus 1.15390 versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437 versus 1.13765 versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413 versus 1.1526 versus 1.16186 versus 1.16001 versus 1.15572
USD/JPY: 112.222 versus 112.076
Historical: Last below 109 in June 2018: 112.076 versus 112.158 versus 113.01 versus 113.12 versus 113.706 versus 113.894 versus 114.383 versus 113.642 versus 113.690 versus 112.734 versus 112.981 versus 112.811 versus 112.575 versus 112.448 versus 112.247 versus 112.369 versus 111.849 versus 112.06 versus 111.81 versus 111.491 versus 111.608 versus 111.192 versus 111.064 versus 110.680 versus 111.448 versus 111.468 versus 111.082 versus 110.962 versus 111.734 versus 111.19 versus 111.081 versus 111.249 versus 111.351 versus 110.766 versus 109.92 versus 110.49 versus 110.935 versus 110.818 versus 111.229
Oil: 71.34, +0.37. Oil sold to the 50 day EMA on the week, showing a doji there Friday. Still looks strong overall but it did give up its higher high hit two weeks back.
Gold: 1222.00, -5.60. Tested after finally posting a big breakout Thursday. Fear trade or inflation trade? No, it's both. Fear of the selloff, fear of the Fed, knowing if the Fed screws up yet again, inflation ultimately results.
MONDAY
Earnings get started in earnest. Many look for earnings to salvage the market. Others say the warning from PPG and the TSE actual earnings show a real slowdown in the economy and that other reports will show the same. If that is the case the earnings won't save the market, won't foster a new rally.
For now we are playing an oversold bounce. We picked up some really solid positions Friday and perhaps more will show themselves this week. The problem is that if this is just a relief move, the later you enter, the worse risk/reward. Thus, we will be selective adding more bounce plays.
At the same time look at some areas receiving money before the rebound. If they hold up in good tests, if the bounce fails they will get money their way. Gold, other precious metals, select retail.
As the bounce matures we will see if these bouncing stocks set up better patterns to play upside -- or downside. Then we play what is offered. It is best to now play the next move versus the current move: the upside gap and vigor of the rally either results in a burnout and roll over, or a test that perhaps then rebounds again. If the latter, there will be good plays on the big names. If not, there will be plays on the areas that were getting money as the big names sold off. Not as exciting upside, but there will also be some downside again.
There is not much more analysis than that. The market sells off, digs holes it has to climb out, and how it does or fails to do will tell the probable outcomes. All the prognosticating means nothing. The only one that is worth anything is the Fed's history, the change in its game plan as discussed last week, the President's comments hemming Powell in to a certain extent. The Fed is a market and economy killer, and if that holds, eventually this move stalls out, whether the one started Friday or the bigger move.
Stocks Rebound, But Still Finish Solidly Lower for the Week
12-Oct-18 16:30 ET
Dow +287.16 at 25339.99, Nasdaq +167.83 at 7497.08, S&P +38.76 at 2766.97
https://www.briefing.com/investor/markets/stock-market-update/2018/10/12/stocks-rebound-but-still-finish-solidly-lower-for-the-week.htm
[BRIEFING.COM] Stocks rebounded on Friday, recouping a good chunk of their weekly losses in a volatile day of trading. The S&P 500 added as much as 1.7% at the start of the session, but nearly wiped it all out intraday before rallying to finish higher by 1.4%.
The Dow Jones Industrial Average advanced 1.2%, and the tech-heavy Nasdaq Composite outperformed, finishing higher by 2.3%. Small caps underperformed, though, leaving the Russell 2000 with a slim gain of 0.1%. For the week, the four indices lost between 3.7% and 5.2%.
This week's sharp sell-off propagated a belief that the major indices had gotten oversold on a short-term basis and were due for a rebound. Friday's upward movement also found some technical support from the S&P 500's 200-day moving average (2766.17), which the index closed just slightly above at 2767.13.
The third quarter earnings season began on a mixed note on Friday morning when big banks JPMorgan Chase (JPM 106.95, -1.18, -1.1%), Citigroup (C 69.84, +1.46, +2.1%), and Wells Fargo (WFC 52.11, +0.67, +1.3%) reported before the opening bell. JPMorgan and Citigroup both beat earnings estimates, but Wells Fargo came up short. In the company's conference call, JPMorgan CEO Jamie Dimon expressed optimism in the global economy, although he did note that trade tensions present some risks going forward.
On a related note, PNC (PNC 124.26, -7.35) tumbled 5.6% despite beating bottom-line estimates.
The financials sector added as much as 1.6% following bank earnings, but eventually rolled over, bringing the broader market with it. The group did rebound in the final stretch though, closing higher by 0.1%. 10 of 11 sectors finished in the green, and information technology was the top performer with a gain of 3.2%.
Within the tech sector, giants Apple (AAPL 222.11, +7.66, +3.6%) and Microsoft (MSFT 109.57, +3.66, +3.5%) outperformed, as did chipmakers, evidenced by a 2.0% jump in the Philadelphia Semiconductor Index. Meanwhile, in the communication services sector (+2.1%), Netflix (NFLX 339.56, +18.46) rallied 5.8% after Citigroup said its recent tumble represents a buying opportunity.
Away from equities, U.S. Treasuries finished roughly flat on Friday, with the benchmark 10-yr yield ticking up one basis point to 2.14%. Meanwhile, the U.S. Dollar Index rebounded from a more than two-week low, climbing 0.3% to 94.96, and WTI crude climbed 0.6% to $71.41/bbl. Crude finished solidly lower for the week though, dropping 3.9%.
Also of note, the CBOE Volatility Index (VIX) fell 14.3% on Friday, retreating from its highest level since February.
Reviewing Friday's economic data, which included September Import/Export Prices and the preliminary reading of the University of Michigan Consumer Sentiment Index for October:
Export prices were flat in September after declining 0.2% in August and import prices were up 0.5% after being down 0.4% in August. Excluding agricultural exports, export prices increased 0.2% after declining 0.2% in August. Excluding fuel, import prices were unchanged after declining 0.2% in August.
The key takeaway from the report is rooted in the understanding that nonfuel import prices are being held in check, which is helpful in terms of easing some of the market's inflation angst.
The preliminary University of Michigan Index of Consumer Sentiment for October checked in at 99.0 (Briefing.com consensus 100.0) versus the final reading of 100.1 for September.
The key takeaway from the report is that it revealed some budding concerns about inflation crimping real income expectations, which is something to be watched closely considering spending is driven more by income growth than consumer confidence.
Looking ahead, investors will receive September Retail Sales on Monday.
Nasdaq Composite +8.6% YTD
S&P 500 +3.5% YTD
Dow Jones Industrial Average +2.5% YTD
Russell 2000 +0.7% YTD
Week In Review: An Ugly Week on Wall Street
Stocks sold off sharply this week, sending the S&P 500 lower by 4.1%. Fears over potentially weakening economic and earnings growth helped fuel the selling, which left stocks at three-month lows going into the third quarter earnings season. The Dow Jones Industrial Average lost 4.2% this week, and the tech-heavy Nasdaq Composite fell 3.7%.
The International Monetary Fund (IMF) cut its 2018 and 2019 global growth outlook to 3.7% from 3.9% on Tuesday, citing trade uncertainties that include tariffs between the U.S. and China, a pending Brexit deal, and the new trilateral agreement between the U.S., Canada, and Mexico that's supposed to replace NAFTA.
On a related note, President Trump and Chinese leader Xi Jinping have reportedly agreed to meet at next month's G-20 summit with hopes of resolving their trade conflict.
A third quarter earnings warning from specialty chemicals company PPG Industries (PPG) weighed on sentiment this week, dampening hopes of another strong quarter. Financial giants JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) kicked off the Q3 earnings season on Friday with mixed results; JPM and C beat bottom-line estimates, but WFC missed. The financial sector initially had a positive reaction to the earnings results on Friday, but later rolled over to close the week with a total loss of 5.6%. A curve-flattening trade in the bond market didn't bode well for lenders, which depend on the interest-rate differential between what they pay for deposits and what they make on loans.
The yield on the benchmark 10-yr Treasury note, which spiked to a seven-year high last week, hovered between 3.12% and 3.26% before eventually settling Friday at 3.14% -- nine basis points below last Friday's close. Meanwhile, the yield on the more Fed-sensitive 2-yr Treasury note fell four basis points to 2.84%, leaving the 2-10 spread with a five bps point loss for the week.
President Trump blamed this week's selling on the Federal Reserve, which he says has "gone crazy" with its rate hikes. The Fed has raised rates three times this year with the most recent hike coming in September, and it appears to be on track to raise rates again at its December meeting. The CME FedWatch Tool places the chances of a December rate hike at 79.7%; that's down slightly from 80.0% last Friday.
The S&P 500 got into technical trouble this week, breaching its 50-day moving average on Wednesday and then its 200-day moving average on Thursday. The benchmark index tried to reclaim its 200-day moving average on Friday, but closed right at the key technical mark. The Dow Jones Industrial Average and the Nasdaq Composite breached their 200-day moving averages as well; the Dow eventually reclaimed the key technical level, but the Nasdaq did not.
Also of note, the CBOE Volatility Index (VIX), often referred to as the "investor fear gauge," touched its highest level since late March (28.64) before pulling back a bit on Friday. Still, the VIX finished the week roughly 40% higher.
In other news, Hurricane Michael made landfall in the Florida Panhandle on Thursday as a Category 4 storm. The storm has devastated the region, causing billions of dollars in damages and killing at least 13 people. Many oil producers in the Gulf of Mexico halted operations in anticipation of the storm, but WTI crude fell this week nonetheless, dropping 3.9% to $71.41/bbl, and the S&P 500's energy sector lost 5.4%.
Looking ahead, earnings season will ramp up next week with Bank of America (BAC), Charles Schwab (SCHW), UnitedHealth (UNH), Johnson & Johnson (JNJ), Morgan Stanley (MS), Goldman Sachs (GS), IBM (IBM), Netflix (NFLX), Travelers (TRV), American Express (AXP), PayPal (PYPL), Procter & Gamble (PG), and a host of others scheduled to report their quarterly results.
In addition, investors will receive September Retail Sales, Industrial Production and Capacity Utilization, Housing Starts and Building Permits, Existing Home Sales, and the minutes from the September FOMC meeting.
Wall Street Extends Wednesday's Drop
11-Oct-18 16:30 ET
Dow -545.91 at 25052.83, Nasdaq -92.99 at 7329.25, S&P -57.31 at 2728.21
https://www.briefing.com/investor/markets/stock-market-update/2018/10/11/wall-street-extends-wednesdays-drop.htm
[BRIEFING.COM] Wall Street extended Wednesday's tumble on Thursday in a volatile day of trading. The major averages settled notably lower, with the S&P 500 losing 2.1%, the Dow Jones Industrial Average falling 2.1%, and the Nasdaq Composite shedding 1.3%. With Thursday marking its sixth straight decline, the S&P 500 is now down 5.5% for the week and is 6.9% below its September 20 record close.
At session lows, the S&P 500 was down 2.7%. Stocks were able to reclaim some losses in the final hour of trading following a Washington Post report that President Trump and Chinese leader Xi Jinping have agreed to meet at next month's G-20 summit in Argentina with hopes of resolving their trade conflict. That knee-jerk move higher was largely undone by the closing bell though.
A drop in bond yields did provide some relief for stock traders, who have been cautious since yields shot to multi-year highs last week. Yields on longer-dated issues fell quite a bit more than yields on shorter-dated issues, leading to a flattening of the yield curve; the yield on the 2-yr Treasury note slipped one basis point to 2.85%, while the benchmark 10-yr yield fell nine basis points to 3.13%.
That yield curve flattening weighed on lenders, which depend on the interest-rate differential between what they pay for deposits and what they make on loans. The S&P 500's financial sector lost 2.9%. The oil-sensitive energy sector was another notable underperformer, losing 3.1%, as crude prices fell to a three-week low, further retreating from multi-year highs. WTI crude fell 3.0% to $70.98/bbl.
All 11 S&P 500 sectors declined on Thursday. However, the communication services and information technology sectors, which contain many of the high-growth and widely-held names that have consistently led the market higher for some time, tried to stage a rebound after dropping sharply on Wednesday. The groups were up modestly intraday, but eventually finished lower by 0.8% and 1.3%, respectively; still, that's notably better than the broader market.
President Trump blamed the recent selling on the Federal Reserve, which he says has "gone crazy" with its rate hikes. When asked if he is considering firing Fed Chairman Jerome Powell, who he appointed, the president said he wouldn't, adding that he's "just disappointed."
From a technical standpoint, the S&P 500 got into trouble once again on Thursday, closing below its 200-day moving average (2766) for the first time since March, after breaching its 50-day moving average the day before. The Dow Jones Industrial Average also fell below its 200-day moving average (25140) and the Nasdaq Composite and Russell 2000 stayed below theirs.
In earnings news, shares of Dow component Walgreens Boots Alliance (WBA 70.90, -1.41) fell 2.0% after the company reported better-than-expected earnings for its fiscal fourth quarter, but missed on the top line. Meanwhile, shares of Delta Air Lines (DAL 51.48, +1.77) rallied 3.6% after the company reported above-consensus earnings and upbeat revenue guidance.
Financial giants JPMorgan Chase (JPM 108.13, -3.34), Citigroup (C 68.38, -1.57), and Wells Fargo (WFC 51.44, -0.99) will unoffically kick off the third quarter earnings season on Friday morning.
Also of note, the CBOE Volatility Index (VIX) spiked once again on Thursday, jumping 11.8% to 25.57, marking its highest level since February.
Reviewing Thursday's economic data, which included the Consumer Price Index for September and the weekly Initial Claims report:
Total CPI and core CPI, which excludes food and energy, increased 0.1%. Both were expected to increase 0.2%, according to the Briefing.com consensus estimate.
The key takeaway from the report is that it helped temper concerns about rising inflation for the time being, yet with total CPI and core CPI running above the Fed's longer-run inflation target of 2.0%, it still left little reason to think the Fed is going to back away from a rate hike in December.
Initial claims for the week ending October 6 increased by 7,000 to 214,000 (Briefing.com consensus 205,000) while continuing claims for the week ending September 29 increased by 4,000 to 1.66 million.
The key takeaway from that report is that it remains reflective of a tight labor market, which will catch the Fed's eye as a contributing factor for why it can validate the continuation of gradual rate hikes.
Looking ahead, investors will receive Import/Export Prices for September and the preliminary reading of the University of Michigan Consumer Sentiment Index for October on Friday.
Nasdaq Composite +6.2% YTD
S&P 500 +2.1% YTD
Dow Jones Industrial Average +1.4% YTD
Russell 2000 +0.6% YTD
Stocks Tumble Following Technical Breach
10-Oct-18 16:30 ET
Dow -831.83 at 25598.74, Nasdaq -315.97 at 7422.24, S&P -94.66 at 2785.52
https://www.briefing.com/investor/markets/stock-market-update/2018/10/10/stocks-tumble-following-technical-breach.htm
[BRIEFING.COM] Stocks tumbled on Wednesday as bond yields held steady at multi-year highs and amid continued concerns about economic and earnings growth prospects. The S&P 500 lost 3.3%, extending its losing streak to five sessions in a row, which is its longest losing streak since 2016. The Dow Jones Industrial Average and the Nasdaq Composite also fell sharply, losing 3.2% and 4.1%, respectively.
At the opening bell, the S&P 500 fell below its 50-day moving average (2879), which has been an area of support for the market this week. Selling continued from there, with the S&P 500 extending its opening loss of 0.5% more than six times over. However, the selling didn't feel fast and panicky; rather, it was somewhat orderly in nature, which underscores the idea that it was largely a risk-reduction effort, whereby market participants are cutting their exposure to stocks, cognizant that earnings growth estimates are at risk with rising interest rates, tariff actions, and higher costs.
Other key technical breaches included the Dow falling below its 50-day moving average, the Nasdaq falling below its 200-day moving average, and the Russell 2000 falling below its 200-day moving average.
High-growth FANG names, which have been key leadership stocks for this bull market, struggled mightily on Wednesday; Netflix (NFLX 325.89, -29.82) lost 8.4%, Amazon (AMZN 1755.25, -115.07) lost 6.2%, Facebook (FB 151.38, -6.52) lost 4.1%, Apple (AAPL 216.36, -10.51) lost 4.6%, and Alphabet (GOOG 1081.22, -57.60) lost 5.1%.
Information technology was the worst-performing S&P sector on Wednesday, tumbling 4.8%, but growth-sensitive, cyclical groups underperformed on the whole, with financials, consumer discretionary, industrials, energy, and communications services all losing between 3.0% and 3.9% apiece. None of the 11 S&P sectors were able to advance on Wednesday, but the defensive-oriented utilities (-0.5%) group did manage to keep its loss in check.
Interestingly, the equity sell off did not lead to higher demand for "risk-free" U.S. Treasuries. In fact, bonds declined with stocks on Wednesday, with investors presumably opting to go to cash instead. The benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, advanced two basis points to 3.23%, closing near a seven-year high.
Meanwhile, the CBOE Volatility Index, often referred to as the "investor fear gauge", spiked 36.2% to 21.73, its highest level since late March.
Away from Wall Street, Hurricane Michael made landfall in the Florida Panhandle as a Category 4 storm. The storm has disrupted crude production in the Gulf of Mexico, but oil prices fell notably on Wednesday nonetheless, retreating from the four-year high hit earlier this month. WTI crude dropped 2.5% to $73.09/bbl.
Reviewing Wednesday's economic data, which included the September Producer Price Index, August Wholesale Inventories, and the weekly MBA Mortgage Applications Index:
Producer prices rose 0.2% in September (Briefing.com consensus +0.2%), and core producer prices increased 0.2% (Briefing.com consensus +0.2%). Year-over-year, producer prices are up 2.6% (vs +2.8% in August) and core producer prices have risen 2.5% (vs +2.3% in August).
The key takeaway from the report is that producer prices climbed in September without a contribution from prices for final demand energy, which fell 0.8%. Furthermore, there is nothing in the report to suggest the Fed is likely to deviate from another rate hike at its December FOMC meeting.
August Wholesale Inventories increased 1.0% (Briefing.com consensus +0.8%). The July reading was left unrevised at +0.6%.
The key takeaway from the report is that the build in wholesale inventories will be accounted for as a positive input for Q3 GDP forecasts.
The weekly MBA Mortgage Applications Index showed a decrease of 1.7%.
Looking ahead, investors will receive the Consumer Price Index for September, weekly Initial Claims, and the September Treasury Budget on Thursday.
Nasdaq Composite +7.5% YTD
S&P 500 +4.2% YTD
Dow Jones Industrial Average +3.6% YTD
Russell 2000 +2.6% YTD
An Indecisive Market
09-Oct-18 16:30 ET
Dow -56.21 at 26430.57, Nasdaq +2.07 at 7738.21, S&P -4.09 at 2880.18
http://www.wsj.com/mdc/public/page/2_3021-tradingdiary2.html?mod=topnav_2_3021
[BRIEFING.COM] U.S. stocks waffled on Tuesday amid concerns about growth, rising interest rates, and the impending arrival of Hurricane Michael in Florida's panhandle. The broader market seemed reluctant to make a decisive move in any direction, as the S&P 500 index crossed back and forth across the unchanged line numerous times during the trading session.
The S&P 500 finished 0.1% lower, the Dow Jones Industrial Average closed lower by 0.2%, and the tech-heavy Nasdaq Composite reset to its flat line.
An overnight spike in U.S. Treasury yields spooked investors this morning, as the benchmark 10-yr yield rose as high as 3.26%. However, renewed buying interest drove prices up and yields down, which eased some of the early angst. The 10-yr note yield settled Tuesday's session at 3.21%, down three basis points from Friday.
The latter move aside, the stock market looked to have gotten caught up on economic and earnings growth concerns that were fostered by the the International Monetary Fund (IMF) cutting its 2018 and 2019 global growth outlook to 3.7% from 3.9% and a third quarter earnings warning from specialty chemicals company PPG Industries (PPG 98.56, -11.02, -10.1%), which pinned some disappointing guidance on currency pressures, cost inflation, softer demand in China, and a lower end-user demand in Europe and the U.S.
PPG's warning rattled the materials sector, which plunged 3.4%. Several sector components finished trading at their 52-week lows.
In addition, transportation stocks weighed on the industrials sector (-1.5%), as worries about higher fuel costs and likely transportation disruptions related to Hurricane Michael weighed on investor sentiment. The Dow Jones Transportation Average tumbled 1.9% and is now down 3.4% this month.
American Airlines (AAL 33.55, -2.35, -6.6%) was a notable laggard despite saying it expects its third quarter total revenue per available seat mile to be up approximately 2-3% year-over-year versus its prior guidance of up 1-2%.
Conversely, the heavily-weighted S&P 500 information technology sector (+0.4%) outperformed on Tuesday, rebounding modestly from recent selling that had it down 3.4% for the month entering today's trading, and lent an important measure of support to the S&P 500, which closed right on top its 50-day moving average.
Apple (AAPl 226.87, +3.10, +1.4%) and Microsoft (MSFT 112.33, +1.48, +1.3%) helped carry the load after failing to show gains the previous three sessions.
Separately, WTI crude climbed 0.8% to $74.86/bbl, as some oil production has been shut down in the Gulf of Mexico in anticipation of Hurricane Michael. The oil-sensitive energy sector led the sector standings, closing 1.0% higher.
Investors received the NFIB Small Business Optimism Index for September was released earlier today, decreasing to 107.9 from 108.8.
Nasdaq Composite +12.1% YTD
S&P 500 +7.7% YTD
Dow Jones Industrial Average +7.0% YTD
Russell 2000 +5.6% YTD
Afternoon Rebound Leaves S&P 500 Little Changed
08-Oct-18 16:30 ET
Dow +39.73 at 26486.78, Nasdaq -52.30 at 7736.14, S&P -1.14 at 2884.27
https://www.briefing.com/investor/markets/stock-market-update/2018/10/8/afternoon-rebound-leaves-s-and-p-500-little-changed.htm
[BRIEFING.COM] The U.S. stock market closed a volatile day of trading on a mixed note. The S&P 500 was down as much as 0.8% on Monday, but rebounded in the afternoon to reclaim its 50-day moving average (2878.47), which it had breached shortly after the opening bell. The benchmark index finished just slightly lower, closing at 2884.43.
As for the other major averages, the tech-heavy Nasdaq Composite underperformed for the third straight day, losing 0.7%; the small-cap Russell 2000 finished the day with a slim loss of 0.2%; and the blue-chip Dow Jones Industrial Average outperformed, tacking on 0.2%.
Concerning headlines overseas weighed on U.S. markets early. In China, Secretary of State Mike Pompeo traded jabs with China's foreign minister, Wang Yi, regarding trade disputes. Mr. Yi accused the United States of meddling with domestic affairs, and Mr. Pompeo retorted that the two simply had a "fundamental disagreement." In Italy, the government continued its feud with the European Union over its budget deficit plan, with Italy's Deputy Minister Matteo Salvini referring to two EU leaders as "enemies of Europe."
The top-weighted information technology sector gave up quite a bit of ground on Monday, closing at the bottom of the S&P 500 sector standings with a loss of 1.2%. The group is now down 3.4% for the month, trimming its 2018 gain to 15.5%. Investors have continued to take profits from the highly-valued growth stocks that have helped propel the group higher this year.
Conversely, the real estate (+1.3%), consumer staples (+1.3%), and utilities (+0.8%) sectors finished atop Monday's leaderboard, and the highly-influential financial sector (+0.6%) also outperformed.
In corporate news, Google's parent company Alphabet (GOOG 1148.97, -8.38) announced that account information of 500,000 of its users was exposed due to a bug, and General Electric (GE 13.61, +0.43) was upgraded to 'Overweight' from 'Equal Weight' at Barclays. Alphabet shares lost 0.7%, while GE shares climbed 3.3%.
Looking head, the third quarter earnings season will unofficially kickoff on Friday with financial giants JPMorgan Chase (JPM 115.32, +0.70, +0.6%), Citigroup (C 72.59, +0.17, +0.2%), and Wells Fargo (WFC 53.67, +0.48, +0.9%) scheduled to report their quarterly results.
Note, the bond market was closed in observance of Columbus Day.
Investors did not receive any economic data on Monday.
Nasdaq Composite +12.1% YTD
S&P 500 +7.9% YTD
Dow Jones Industrial Average +7.2% YTD
Russell 2000 +6.1% YTD
Rising Rates Drive Falling Stock Prices
05-Oct-18 16:35 ET
Dow -180.43 at 26447.05, Nasdaq -91.06 at 7788.44, S&P -16.04 at 2885.41
https://www.briefing.com/investor/markets/stock-market-update/2018/10/5/rising-rates-drive-falling-stock-prices.htm
[BRIEFING.COM] The stock market fell on Friday as bond yields continued to climb following the release of the Employment Situation report for September. The S&P 500 and the Dow lost 0.6% and 0.7%, respectively. The tech-heavy Nasdaq dropped 1.2%.
At its session low, the S&P 500 was down 1.1%, falling below its 50-day moving average for the first time since July. The market eventually gathered its footing though, closing near the middle of the day's trading range.
The Employment Situation report for September was mixed from a headline standpoint, as nonfarm payrolls showed a below-consensus increase of 134,000 (Briefing.com consensus 184K), but the August increase was revised upward to 270,000 (from 201K). Average hourly earnings rose 0.3%, as expected, and the unemployment rate fell to from 3.9% to 3.7%, marking its lowest level since 1969.
U.S. Treasuries extended their weekly losses following the release of the jobs report, pushing yields higher across the curve. The 2-yr yield advanced one basis point to 2.88%, and the benchmark 10-yr yield jumped three basis points to 3.23%, extending its weekly gain to 16 basis points and marking its highest close since 2011.
In corporate news, Costco (COST 218.82, -12.86) lost 5.6% despite reporting above-consensus earnings, and Tesla (TSLA 261.95, -19.88) dropped 7.1% after CEO Elon Musk seemingly mocked the SEC in a late Thursday tweet, just days after agreeing to a settlement with the agency over securities fraud allegations stemming from his failed bid to take the company private.
Reviewing all of Friday's economic data, which, in addition to the September Employment Situation report, included the August Trade Balance and the August Consumer Credit reports:
September nonfarm payrolls increased by 134,000 while the Briefing.com consensus expected an increase of 184,000. The prior month's increase was revised to 270,000 from 201,000. Nonfarm private payrolls rose by 121,000 while the Briefing.com consensus expected an increase of 180,000. The previous month's increase was revised to 254,000 from 204,000. Average hourly earnings increased 0.3% (Briefing.com consensus +0.3%), while the previous month's increase was revised to 0.3% from 0.4%. The average workweek was reported at 34.5 (Briefing.com consensus 34.5). The unemployment rate fell to 3.7% from 3.9% in August (Briefing.com consensus 3.8%).
The key takeaway from the report is that the labor market is solid and still simmering with the prospect of pent-up wage pressures being unleashed at any point as employers encounter difficulty in finding qualified workers.
The August trade balance report showed a deficit of $53.2 billion (Briefing.com consensus -$52.6 billion). The July deficit was revised to $50.0 billion from $50.1 billion.
The key takeaway from the report is that it has yet to confirm the tariff actions are succeeding in cutting the trade deficit in a big way; moreover, with the third quarter real average trade deficit 8.9% higher than the second quarter average, trade will be accounted for as a negative input in Q3 GDP forecasts.
The Consumer Credit report for August showed an increase of $20.1 billion, and July credit growth was unrevised at $16.6 billion.
The key takeaway from the report is that it reflects a pickup in credit demand that should be construed as an offshoot of a strengthening economy led by a solid labor market.
Looking ahead, investors won't receive any notable economic data on Monday.
Week In Review: Stocks Fall As Yields Surge
The S&P 500 fell 1.0% this week, weighed down by a surge in bond yields, which rose to multi-year highs in front of Friday's release of the Employment Situation report for September. The tech-heavy Nasdaq and the small-cap Russell 2000 underperformed, losing 3.2% and 3.7%, respectively, but the blue-chip Dow finished flat.
Stocks began the week on a positive note, boosted by Canada joining Mexico and the United States in a trade agreement. On Sunday night, Canada agreed to allow greater dairy market access to the U.S., while also capping its automobile exports to the States. The deal, also known as the United States-Mexico-Canada Agreement (USMCA) replaces the 24-year-old NAFTA deal between the countries. However, Congress still has to approve the deal, which likely won't be easy.
Investors awoke to continued Italian drama on Tuesday, when Italy's anti-establishment government defended its plan to increase the country's budget-deficit target despite pushback from the EU. In addition, Claudio Borghi, who leads the economic policy of the ruling Lega party, claimed that most of Italy's problems could be solved if the country had its own currency -- although that idea was dismissed by Italy Deputy Prime Minister Di Maio.
However, on Wednesday, Italy's government decided to cede to some of the EU's budget demands. Italy's budget-deficit target will be reduced from 2.4% of GDP in 2019 to 2.2% in 2020 and then to 2.0% in 2021.
That news helped push bond yields higher overnight. Yields then extended those gains significantly after the September ADP Employment Change report -- a prelude to Friday's nonfarm payrolls reading -- showed an estimated 230K positions were added to private sector payrolls -- well above the Briefing.com consensus estimate of 184K. The ISM Services Index for September also came in better-than-expected on Wednesday, hitting a record high of 61.6% (Briefing.com consensus 58.2%), clearly indicating that business activity in the service-providing sector of the economy is strong.
Yields continued to advance on Thursday and then again on Friday following the release of the Employment Situation report for September.
The report showed a smaller-than-expected increase in nonfarm payrolls (134K actual vs 184K Briefing.com consensus), but the August increase underwent a notable upward revision (to 270K from 201K). As for the rest of the report, average hourly earnings increased 0.3% (Briefing.com consensus +0.3%), the average workweek was reported at 34.5 (Briefing.com consensus 34.5), and the unemployment rate dropped to 3.7% from 3.9%.
The key takeaway from the September jobs report is that the labor market is solid and still simmering with the prospect of pent-up wage pressures being unleashed at any point as employers encounter difficulty in finding qualified workers.
Looking at this week's S&P sector standings, most groups finished in negative territory. The consumer discretionary sector led the retreat with a loss of 4.4%, and real estate (-2.7%), information technology (-2.2%) and communication services (-2.2%) also showed relative weakness. On a positive note, the influential financial sector advanced 1.5%, benefiting from rising yields and, more specifically, a steepening of the yield curve. The energy sector added 1.9% as it moved up with oil prices.
The benchmark 10-yr yield jumped 16 basis points in total, closing Friday at 3.23% -- which marks its highest level since 2011 -- while the 2-yr yield jumped five basis points to 2.88%.
In corporate news, General Electric (GE) replaced CEO John Flannery with former Danaher CEO Larry Culp; Tesla's (TSLA) CEO, Elon Musk, agreed to settle charges with the SEC, in which Mr. Musk and Tesla are to pay $20 million each, and Mr. Musk is to step down as chairman for three years; Amazon (AMZN) announced that it will be raising its minimum wage to $15 an hour for all U.S. employees, pressuring other retailers to do the same; and General Motors (GM) announced that it will be partnering with Honda Motor (HMC) to build autonomous vehicles.
Stocks Fall As Yields Rise; Jobs Report On Tap
04-Oct-18 16:30 ET
Dow -200.91 at 26627.48, Nasdaq -145.57 at 7879.50, S&P -23.90 at 2901.45
https://www.briefing.com/investor/markets/stock-market-update/2018/10/4/stocks-fall-as-yields-rise-jobs-report-on-tap.htm
[BRIEFING.COM] Stocks tumbled in Thursday's trading session, extending yesterday afternoon's slow and steady retreat, which was triggered by U.S. Treasury yields reaching multi-year highs. The S&P 500 was down as much as 1.4% in intraday trade, but bounced back late to close at -0.8%.
As for the other major averages, the Dow Jones Industrial Average closed at -0.8%, while the tech-heavy Nasdaq Composite showed relative weakness, ending at -1.8%. The small-cap Russell 2000, which has struggled recently, lost 1.5% on Thursday, extending its weekly loss to 2.9%.
A robust economic outlook, underlined by Wednesday's stronger-than-expected ADP Employment Change report for September -- which is a prelude to Friday's consequential nonfarm payrolls reading -- helped ignite the Treasury sell-off, thereby increasing yields. The yield on the benchmark 10-yr note climbed another four basis points on Thursday to 3.20% and is now up 16 basis points since Tuesday.
Unsurprisingly, the rate-sensitive financials sector was the strongest-performing sector in today's session, adding 0.7%. However, nine of the 11 sectors finished in negative territory.
Tech stocks were hit with news that China infiltrated leading companies', including Apple (AAPL 227.99, -4.08, -1.8%) and Amazon (AMZN 1909.42, -43.34, -2.2%), supply chains by implanting a spy chip in their servers. Both companies, however, denied the claim.
In earnings news, Constellation Brands (STZ 222.10, +11.34) finished 5.4% higher after beating top and bottom line estimates and raising its guidance for the fiscal year.
Also of note, Barnes & Noble (BKS 6.65, +1.19) closed 21.8% higher after the company decided to enter into a formal review process to evaluate strategic alternatives in response to multiple parties expressing interest to acquire the bookseller.
In other markets, WTI crude fell 2.6% to $74.44 a barrel after reaching a four-year high yesterday; Looking ahead, U.S. sanctions on Iran, which holds the fourth largest supply of crude oil reserves, will take effect next month on November 4. Meanwhile, the U.S. Dollar Index fell 0.3% at 95.40, ending a six-day winning streak, despite the jump in yields.
Reflective of today's price movements, CBOE Volatility Index, which is often referred to as the "investor fear gauge," catapulted as high as 32.9% before closing +21.8% at 14.14.
Recapping Thursday's economic data, which included the weekly Initial Claims report and August's Factory Orders report:
Initial claims for the week ending September 29 decreased by 7,000 from the prior week to 207,000 (Briefing.com consensus 210,000), while continuing claims for the week ending September 22 decreased by 13,000 to 1.650 million.
The key takeaway from the report is that it shows the labor market remains tight and conducive to an increase in wage growth.
Factory orders increased 2.3% in August (Briefing.com consensus +1.8%) following an upwardly revised 0.5% decline (from -0.8%) in July.
The key takeaway from the report is that there wasn't much strength in factory orders outside transportation equipment; moreover, a downward revision to shipments of nondefense capital goods excluding aircraft will detract from Q3 GDP growth estimates.
Looking ahead, investors will receive the Employment Situation report for September at 8:30 AM ET and the Consumer Credit report for August at 15:00 PM ET.
Nasdaq Composite +14.1% YTD
S&P 500 +8.5% YTD
Dow Jones Industrial Average +7.7% YTD
Russell 2000 +7.3% YTD
Stocks Trim Early Gains As Yields Surge
03-Oct-18 16:30 ET
Dow +54.45 at 26828.39, Nasdaq +25.54 at 8025.07, S&P +2.08 at 2925.35
https://www.briefing.com/investor/markets/stock-market-update/2018/10/3/stocks-trim-early-gains-as-yields-surge.htm
[BRIEFING.COM] The S&P 500 flirted with record territory on Wednesday morning, but pulled back in the afternoon as investors expressed concern over a surge in bond yields. The S&P 500 finished the session with a slim gain of 0.1% after trading as high as +0.6% intraday.
As for the other major indices, the Dow managed to keep 0.2% of its 0.7% intraday gain, closing at a new record high for the second day in a row. The tech-heavy Nasdaq finished +0.3%, and the small-cap Russell 2000 finished +0.9%, undoing some of the damage done on Monday and Tuesday.
Investors awoke to encouraging news out Italy, where the new anti-establishment government reportedly decided to cede to some of the EU's budget demands. Italy's budget-deficit target will be reduced from 2.4% of GDP in 2019 to 2.2% in 2020 and then to 2.0% in 2021. That news helped alleviate fears of an EU-Italy showdown and pushed stock futures and Treasury yields higher overnight.
Yields continued to climb after the September ADP Employment Change report, which is a prelude to Friday's nonfarm payrolls reading, showed an estimated 230K positions were added to private sector payrolls -- well above the Briefing.com consensus estimate of 184K -- and after the ISM Services Index for September hit a record high of 61.6% (Briefing.com consensus 58.2%), clearly indicating that business activity in the service-providing sector of the economy is strong.
Stocks were able to hold on to opening gains throughout the morning, but started wavering in the afternoon as Treasury yields continued to climb, with the benchmark 10-yr yield crossing a high-water mark dating back to July 2011. The 10-yr yield closed at 3.16% -- a daily gain of ten basis points -- while the more Fed-sensitive 2-yr yield rallied to 2.86% (+6 bps).
Unsurprisingly, the financial sector, which often moves in tandem with Treasury yields, was among the top-performing S&P 500 groups on Wednesday with a gain of 0.8%.
The energy sector advanced 0.8% as well, benefiting from the continued rise in the price of crude oil; WTI crude futures jumped another 1.6% on Wednesday to $76.39/bbl, marking a new four-year high. Wednesday's rise in oil prices came despite the Department of Energy's weekly inventory report showing an unexpected build of 8.0 million barrels -- the largest weekly increase of the year.
On the downside, six of 11 sectors finished in the red, with utilities (-1.2%), real estate (-1.0%), and consumer staples (-1.1%) being the worst performers.
In individual stocks, General Motors (GM 34.00, +0.70) climbed 2.1% after announcing that it will be partnering with Honda Motor (HMC 29.37, -1.09) to build autonomous vehicles. Honda shares fell 3.6%. Separately, struggling retailer J.C. Penney (JCP 1.62, +0.06) jumped 3.9% after appointing a new CEO, Jill Soltau, who is the former President and CEO of Joann Stores, and homebuilder Lennar (LEN 46.24, -0.53) dropped 1.1% after reporting earnings.
Rehashing Wednesday's economic data, which included the ISM Services Index for September, the ADP Employment Change report for September, and the weekly MBA Mortgage Applications Index:
The ISM Non-Manufacturing Index checked in at 61.6% for September (Briefing.com consensus 58.2%), up from 58.5% in August.
The key takeaway from the report is that it clearly indicates business activity is strong for the service-providing sector of the economy, which accounts for a much larger slice of economic activity than the manufacturing sector does.
The ADP National Employment Report showed an increase of 230,000 in September (Briefing.com consensus 184,000), and the August reading was revised to 168,000 (from 163,000). The ADP reading is seen as a prelude to the BLS's nonfarm payrolls figure (Briefing.com consensus 184,000), which will be released on Friday.
The weekly MBA Mortgage Applications Index was flat to follow last week's increase of 2.9%.
Looking ahead, investors will receive weekly Initial Claims and August Factory Orders on Thursday.
Nasdaq Composite +16.3% YTD
S&P 500 +9.4% YTD
Russell 2000 +8.8% YTD
Dow Jones Industrial Average +8.5% YTD
Dow Reaches All-Time High, S&P Waffles
02-Oct-18 16:30 ET
Dow +122.73 at 26773.94, Nasdaq -37.75 at 7999.53, S&P -1.16 at 2923.27
https://www.briefing.com/investor/markets/stock-market-update/2018/10/2/dow-reaches-alltime-high-s-and-p-waffles.htm
[BRIEFING.COM] Investors awoke to continued Italian drama on Tuesday, but were able to shrug it off for the most part, leaving the S&P 500 little changed. The Dow Jones Industrial Average outperformed, climbing 0.5% to a new all-time high, while the tech-heavy Nasdaq Composite lagged for the second day in a row, shedding 0.5%.
Like the Nasdaq, the Russell 2000 also struggled on Tuesday, losing 1.0% to extend its weekly loss to 2.4%. The small-cap index has been weighed down this week by a last-minute trade deal between the U.S. and Canada, which has brightened the outlook for global trade -- and, in turn, weakened demand for smaller, domestically-focused companies.
Overnight, Italy's anti-establishment government defended its plan to increase the country's budget-deficit target for next year to 2.4% of GDP, causing concern for global investors. In addition, Claudio Borghi, who leads the economic policy of the ruling Lega party, claimed that most of Italy's problems could be solved if the country had its own currency, though, that idea was dismissed by Italy Deputy Prime Minister Di Maio. The yield on Italy's 10-yr bond spiked 18 basis points to 3.48% -- its highest level since February 2014.
Back of the home front, the Dow was boosted by top-weighted Boeing (BA 386.37, +4.08, +1.1%), chipmaker Intel (INTC 48.10, +1.65, +3.6%), and Caterpillar (CAT 154.82, +2.54, +1.7%). Intel propelled the Philadelphia Semiconductor Index as high as +0.7% intraday, but the index eventually lost steam, finishing at its flat line.
FANG stocks underperformed in today's session, with Facebook (FB 159.33, -3.11, -1.9%), Amazon (AMZN 1971.31, -33.05, -1.7%), and Netflix (NFLX 377.14, -4.29, -1.1%) each falling. Facebook continues to disappoint investors, now down 5.6% since Friday, when it disclosed that it discovered a "very serious" security issue that could affect around 50 million accounts.
Also of note, Amazon announced that it will be raising its minimum wage to $15 an hour for all U.S. employees, effective November 1.
In earnings news, PepsiCo (PEP 108.72, -1.99, -1.8%) and online retailer Stitch Fix (SFIX 28.94, -15.69, -35.2%) fell after reporting their quarterly results. Despite beating earnings-per-share estimates, PepsiCo shares slipped after the company lowered guidance for fiscal year 2018. Stitch Fix plunged after also issuing disappointing guidance, despite upbeat quarterly earnings.
Investors did not receive any notable economic data Tuesday, but did consider auto and truck sales throughout the day. General Motors (GM 33.30, -0.90, -2.6%) and Ford Motor (F 9.20, -0.12, -1.3%) fell, as General Motors reported Q3 sales to be down 11.1% year-over-year to 694,638 vehicles, while Ford reported September U.S. sales to be down 11.2% year-over-year to 197,404 units.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index, September's ADP Employment Change, and September's ISM Services report on Wednesday.
Nasdaq Composite +15.9% YTD
Russell 2000 +7.9% YTD
S&P 500 +9.3% YTD
Dow Jones Industrial Average 8.3%+ YTD
Revised Trade Deal Boosts Wall Street
01-Oct-18 16:30 ET
Dow +192.90 at 26651.21, Nasdaq -9.05 at 8037.28, S&P +10.45 at 2924.43
https://www.briefing.com/investor/markets/stock-market-update/2018/10/1/revised-trade-deal-boosts-wall-street.htm
[BRIEFING.COM] U.S. stocks opened the fourth quarter Monday on a higher note, boosted by Canada joining Mexico and the United States in a trade agreement. The S&P 500 closed the session +0.4%, down from its +0.8% intraday high. The Dow finished strong, up 0.7%, but the Nasdaq Composite lost steam as the day wore on, closing 0.1% lower. The small-cap Russell 2000 also closed lower, tumbling 1.4%.
On Sunday night, Canada agreed to allow greater dairy market access to the U.S., while also capping its automobile exports to the States. The deal, also known as the United States-Mexico-Canada Agreement (USMCA) replaces the 24-year-old NAFTA deal between the countries. However, Congress still has to approve the deal, which likely won't be easy, with Washington Post reporter Robert Costa tweeting that "Administration officials anticipate a fierce political battle to win congressional approval."
As for the S&P sector standings, it was energy that enjoyed the highest gains, finishing higher by 1.5%. The oil-sensitive sector climbed to a two-month high, as WTI crude oil (+3.2%) reached $75/bbl for the first time since November 2014 and Brent oil (+2.9%) sported high gains, closing at $85.11/bbl.
Meanwhile, the real estate (-0.9%), utilities (-0.3%), consumer discretionary (-0.2%), and communication services (-0.1%) sectors weighed on the broader market. Facebook (FB 162.44, -2.02, -1.2%) weighed down the communications sector, as it continued to stumble after its 2.6% fall Friday when it announced it discovered a "very serious" security breach.
In other corporate news, General Electric (GE 12.09, +0.80) opened 15.1% higher before trimming its gains to 7.1% after the company suddenly announced it was replacing CEO John Flannery with former Danaher CEO Larry Culp. Mr. Flannery held the position for just over a year, in which he was unable to wake the company from its deep slumber and stated expectations to miss 2018 earnings.
Separately, Tesla (TSLA 310.70, +45.93) rebounded 17.4% after CEO Elon Musk agreed to settle charges with the SEC, in which Mr. Musk and Tesla are to pay $20 million each, and Mr. Musk will step down as chairman for three years. This concludes the saga that ensued after Mr. Musk tweeted last month that he had the funds to take the company private.
In politics, Director of the National Economic Council Larry Kudlow stated that a U.S.-China deal was not imminent, as President Trump is not satisfied with the progress of trade talks.
Reviewing Monday's economic data, which included the ISM Manufacturing Index for September and the Construction Spending report for August:
The ISM Manufacturing Index for September declined to 59.8 (Briefing.com consensus 60.4) from 61.3 in August. The dividing line between expansion and contraction is 50.0; and September marked the 24th consecutive month of expansion.
The key takeaway from the report is that even with the September pullback, the Index remains near multi-year highs with continued growth in most sub-indices.
Total construction spending increased 0.1% in August (Briefing.com consensus 0.4%) following a downwardly revised 0.2% increase (from 0.1%) in July.
The key takeaway from the report is that public construction spending has continued driving the overall growth rate while private construction spending growth has moderated.
Looking ahead, there will be no economic data on Tuesday, but investors will receive September auto and truck sales throughout the day.
Nasdaq Composite +16.4% YTD
Russell 2000 +9.0% YTD
S&P 500 +9.4% YTD
Dow Jones Industrial Average +7.8% YTD
InvestmentHouse - Is Market Drop Coming in October? (Weekend Newsletter)
https://www.investmenthouse.com/frblog.php
- Friday shows no relative change after the post-Powell changes.
- Tumultuous week outside the markets, some sharp move in financial
markets.
- Trade, economy, politics still issues, but the Fed significance
becomes more of a reality for most players.
- Market starts to show money shifts heading into Q4.
- No September drop so it is coming in October, right? Not
necessarily.
- Q4 potentially shaping up similar to 2017 with a big name focus to
start.
A tumultuous week outside of financial markets, some tumult in the financial
markets, and a possible change of focus in the stock market.
Trade remained an issue with more US companies complaining about the
potential for rising costs, no deal with Canada but deals with South Korea
and others, and of course, China whining like a toddler about how the US
just isn't playing fair. Hell, maybe China ISN'T ready to join the big
leagues of world finance -- but it certainly will have to trade fairly and
stop stealing the rest of the world's intellectual efforts. China likes to
brag about its intellectual power, but it has stolen most of its advances.
Kind of like the guy in college who would probably still make good grades if
he spent as much effort studying as he did figuring out ways to cheat.
Economics of course played their role. The US remans much stronger than the
rest of the world, but even the US data appears slowing in the forward
looking areas. For example, Chicago PMI put in its lowest reading since
April -- but at 60.4 it is HARDLY low. Trends, however, are always the real
story, and while the overall trend is up, the data is slowing a bit. Of
course any slowing is heralded as the end of the run -- instead of the more
obvious . . . a slow down after two 4+% GDP quarters. Even in the gains in
the 1980's there were slowdowns between quarters. Not major slowing, just
ebb and flow in a very strong run higher. History repeats, but so do
doomsayers.
The Fed was THE dominant factor for the week, specifically the chairman's
comments regarding 'excess asset valuations.' Always a slap for markets
because when the Fed starts talking overpriced assets it moves into areas
where its lack of understanding has manifested time and time and time again,
always with the same actions and same result: it overreacts, goes too tight
too long, the market rolls over, the economy after it.
With that, stocks hiccupped after the chairman's press comments. More than
that, there was a notable shift from small and midcap stocks. They broke
near support in a much more violent move than the large cap indices. They
recovered some ground the balance of the week but they did not retake
support.
Small and midcaps are economic harbingers, but it is also true that as a
recovery matures, money tends to shift away from them. They are early
growers -- something we saw with the RUTX the first to hit new highs on
several occasions -- but after their growth spurt they slow and money moves
to other areas. Hence the rise in the SP500 and DJ30 in terms of relative
strength in recent market history. The Fed chairman's comments may have
just acted as the trigger point for what funds were already contemplating.
With the Fed chair comments, why wait for the Christmas rush? So, they sold
now.
As of Friday, not much has changed. NASDAQ still trended higher in its
channel though no big moves at all. NASDAQ 100 is stronger than overall
NASDAQ, lending to the 'lose the small stuff' attitude that emerged late
Wednesday. SP500, DJ30 still trending higher. RUTX and SP400 are seriously
challenged. SOX is still, yes still, working on its base. That it is not
breaking down is a win. For now.
SP500 -0.02, -0.00%
NASDAQ 4.38, 0.05%
DJ30 18.38, 0.07%
SP400 0.34%
RUTX 0.36%
SOX 0.65%
NASDAQ 100 -0.03%
VOLUME: NYSE +27%, NASDAQ +14%. Volume spiked Friday, but it was month end
and quarter end. Highest NYSE trade since the S&P rebalance and before that
since late July. NASDAQ trade rallied back to recent elevated levels after
a Thursday dip to near average.
ADVANCE/DECLINE: NYSE +1.3:1, NASD +1.2:1. Still nondescript.
Quarter 4 starts now. Along with October.
Moving into Q4, October, earnings season, and the jobs report Friday.
September certainly was not a downside month; it just wasn't a surge upside.
Many are expecting a selloff in October. It could happen, It did not last
year after a solid move higher in September. No downside occurred until
mid-November and it was just a dip. Then a more than impressive run higher
into late January.
The point: just because September and October often result in downside does
not mean they have to result in downside.
What we think is happing right now and will become clearer as the market
moves through Q4 is similar to last year: an initial focus on large caps,
particularly known names. Last year in Q4 we said get used to the idea of
buying FAANG and playing them to the exclusion of most other areas. We made
huge gains doing that -- and playing other opportunities that emerged as
money again re-entered the market and bought just about everything. Recall:
many big names said the rally was done, done, and more done. Then it kept
moving higher and they were forced back into the market, driving stocks to
gains, amazing gains for us.
We think a similar play could very well present itself this year. Perhaps
not all of FAANG: thanks to FB, NFLX and GOOG, it has started lagging SP500.
NFLX is coming around very well, however, while AMZN and AAPL remained more
or less solid. Now throw in some other name brands such as NVDA, cloud and
gaming software, a few other tech and miscellaneous leaders along with the
industrials . . . and there are plenty of solid money makers in Q4.
The trick is whether the market decides to sell some in October to reset for
a run to year end. As noted, history, indeed recent history, shows that
does not have to be the case. With Fed chair Powell's comments this past
week, however, asset valuation scares rippled in the market. Several
players have said for awhile that a selloff is coming and that group of
believers may try to sell the market and cause an October dip.
Perhaps. Many leaders improved their positions and patterns despite a
sluggish market overall. Indeed, as you see, that even lends to the thesis
that the market move will again concentrate in fewer names toward year end.
It might not; maybe everything will rally. Okay, that works because as new
patterns set up and make moves, we will be there and ready to take advantage
of them.
CHARTS
NASDAQ: Up on the week, bouncing off a drop to the 50 day MA's. Was
rocking higher Wednesday then the foul Powell comments hit and it gave up
the move. Didn't stop the big techs; they moved higher Thursday and Friday,
though a most modest move. Still trending, getting help from the big techs
as NASDAQ 100 is outperforming NASDAQ overall.
RUTX: Major moves the past two weeks. After an initial drop from the late
August new high, RUTX consolidated at the 20 day EMA. After a week, it
dropped hard in once session to the 50 day MA and the June/July highs.
Tried a sharp bounce, failed. Then last Wednesday it broke the 50 day MA's
and the prior summer highs post-Powell. It attempted a Friday recovery but
is still below those two former support levels. A very, very key week for
RUTX to see if it can recover. It formed an ABCD consolidation on top of
the prior highs -- great pattern. It could not bounce, however, and now has
an ABCDEF pattern -- hmm. Never seen one of those work.
SP400: The midcaps bumped along the 20 day EMA and the August all-time high
heading into last week. As the week started, however, SP400 started sliding
lower, and then there was that Wednesday Powell plunk below the 50 day MA's.
Held, roughly, the summertime highs, bouncing Friday to the 50 day MA. As
with RUTX, there was a money shift. As with RUTX, this week is a very
important week for the midcaps.
SP500: Down on the week, gapping lower Monday and unable to recover by
Friday. Too much to deal with for any bids to feel really good and thus
buyers stayed home. Still trending up the 20 day EMA and still bumping
around the upper channel line. SP500 has found it difficult to break out
and hold a breakout over the upper channel line. Often that will wear out
an attempt to move over it and precipitate a test lower in the channel.
With the financials providing no help, this could be the potential 'dip'
ahead discussed in the market overview. There are some really good setups
in the industrial side, however, and if they move that will help SP500's
upside.
DJ30: Still holding the 10 day EMA in its test back from its new all-time
high posted the previous Friday. Low volume on the fade, even on the Powell
pause day. DJ30 remains well-poised to move higher with stocks such as CAT,
UTX, BA in excellent position. Indeed, BA started upside Friday off its
fade, perhaps signaling the others are to follow.
SOX: SOX continues toiling in its 6 month triangle, falling to the 200 day
SMA on the week. Landed there Wednesday, held, started upside Friday.
Another higher low inside the pattern at a key level. Perhaps, finally,
this one will yield a breakout after the chips have toiled for months
consolidating prior gains. With stocks such as AVGO turning the corner and
NVDA starting its next blast higher, it is possible. AND THAT would be huge
for the market in a Q4 yearend rally.
LEADERSHIP
FAANG: Thanks to FB and GOOG, and until recently NFLX, SP500 has
outperformed FAANG on a relative basis. AAPL and AMZN continue trending
higher over near support. NFLX has established a nice 3 month cup base and
is moving higher. GOOG could be setting up for a new move. FB cannot get
out of its own way with a new 50M user hack as well as selling the phone
numbers of users who provided FB with the number as part of a 2-step
authentication process. FB is quickly becoming hated. GOOG will face
antitrust actions from the Trump administration given its 98% market share
and its office in the White House during the prior administration. We are
now naming this SCAANN: SQ, CRM, AAPL, AMZN, NFLX, NVDA.
Energy: A much-improved sector. APC posted a gain on rising volume Friday
in a very nice pattern. XOM in an excellent rally test at the 10 day EMA.
CVX shows a similar pattern to APC. APA a cup with handle. CRZO still in a
nice pattern. HAL the same. ESV testing a solid rally, waiting on the 10
day EMA to catch up.
Software: CRM surged Monday and continued upside on the week to a new high.
ATVI moved to a new high while TTWO did the same. ADBE bounced well, MAST
is in a very nice 10 day EMA test. FEYE remains ready to break higher.
DATA, NOW somewhat blah. NEWR needs to show something right now. SZ
recovered and put in a nice test of the 50 day MA.
Chips: There is some promise here. NVDA gapped and surged Friday on
reports its AI platform is almost 'there.' AVGO in a solid 200 day SMA
test. AMD 20 day EMA testing. XLNX is solid, still looking to enter.
INTCE started upside on volume. AMAT, LRCX sport patterns similar to FB and
GOOG before they made their recent bounces from lows.
Financial: Pathetic. BAC continued lower, adding 5 downside sessions on
the week, picking up speed to the downside. JPM, C are both now testing to
the 200 day SMA in week-plus fades. V touched a nominal new high in modest
upside. GS gapped lower Friday after a prior week of selling.
Machinery/Manufacturing: CMI, CAT, DE still solid in tests. CMI , ETN look
great in tests and BA started upside big Friday. Great looking group.
Drugs: PFE in a lateral test at the 10 day EMA, still trending nicely
higher. MRK, BMY, LLY similarly situated. BIIB bounced upside on the week,
AMGN upside all week but Friday, CELG is interesting and Adami on Fast Money
likes it for what that is worth. INFI surging for us, up 10+% Friday. VCEL
is testing but looks really good at the 10 day EMA.
Retail: Same stocks are solid: TJX, ULTA, ROST. WSM testing the 50 day MA
nicely. HD in an ABCD at the 20 day EMA. LULU new high. Yoga pants.
Whatever.
MISC: SQ new highs. PYPL broke the 50 day MA Friday. MTCH, GRUB not much
changed, bouncing up off support. DDD also up off support, looking for a
stronger upside break.
MARKET STATS
DJ30
Stats: +18.38 points (+0.07%) to close at 26458.31
Nasdaq
Stats: +4.38 points (+0.05%) to close at 8046.35
Volume: 2.34B (+13.59%)
Up Volume: 1.13B (0)
Down Volume: 1.16B (+269.22M)
A/D and Hi/Lo: Advancers led 1.17 to 1
Previous Session: Advancers led 1.01 to 1
New Highs: 85 (+22)
New Lows: 87 (+16)
S&P
Stats: -0.02 points (0.00%) to close at 2913.98 NYSE Volume: 953.397M
(+27.31%)
A/D and Hi/Lo: Advancers led 1.27 to 1
Previous Session: Advancers led 1.25 to 1
New Highs: 63 (+18)
New Lows: 134 (+19)
SENTIMENT
VIX: 12.12; -0.29
VXN: 16.58; -0.17
VXO: 11.30; -0.38
Put/Call Ratio (CBOE): 1.06; +0.12
Bulls and Bears:
Bulls continue bumping at 60.0, a historically high level that leads to
declines. Bears remain elevated, but not moving higher right now.
Bulls: 59.0 versus 57.7
Bears: 18.1 versus 18.3
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 59.0 versus 57.7
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 versus 64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1
versus 64.2 versus 62.3 versus 61.5 versus 63.5 versus 64.4 versus 63.5
versus 62.3 versus 60.6 versus 60.4 versus 57.5 versus 54.3 versus 50.5
versus 47.1
Bears: 18.1 versus 18.3
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: 3.061% versus 3.052%. Bonds rebounded sharply Wednesday and
Thursday but Friday reversed for a loss after a gap above the 10 day EMA.
Bounced, but what is still there?
Historical: the last sub-2% rate was in November 2016 (1.867%). 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% versus 2.941% versus 2.879% versus 2.904% versus
2.897% versus 2.86% versus 2.857% versus 2.882% versus 2.882% versus 2.846%
versus 2.813% versus 2.828% versus 2.821% versus 2.819% versus 2.819% versus
2.864% versus 2.871% versus 2.879% versus 2.882% versus 2.873% versus 2.928%
versus 2.963% versus 2.977% versus 2.977% versus 2.945% versus 2.95% versus
2.986% versus 3.005% versus 2.962% versus 2.975% versus 2.958% versus 2.982%
versus 2.965%
EUR/USD: 1.16038 versus 1.16357. The dollar posted a strong 2-session move
that sent the pair down to the 50 day SMA.
Historical: 1.16357 versus 1.17501 versus 1.17658 versus 1.17476 versus
1.17486 versus 1.17772 vs 1.16833 versus 1.16692 versus 1.16858 versus
1.16226 versus 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus
1.15534 versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus
1.1664 versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus
1.15390 versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437 versus
1.13765 versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413 versus
1.1526 versus 1.16186 versus 1.16001 versus 1.15572 versus 1.15683 versus
1.15864 versus 1.1662 versus 1.1689 versus 1.17074 versus 1.16558 versus
1.17324 versus 1.17385 versus 1.16846 versus 1.16989 versus 1.17214 versus
1.1651 versus 1.16514 versus 1.16603 versus 1.1709 versus 1.1685 versus
1.16608 versus 1.1672 versus 1.17288 versus 1.17578 versus 1.17439 versus
1.1689
USD/JPY: 113.690 versus 113.410. Dollar continued a 3 week run from the
July to early September range.
Historical: Last below 109 four months back. 113.690 versus 112.734 versus
112.981 versus 112.811 versus 112.575 versus 112.448 versus 112.247 versus
112.369 versus 111.849 versus 112.06 versus 111.81 versus 111.491 versus
111.608 versus 111.192 versus 111.064 versus 110.680 versus 111.448 versus
111.468 versus 111.082 versus 110.962 versus 111.734 versus 111.19 versus
111.081 versus 111.249 versus 111.351 versus 110.766 versus 109.92 versus
110.49 versus 110.935 versus 110.818 versus 111.229 versus 110.737 versus
110.840 versus 111.07 versus 111.361 versus 111.344 versus 111.254 versus
111.621 versus 111.628 versus 111.744 versus 110.990 versus 110.995 versus
110.791 versus 110.871 versus 111.235 versus 111.084 versus 111.451 versus
112.732 versus 112.783 versus 112.896 versus 112.337 versus 112.631 versus
112.093 versus 110.911
Oil: 73.25, +1.13. Breaking higher and now knocking at the June high.
Gold: 1196.20, +8.80.
S&P Closes Friday Flat, Securing 7.2% Gain for Q3
28-Sep-18 16:30 ET
Dow +18.38 at 26458.31, Nasdaq +4.38 at 8046.33, S&P -0.02 at 2913.98
https://www.briefing.com/investor/markets/stock-market-update/2018/9/28/s-and-p-closes-friday-flat-securing-72-gain-for-q3.htm
[BRIEFING.COM] Wall Street finished Friday little changed, securing big gains for the third quarter. The S&P 500 kept near its flat line throughout the session, closing just a tick below its unchanged mark. The Nasdaq and the Dow added 0.1% apiece. For the quarter, the S&P 500 added 7.2%, the Dow added 9.0%, and the Nasdaq added 7.1%.
Friday began with news from across the pond, where Italy's anti-establishment government widened the country's budget-deficit target for next year to 2.4% of GDP. That could raise problems with the EU, which has pushed Italy to lower its public debt. European stocks fell in reaction, with Italy's MIB (-3.7%) leading the retreat.
The headlines weighed on the U.S. futures market as well, but Wall Street quickly pared losses after the opening bell.
Financial shares fell once again on Friday (-1.1%), extending the heavily-weighted financial sector's weekly loss to 4.1%. On the flip side, the lightly-weighted real estate (+1.3%) and utilities (+1.5%) sectors rallied, closing atop the sector standings. Most other groups finished within 0.4% of their unchanged marks.
Tesla (TSLA 264.77, -42.75) tumbled 13.9% after its CEO, Elon Musk, was sued by the SEC over his tweet about taking the electric automaker private. Mr. Musk and the SEC were reportedly close to reaching a no-guilt settlement that would have barred him from being chairman for two years, but Mr. Musk backed out at the last minute.
In other corporate news, Facebook (FB 164.46, -4.38) dropped 2.6% after announcing that it's discovered a "very serious" security issue that could affect around 50 million accounts; NVIDIA (NVDA 281.02, +13.62) climbed 5.1% after Evercore ISI raised its target price to a new Street high of $400 per share; and Intel (INTC 47.29, +1.41) advanced 3.1% after announcing that it's making progress with 10nm chips, but Intel competitor Advanced Micro (AMD 30.89, -1.70) lost 5.2%.
On Capitol Hill, the Senate Judiciary Committee advanced President Trump's Supreme Court nomination of Brett Kavanaugh on Friday, but a final Senate vote will be delayed after Senator Jeff Flake (R-AZ) unexpectedly called for a one-week FBI investigation into sexual misconduct allegations against the judge.
Reviewing Friday's batch of economic data, which included August Personal Income, Personal Spending, and PCE Prices, the final reading of the University of Michigan Consumer Sentiment Index for September, and the Chicago PMI Index for September:
Personal income climbed 0.3% in August (Briefing.com consensus +0.4%) following an unrevised increase of 0.3% in July. Meanwhile, personal spending rose 0.3% in August (Briefing.com consensus +0.3%) following an unrevised increase of 0.4% in July. The PCE Price Index rose 0.1% in August (Briefing.com consensus +0.1%), and the core PCE Price Index, which excludes food and energy, was flat (Briefing.com consensus +0.1%). Year-over-year, the core PCE Price Index is up 2.0%, unchanged from July.
The key takeaway from the report is that the year-over-year increase in the PCE Price Index (+2.2% vs. +2.3% prior) and the core PCE Price Index (+2.0% vs. +2.0% prior) will keep the Federal Reserve on its tightening path.
The final reading of the University of Michigan Consumer Sentiment Index for September ticked down to 100.1 (Briefing.com consensus 100.5) from 100.8 in the preliminary reading.
The key takeaway from the report is that even with the pullback, the Sentiment Index remains above 100.0 for the third time since the start of 2004.
The Chicago PMI Index declined to 60.4 in September from 63.6 in August. The dividing line between expansion and contraction is 50.0.
The key takeaway from the report is that the September dip represents the second consecutive decline, returning the Index into the lower half of the range from the past 12 months.
Looking ahead, investors will receive the ISM Manufacturing Index for September and the August Construction Spending report on Monday.
Nasdaq Composite +16.6% YTD
Russell 2000 +10.5% YTD
S&P 500 +9.0% YTD
Dow Jones Industrial Average +7.0% YTD
Week In Review: Raising Rates and Playing Politics
The S&P 500 pulled away from record highs this week, losing 0.5% in total, as investors digested a flurry of political headlines and the latest policy statement from the Federal Reserve, which included another rate hike -- the third one this year. The Dow also fell, losing 1.1%, but the tech-heavy Nasdaq outperformed, rallying 0.7%.
The week began with the U.S. implementing tariffs on $200 billion worth of Chinese goods, which triggered Beijing to impose retaliatory tariffs on $60 billion worth of American products. Chinese officials also canceled mid-level trade talks that had been scheduled for later in the week, dashing hopes for a near-term resolution.
OPEC was also in focus on Monday after it and several non-OPEC nations ended a weekend meeting without an agreement to increase output in order to counter falling supply from Iran due to U.S. sanctions. President Trump criticized OPEC in front of the UN General Assembly on Tuesday, saying the oil cartel is "ripping off the rest of the world" by colluding to limit supply and prop up prices.
In the same address, the U.S. president also criticized Iran, which is currently the target of U.S. economic sanctions, calling its government a "corrupt dictatorship" and saying its leaders "sow chaos, death, and destruction." President Trump also spoke regarding North Korea, ISIS, and Syria, and reiterated his administration's hard stance on fair trade.
The Federal Reserve increased short-term interest rates on Wednesday, as expected, raising the fed funds target range by 25 basis points to 2.00-2.25%. In its policy statement, the Fed removed the word 'accommodative', which led some to believe that officials could be moving towards slowing monetary tightening. However, Fed Chairman Jerome Powell said during his post-decision press conference that the language change didn't signal a change in the Fed's path for rate hikes.
As for rate-hike projections, the Fed still appears to be on track to raise rates another 25 basis points in December, with the CME FedWatch Tool putting the chances at 75.8%. Beyond 2018, the Fed's dot plot showed expectations for three rate hikes in 2019 (unchanged from June) and one in 2020 (also unchanged from June).
On Capitol Hill, political drama unfolded on Thursday as Supreme Court nominee Brett Kavanaugh and his accuser, Christine Ford, who has accused Mr. Kavanaugh of sexually assaulting her back in high school, testified before the Senate Judiciary Committee. The Committee advanced Mr. Kavanaugh's nomination on Friday, but a final Senate vote will be delayed for a one-week FBI investigation.
Overseas, two populist parties governing Italy widened the country's budget-deficit target for next year to 2.4% of GDP on Friday, likely putting the country at odds with the European Union. The major European stock indices sold off in reaction to the news, with Italy's MIB leading the retreat.
In U.S. corporate news, Comcast (CMCSA) paid $40 billion to win a bid for European broadcaster Sky, ending a two-year battle with 21st Century Fox (FOXA); Nike (NKE) reported above-consensus earnings for its fiscal first quarter; and Facebook (FB) fell on Friday after disclosing a "security issue" impacting 50 million users.
However, perhaps the week's biggest corporate story revolved around Tesla's (TSLA) CEO, Elon Musk, who was sued by the SEC on Thursday evening over his tweet about taking the electric automaker private. Mr. Musk and the SEC were reportedly close to reaching a no-guilt settlement that would have barred him from being chairman for two years, but Mr. Musk backed out at the last minute.
As for the sector standings, they were pretty mixed between red and green. The heavily-weighted financials sector was the second-worst performer, losing 4.1% in total, with materials (-4.5%) being the only group with a more substantial loss. Conversely, the newly-added communications services sector was the top performer with a weekly gain of 1.1%.
Fed Votes to Raise Rates; Stocks Slide in the Final Minutes
26-Sep-18 16:20 ET
Dow -106.93 at 26385.28, Nasdaq -17.11 at 7990.35, S&P -9.59 at 2905.97
https://www.briefing.com/investor/markets/stock-market-update/2018/9/26/fed-votes-to-raise-rates-stocks-slide-in-the-final-minutes.htm
[BRIEFING.COM] The Federal Reserve increased short-term interest rates on Wednesday, as expected, raising the fed funds target range by 25 basis points to 2.00-2.25%.
Stocks were up modestly ahead of the release of the Fed's decision, which crossed the wires at 2:00 PM ET, and extended gains after the central bank removed the word 'accomodative' from its policy statement. However, that initial move was reversed, and then some, following a post-decision press conference from Fed Chairman Jerome Powell, during which he said the language change didn't signal a change in the Fed's path for rate hikes.
The S&P 500 was up as much as 0.5% on Wednesday, but fell sharply in the final minutes of the session to finish with a loss of 0.3%. The tech-heavy Nasdaq Composite ended lower by 0.2%, the blue-chip Dow Jones Industrial Average finished lower by 0.4%, and the small-cap Russell 2000 lost 1.0%.
As for rate-hike projections, the Fed still appears to be on track to raise rates another 25 basis points in December, with the CME FedWatch Tool putting the chances at 79.2%. Beyond 2018, the Fed's dot plot showed expectations for three rate hikes in 2019 (unchanged from June) and one in 2020 (also unchanged from June).
U.S. Treasury yields fell following the Fed's policy announcement, although the 2-yr yield managed to close unchanged at 2.83%. The yield on the benchmark 10-yr Treasury note dropped four basis points to 3.06%. In currencies, the U.S. Dollar Index finished +0.2% at 93.90, but was volatile after the release.
The drop in Treasury yields weighed on the rate-sensitive financial sector, which finished at the bottom of the sector standings with a loss of 1.3%. The energy sector (-1.0%) was another notable laggard, dropping in tandem with the price of crude oil; WTI crude futures finished -1.0% at $71.58/bbl.
On the upside, the communication services, consumer discretionary, and health care sectors had relatively strong outings, adding between 0.2% and 0.4%.
On the corporate front, Nike (NKE 83.70, -1.09) lost 1.3% despite reporting above-consensus earnings; IBM (IBM 151.61, +2.70) climbed 1.8% after getting upgraded to 'Buy' from 'Neutral' at UBS; Papa John's (PZZA 50.14, +3.93) spiked 8.5% after reports that its recently ousted founder and CEO is reaching out to private equity firms to buy the company; and SurveyMonkey (SVMK 17.24, +5.24) closed its first day of trading 43.7% above its IPO price of $12.00/share.
In politics, the details of a U.S.-Mexico trade deal will reportedly be released on Friday. That deal is expected to allow Canada to join at a later date.
Reviewing Wednesday's economic data, which included August New Home Sales and the weekly MBA Mortgage Applications Index:
New Home Sales in August hit an annualized rate of 629,000, which is below the Briefing.com consensus of 630,000. The July reading was revised to 608,000 (from 627,000).
The key takeaway from the report is that it reflects the affordability constraints that are increasing on the back of high prices and rising mortgage rates. To wit, the median sales price was up 1.9% year-over-year to $320,200 and the supply of new homes for sale stood at a 6.1-months' supply at the August sales pace versus 6.0 months a year ago.
The weekly MBA Mortgage Applications Index rose 2.9% to follow last week's increase of 1.6%.
Looking ahead, investors will receive a big batch of economic data on Thursday, including the advanced readings for August International Trade in Goods, Retail Inventories, and Wholesale Inventories, Durable Goods Orders for August, the third estimate for Q2 GDP, weekly Initial Claims, and August Pending Home Sales.
Nasdaq Composite +15.8% YTD
Russell 2000 +10.2% YTD
S&P 500 +8.7% YTD
Dow Jones Industrial Average +6.7% YTD
Mixed Outing Ahead of Wednesday's Fed Decision
25-Sep-18 16:25 ET
Dow -69.84 at 26492.21, Nasdaq +14.22 at 8007.46, S&P -3.81 at 2915.56
https://www.briefing.com/investor/markets/stock-market-update/2018/9/25/mixed-outing-ahead-of-wednesdays-fed-decision.htm
[BRIEFING.COM] Stocks had a mixed outing on Tuesday, with the major averages settling little changed. The S&P 500 lost 0.1%, the Nasdaq ticked up 0.2%, and the Dow slid 0.3%. The flat performance happened as the Federal Reserve kicked off a two-day policy meeting in D.C., and as President Trump appeared before the UN General Assembly in New York.
The utilities (-1.2%), consumer staples (-0.7%), and materials (-0.5%) sectors led to the downside, while communication services (+0.1%), consumer discretionary (+0.6%), and energy (+0.6%) led to the upside. The energy space is now +2.1% for the week, a performance that's been underpinned by a jump in the price of crude oil -- although crude did pull back amid President Trump's UN speech.
Addressing world leaders, President Trump criticized OPEC on Tuesday, saying the oil cartel is "ripping off the rest of the world" by colluding to limit supply and prop up prices. WTI crude futures were up as much as 0.9%, but fell to their flat line following the president's comment. WTI crude closed +0.2% at $72.28/bbl.
President Trump also criticized Iran, which is currently the target of U.S. economic sanctions, calling its government a "corrupt dictatorship" and saying its leaders "sow chaos, death, and destruction." The president also touched on North Korea, ISIS, and Syria, and reiterated his administration's hard stance on fair trade.
Meanwhile, in Washington, Fed officials began their September meeting, which is all but certain to end on Wednesday afternoon with a rate hike of 25 basis points. The Fed-sensitive yield on the 2-yr Treasury note rose three basis points to 2.83% on Tuesday, while the benchmark 10-yr yield climbed two basis points to 3.10%.
In corporate news, semiconductor giant Intel (INTC 45.91, -1.00) lost 2.1% after being downgraded to 'Underperform' from 'Market Perform' at Raymond James. Chipmakers underperformed as a whole, with the Philadelphia Semiconductor Index dropping 1.7%. Separately, Century Link (CTL 21.05, -1.85) lost 8.1% following the resignation of its CFO, Sunit Patel.
Reviewing Tuesday's economic data, which included the Consumer Confidence Index for September, the FHFA Housing Price Index for July, and the S&P Case-Shiller Home Price Index for July:
The consumer confidence reading for September increased to 138.4 (Briefing.com consensus 131.0) from the prior month's revised reading of 134.7 (from 133.4).
The key takeaway from the report is that the high level of consumer confidence, which was fueled by an uptick in expectations, creates a good backdrop for healthy consumer spending activity that is the driver of GDP growth.
The FHFA Housing Price Index rose 0.2% in July (Briefing.com consensus +0.2%), and the June increase was revised to 0.3% from 0.2%.
The Case-Shiller 20-City Index increased 5.9% in July (Briefing.com consensus +6.2%), and the June increase was revised to 6.4% from 6.3%.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and August New Home Sales on Wednesday morning. As mentioned above, the Fed's latest policy directive will be released in the afternoon, with the CME FedWatch Tool placing the chances of a rate hike at 100%.
Nasdaq Composite +16.0% YTD
Russell 2000 +11.3% YTD
S&P 500 +9.1% YTD
Dow Jones Industrial Average +7.2% YTD
InvestmentHouse - DJ30 Finally Purchased a New High (Weekend Newsletter)
https://www.investmenthouse.com/frblog.php
- DJ30 pads its new high. What next now that the last dog caught the
car?
- NASDAQ and growth continue their tests of support, looking for the
bids to return.
- More of the same rotation pattern or does it change this time?
- Set up for the same moves but there are some issues to face.
- New leaders trying to emerge and give upside support as NASDAQ and
big names face the lick log.
The theme for the week remained through Friday, that is the NYSE large caps
moving higher as money moved their way, the NASDAQ, small caps and midcaps
consolidating the past three weeks the August move to a new high. SOX
remains in its triangle, showing promise of a breakout to come, but not
still not making the move.
SP500 -1.08, -0.04%
NASDAQ -41.27, -0.51%
DJ30 86.52, 0.32%
SP400 -0.19%
RUTX -0.46%
SOX -0.33%
VOLUME: +235%, NASDAQ +57%. Explosion in volume on the SP500 and NASDAQ on
the S&P rebalance.
ADVANCE/DECLINE: NYSE flat. NASDAQ -1.2:1.
Indeed, DJ30 finally purchased a new high, moving past the January peak, the
last to join the indices (excluding the specialty SOX) at new highs since
the early year peak. That of course raises the question that now the last
dog has caught the car, what do they do next? Rotate back to the techs?
Certainly they are set up after 3 weeks of testing, the small caps are
pretty much in the same position.
In recent history this same rotation two-step has played out with moves
higher. The 'industrial side' rallies then money shifts back to the more
tech-ish/growth side and the roles are swapped, the rallies in both sides
maintained. Virtuous rotation as opposed to vicious rotation.
Thus the indices all stay in their uptrends, testing then rallying in a
sinusoid wave.
Ah but there are issues or potential threats.
First, though the sinusoidal rotation has been the pattern, NASDAQ relative
strength is weakening against the large cap NYSE indices over the past three
months. SP500 relative strength rose in late July as NASDAQ sold, faded to
midmonth August before rallying again. The past 3 weeks it has again
rallied back, this time near the late July peak as of Friday. It is at the
lick log, i.e. if it continues it will break trend of falling against
NASDAQ. If so, NASDAQ could continue to weaken against it, and the virtuous
rotation cycle may end, leaving NASDAQ in the cold.
Second, the rampant pessimism for this rally. Each day you hear a new
billionaire, brokerage, or major financial group speak of their concerns
regarding the move's longevity. This past week Mr. Schiller of the
Case/Schiller housing index said the market would make one more move higher
then roll over. Now I am not certain of Mr. Schiller's market acumen, but
he follows a list of brokerages (e.g. MS, GS) and billionaires (e.g.
Gundlach) calling a market top.
As noted before, sentiment is an inverse indicator, suggesting opposite
moves in the market than sentiment. Thus, if there was ebullience at new
highs -- and there was some on Friday on the financial stations who view the
Dow as THE market -- but at the same time the caveats abounded. 'A new high
yes, but . . .'
On the other hand, if all the big money feels the same way then it can lead
to a self-fulfilling prophecy. Certainly how this current test by the
growth sectors will tell a good part of that tale.
Third, this weekend it is learned the President is drafting an executive
order instructing law enforcement and antitrust agencies to begin investing
the business practices of 'social media companies.' This on top of the EU
threatening FB and others with regulation. One would assume that the EO
targets include FB, Twitter, perhaps GOOG. TWTR this weekend suspended
conservative actor James Wood's account for posting a satirical video that
TWTR claims could 'impact an election.' Wow, ANY comment about politics
could sway an election. Is that now the new-Nazi standard: political speech
outlawed? How Stalinist. Old Joe is smiling from his grave -- he finally
won. And now an executive order to make it 'fair?' During this episode I
keep wondering why not a conservative Twitter or FB? Patent issues I am
sure, but would it not be good for the companies to see this and do it
themselves? It is not a perfect solution, but it beats having the
government down your back. Or, here is a novel solution, just let people
speak freely with just pornography, graphic violence, and profanity being
the automatic filters? In my book, more speech is always better than less
speech because if we truly believe in the power of ideas, just ideas will
win out over unjust.
In any event, remember when the Clinton administration went after MSFT as a
monopoly and the EU followed suit? That threat of regulation helped peak
the stock and for a time the market.
Fourth, is trade and beyond trade. Thus far the market has managed to
rebound and indeed move to new highs in the face of the trade war/skirmish
with China. China has cancelled the planned resumption of trade talks with
the US, angered by sanctions against China for its buying Russian arms.
China warned of consequences and has summoned the US ambassador over the
sanctions. The trade 'skirmish' as Jamie Dimon called it this week is
branching out into other areas. You know the old saying, trade wars lead to
shooting wars . . . Looking to the north, at least they are saying the US
and Canada are very close to a trade deal.
Fifth, the FOMC is still out there tightening and the next round comes
Wednesday when it is expected to hike another 25BP, the purported
penultimate hike of the campaign. Think so? Think not. The Fed fears a
rising economy, and even if it shows signs of slowing at the next hike or
beyond, the Fed will overlook them and continue tightening after a slowdown
starts. It always does. It is a supertanker that cannot change its course
without a lot of planning and a lot of time. The problem is it sets itself
up to keep hiking because the way the economy works. It slows but shows
little sign of doing so, then all at once it hits the skids. Moreover, the
Fed is already jawboning, laying the groundwork for further hikes due to an
increasing 'divergence' between the US and the rest of the world. Hey,
divergences are good if they are in your favor. We struggled in the early
2000's and from through 2016 when we tried to not excel and lead the rest of
the world. In any event, the Fed is there, the Fed doesn't know when to
cease and desist.
All of these present issues to the market move and the market has to prove
it can overcome them. As noted, NASDAQ and particularly the NASDAQ large
cap names are at the point they need to bounce to keep the same pattern
working.
THE MARKET
CHARTS
DJ30 put in a pair of new highs to end the week, the last of the big indices
to take out the January all-time high. Now the dog has caught the car while
NASDAQ big names are at important support. Will the pattern of rotation
continue or will a break occur where the NYSE large caps dominate while
NASDAQ large caps and growth base?
DJ30: Solid 4-session move to 2 new highs to end the week. Friday DJ30
gapped to a doji. Good 4-session move, about the most it has put in on its
prior runs. It could come back to test after the new high, but overall in a
trend upside, sitting on a good breakout move to a new high.
NASDAQ: Fell back to the 50 day MA Monday. Started up off that level into
the Thursday close, showing very good price/volume action on that move, i.e.
strong volume on the up sessions, lower volume on the downside day. Friday
a gap higher looked promising, but it was sold as big names sold back.
Volume spiked, but it was S&P rebalance Friday so you have to toss volume
out the window for the day.
SP500: Gapped to a higher new high then reversed for a modest loss to end a
week that saw a hold of the 20 day EMA and rebound. SP500 gapped to a new
high Thursday, looking to put some mileage on the prior peak. It did that,
but still problematic as SP500 is over the upper trendline and trying to
extend the move. Important that it does.
SOX: Very important group for the market's overall success. SOX fought off
selling in mid-August and again for a day in mid-September as it gapped to
the 200 day SMA and lower pattern trendline then gapped right back up to the
50 day MA's. Started higher Thursday with a gap, paused Friday, but looking
better in its triangle as some more stocks, e.g. AVGO, are joining the
upside. Still in the middle of the triangle pattern though cheating into
the top half. It is at the point to make a break.
RUTX: On the week, not a bad test of a key area, a bounce, now it has to
show it can do more. Dropped to the 50% Fibonacci retracement and 50 day MA
Monday. Then a nice bounce Thursday. Friday a try higher that fizzled into
a loss giving back half or so of the Thursday move.
SP400: Bumping the highs but nothing more than that as SP400 midcaps remain
in a 3 week flat consolidation over the 20 day EMA.
LEADERSHIP
Machinery/Manufacturing: CAT surged on the week, flat Friday. CMI broke
resistance in a 2 month lateral move. DE broke the 200 day and is testing;
interesting setup. UTX a solid upside week. ETN, EMR continuing upside
trends. BA posted a nice second week of the rebound off the 200 day SMA
test.
Financial: Solid week upside after 3 weeks lower. Good new breaks higher
by the banks Wednesday and Thursday, rested Friday (JPM, BAC, C). V and MA
moved higher again end of the week. GS surged through the 50 day MA,
testing Friday.
Energy: Coming to life with some drillers breaking out, e.g. RIG, DO.
Others as well, e.g. XOM, MRO, NE. Others are following, setting up
patterns.
Drugs: PFE still trending up the 10 day EMA as is BMY, MRK. Smaller issues
moving, e.g. VCEL, INFI. JNJ moving very well, tripping the target.
FAANG: NFLX still looks quite good in its 3-month base. FB, GOOG bounced
Wednesday and Thursday but then faded rather hard Friday. Worries re
regulation? AAPL put in a decent week, moving laterally along the 20 day
EMA. AMZN tested the 50 day MA starting Monday with that drop, then slid
laterally all week. Friday it dumped back to near the 50 day, but perhaps
more to do with the rebalance.
Chips: NVDA looked promising early week then slid to the 50 day MA to end
the week on an MS comment about its new chips. At the lick log. AVGO broke
over the 200 da on the week. AMD still strong wth a weeklong lateral test
over the 10 day EMA. TXN rebounded on the week to the 50 day EMA, up four
straight sessions. INTC bounced on the week to the 20 day EMA. Okay, but
yawn. XLNX trying a break to a new rally high. Improved but still working
on it.
Software: Some ups and downs in the group. MSFT was an up, breaking higher
after a lateral consolidation. Not huge but an up. DATA setting up a nice
flag to continue higher. FFIV still strong though slowly moving up the 10
day EMA. ADBE tested on the week to the 50 day MA. Interesting. CRM
tested into Thursday, started to bounce.
Telecom: Some interesting setups. HLIT, SWIR.
Transports: Big week for AAL as it took off, rallied, gaining more altitude
Friday. DAL broke higher Friday. Airlines good. Rails okay, but NSC is
good, CSX, KSU had a bit of issues though not much.
MISC: TLRY pot stock struggled but after it gave us a huge gain. CGC, CRON
still pretty decent; got some gain on CRON as well. SQ trying to hold the
20 day EMA. WBA a solid week.
MARKET STATS
DJ30
Stats: +86.52 points (+0.32%) to close at 26743.50
Nasdaq
Stats: -41.27 points (-0.51%) to close at 7986.96
Volume: 3.598B (+57.1%)
Up Volume: 1.275B (-455.159M)
Down Volume: 2.235B (+1.722B)
A/D and Hi/Lo: Decliners led 1.22 to 1
Previous Session: Advancers led 2.69 to 1
New Highs: 103 (+13)
New Lows: 48 (-3)
S&P
Stats: -1.08 points (-0.04%) to close at 2929.67 NYSE Volume: 2.647B
(+234.60%)
Up Volume: 1.463B (-1.097B)
Down Volume: 1.149B (+426.671M)
A/D and Hi/Lo: Advancers led 1.02 to 1
Previous Session: Advancers led 2.06 to 1
New Highs: 103 (+13)
New Lows: 87 (-7)
SENTIMENT
VIX: 11.68; -0.12
VXN: 16.84; +0.64
VXO: 10.89; +0.22
Put/Call Ratio (CBOE): 0.98; +0.09
Bulls and Bears:
Bulls continue bumping at 60.0, a historically high level that leads to
declines. Bears remain elevated, but not moving higher right now.
Bulls: 59.0 versus 57.7
Bears: 18.1 versus 18.3
Theory: When everyone is bullish and has put all their capital to work,
where does the ammunition to drive the market come from? There is always
new money to start a new year. After that is used will more money be
coming? That is the question.
Bulls: 59.0 versus 57.7
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 versus 64.7 versus 66.7 versus 64.4 versus 61.9 versus 64.1
versus 64.2 versus 62.3 versus 61.5 versus 63.5 versus 64.4 versus 63.5
versus 62.3 versus 60.6 versus 60.4 versus 57.5 versus 54.3 versus 50.5
versus 47.1
Bears: 18.1 versus 18.3
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: 3.066% versus 3.068%. Bonds sold on the week, bouncing modestly late
but in a steady downtrend below the 10 day EMA.
Historical: the last sub-2% rate was in November 2016 (1.867%). 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% versus 2.941% versus 2.879% versus 2.904%
versus 2.897% versus 2.86% versus 2.857% versus 2.882% versus 2.882% versus
2.846% versus 2.813% versus 2.828% versus 2.821% versus 2.819% versus 2.819%
versus 2.864% versus 2.871% versus 2.879% versus 2.882% versus 2.873% versus
2.928% versus 2.963% versus 2.977% versus 2.977% versus 2.945% versus 2.95%
versus 2.986% versus 3.005% versus 2.962% versus 2.975% versus 2.958% versus
2.982% versus 2.965%
EUR/USD: 1.17486 versus 1.17772. Broke higher Thursday, tested a bit
Friday.
Historical: 1.17772 vs 1.16833 versus 1.16692 versus 1.16858 versus 1.16226
versus 1.16900 versus 1.15863 versus 1.16016 versus 1.15946 versus 1.15534
versus 1.16243 versus 1.16341 versus 1.15832 versus 1.16029 versus 1.1664
versus 1.17035 versus 1.1691 versus 1.16802 versus 1.16216 versus 1.15390
versus 1.15709 versus 1.158 versus 1.1487 versus 1.1437 versus 1.13765
versus 1.13731 versus 1.13479 versus 1.14052 versus 1.1413 versus 1.1526
versus 1.16186 versus 1.16001 versus 1.15572 versus 1.15683 versus 1.15864
versus 1.1662 versus 1.1689 versus 1.17074 versus 1.16558 versus 1.17324
versus 1.17385 versus 1.16846 versus 1.16989 versus 1.17214 versus 1.1651
versus 1.16514 versus 1.16603 versus 1.1709 versus 1.1685 versus 1.16608
versus 1.1672 versus 1.17288 versus 1.17578 versus 1.17439 versus 1.1689
USD/JPY: 112.575 versus 112.448
Historical: Last below 109 four months back. 112.448 versus 112.247 versus
112.369 versus 111.849 versus 112.06 versus 111.81 versus 111.491 versus
111.608 versus 111.192 versus 111.064 versus 110.680 versus 111.448 versus
111.468 versus 111.082 versus 110.962 versus 111.734 versus 111.19 versus
111.081 versus 111.249 versus 111.351 versus 110.766 versus 109.92 versus
110.49 versus 110.935 versus 110.818 versus 111.229 versus 110.737 versus
110.840 versus 111.07 versus 111.361 versus 111.344 versus 111.254 versus
111.621 versus 111.628 versus 111.744 versus 110.990 versus 110.995 versus
110.791 versus 110.871 versus 111.235 versus 111.084 versus 111.451 versus
112.732 versus 112.783 versus 112.896 versus 112.337 versus 112.631 versus
112.093 versus 110.911
Oil: 70.78, +0.46. Trying to break past the recent 4 week highs.
Gold: 1201.30, -10.00. Rallied to the 50 day SMA to end the week then fell
sharply Friday.
MONDAY
FOMC week with a rate hike Wednesday and no doubt more trade issues. Some
possibly positive re Canada, but China is getting even more persnickety with
each US move to ratchet up the pressure. Then there is the administration's
animosity toward social media and talk of an executive order. Don't forget
AMZN has in the past drawn the President's ire.
That is all well and good, but all that information is distilled down into
the stock and index patterns. Again, new highs on DJ30 and SP500 as money
moved their way after 2.5 week consolidation, and now NASDAQ and the other
growth indices have put in consolidations to support. Does the same
rotation pattern continue? Perhaps they all move up together for a change?
Or does one side roll over to the benefit of others?
New leadership is trying to show up in support, e.g. energy, some telecom,
financials are trying their hand. Of course it would help the entire market
if the NASDAQ large caps started higher as they trade on several exchanges.
Definitely time for them to rebound and put in their next upside leg after 3
weeks testing.
Thus, we look at more good setups but there are more sectors to choose from
as the week progresses as some new patterns are setting up. We will see if
they continue to do so and make the breaks higher.
Have a great weekend!
Mixed Ending to Largely Positive Week
21-Sep-18 16:30 ET
Dow +86.52 at 26743.50, Nasdaq -41.28 at 7986.95, S&P -1.08 at 2929.67
https://www.briefing.com/investor/markets/stock-market-update/2018/9/21/mixed-ending-to-largely-positive-week.htm
[BRIEFING.COM] Wall Street had a mixed outing on Friday, with the underperformance of financial and technology shares balancing gains most elsewhere. The Dow Jones Industrial Average climbed 0.3%, closing at a new all-time high for the second day in a row. The S&P 500 finished slightly below its flat line, and the tech-heavy Nasdaq lost 0.5%.
For the week, the S&P 500 and the Dow added 0.9% and 2.3%, respectively, while the Nasdaq lost 0.3%.
The top-weighted information technology sector lost 0.3% on Friday, capping an unimpressive week overall. Within the group, Micron (MU 44.74, -1.32) was among the worst performers, falling 2.9% after its above-consensus earnings report was overshadowed by disappointing guidance for the current quarter -- due in part to tariffs.
Meanwhile, the influential financial sector ended a positive week on a disappointing note. The group lost 0.4% on Friday, trimming its weekly gain to 2.3%, as Treasuries ticked higher, pushing yields slightly lower. The benchmark 10-yr yield, for instance, slipped one basis point to 3.07%, but remained near a four-month high.
On a positive note, the lightly-weighted telecom services group finished atop the sector standings with a gain of 1.0%. Within the group, AT&T (T 33.78, +0.34) advanced 1.0% after being upgraded to 'Buy' from 'Neutral' at UBS. However, shares gave back some gains in the late afternoon following reports that President Trump is pressing the Department of Justice to breakup the wireless giant.
There was some volatility during the final stretch of Friday's session due to a major sector rebalancing, which will result in a new 'Communication Services' sector.
Several widely-held technology, telecom, and media stocks will be reclassified into this group, including Facebook (FB 162.93, -3.09, -1.9%), Alphabet (GOOG 1166.09, -20.78, -1.8%), Verizon (VZ 54.42, +0.47, +0.9%), Netflix (NFLX 361.19, -4.17, -1.1%), and Walt Disney (DIS 110.40, -1.22, -1.1%).
Also adding to the volatility, Friday was a quadruple witching day -- when futures and options on both indices and individual stocks expire.
In the crude oil market, WTI crude futures finished up 0.8% at $70.77/bbl, but were volatile after Reuters reported that OPEC and non-OPEC producers are discussing the possibility of raising output by 500,000 barrels a day to counter falling supply from Iran due to U.S. sanctions. OPEC and non-OPEC nations are scheduled to meet in Algeria on Sunday.
Investors did not receive any notable economic data on Friday, and Monday's economic calendar is also blank.
Nasdaq Composite +15.7% YTD
Russell 2000 +11.5% YTD
S&P 500 +9.6% YTD
Dow Jones Industrial Average +8.2% YTD
Week In Review: Dow Shrugs Off Tariffs, Returns to Record Territory
Wall Street rallied this week with investors shrugging off another tranche of U.S. tariffs on Chinese goods. The S&P 500 and the Dow touched new records -- the first time that's happened for the Dow since January 26 -- and finished the week with respective gains of 0.9% and 2.3%. The Nasdaq lagged though, slipping 0.3%.
President Trump announced on Monday evening that the U.S. will be slapping tariffs on $200 billion worth of Chinese goods starting on September 24. The tariff rate will start at 10%, but will increase to 25% on January 1. The president also said he will impose additional tariffs on $267 billion worth of Chinese goods if Beijing retaliates -- which it vowed to do with 5-10% tariffs on $60 billion worth of U.S. goods.
Stocks unexpectedly took off on Tuesday following the tariff announcement, with some analysts pointing to the fact that the initial 10% tariff rate by the U.S. was not as harsh as expected -- thereby reflecting a willingness to negotiate. Others said the rally reflected the market's belief that the U.S.-China trade dispute will eventually die down. Short-covering activity likely helped as well.
The heavily-weighted financial sector was among the top-performing groups this week with a gain of 2.3%, benefiting from a steepening of the yield curve. The yield on the benchmark 10-yr Treasury note climbed seven basis points to end Friday at 3.07%, while the Fed-sensitive 2-yr yield jumped two basis points to 2.81%.
Conversely, the top-weighted information technology sector (-0.1%) underperformed this week, getting surpassed by consumer discretionary (+0.4%) for the top spot in the 2018 sector standings. The two groups hold year-to-date gains of 18.5% and 18.7%, respectively. For comparison, the S&P 500 is up 9.6%.
In total, eight of the eleven S&P sectors finished in the green, with cyclical sectors showing relative strength. A new sector, communication services, will be born after Friday's close, and it will involve reclassifying several widely-held technology, telecom, and media stocks into the new sector -- including Facebook (FB), Alphabet (GOOG), Verizon (VZ), Netflix (NFLX), and Walt Disney (DIS).
In individual stocks, cannabis names were in focus this week, with Tilray (TLRY) going on a wild ride after its CEO suggested that his business would be a "smart hedge" for major pharmaceutical companies. TLRY shares traded as high as $299.46/share -- 175% above last Friday's close -- before ending the week at $123.00/share (+13%).
On the oil front, WTI crude climbed 2.6% this week to $70.77/bbl even though President Trump criticized OPEC on Thursday morning, saying the "OPEC monopoly must get [oil] prices down now!" Reuters then reported on Friday that OPEC and non-OPEC countries are discussing the possibility of raising output by 500,000 barrels a day to counter falling supply from Iran due to U.S. sanctions.
Looking ahead, the Federal Reserve will release its latest policy directive on Wednesday. The market is all but certain that the central bank will hike rates -- with the CME FedWatch Tool placing the chances at 100% -- so investors will be more focused on the Fed's rate forecast, especially for 2019.