From Briefing.com: 4:15 pm : The stock market ended Thursday relatively flat as some interest rate volatility and some caution ahead of the September employment report on Friday kept a lid on things. The Dow Jones Industrial Average (-0.1%) and the Nasdaq Composite (-0.2%) settled slightly behind the S&P 500 (+0.05%). Long-term interest rates continued their recent climb despite some dovish-sounding minutes from the European Central Bank's (ECB) September meeting and accommodative jawboning from ECB Vice President Vitor Constancio.
Mr. Constancio briefly rallied global bond markets when he denied reports from earlier in the week that suggested the central bank has held discussions about tapering its asset purchase program. That headline boost proved to be short-lived, however, as Treasury prices soon started to fade again, pushing yields back up.
The yield on the benchmark 10-yr note, which slipped back to 1.71% after the Constancio headline first hit, finished higher by four basis points at 1.74%.
The stock market took the afternoon boost in long-term rates in stride. While there weren't any big gains (or losses) from a sector standpoint, the real estate (+0.2%), consumer staples (+0.1%), utilities (unch), and telecom services (-0.1%) sectors, otherwise known as "yield plays," held up reasonably well and finished off their worst levels of the day. Those four groups have lost between 1.6% and 3.7% this week, with the 10-yr note yield climbing 14 basis points since last Friday's close.
Stock market participants, by and large, showed limited conviction ahead of Friday's employment report.
The Employment Situation Report for September is in focus as participants try to assess the fed funds rate hike picture for the remainder of the year. The Briefing.com consensus expects the jobs report to show that 176,000 positions were added to nonfarm payrolls and that average hourly earnings increased 0.2%. The report is slated to cross the wires on Friday at 8:30 a.m. ET, which is when the media should also be busy reporting on Hurricane Matthew, a Category 4 storm that is expected to hit Florida's east coast Thursday night.
Six sectors ended in the green today with materials (+0.8%) and technology (+0.2%) leading the advance. Today's trade also featured an uptick in crude oil ($50.44/bbl; +$0.68; +1.4%) and weakness in the heavily-weighted health care (-0.4%) space.
Biotechnology underperformed inside the health care sector (-0.4%) as the iShares Nasdaq Biotechnology ETF (IBB 284.16, -6.64) fell 2.3%. Alnylam Pharmaceuticals (ALNY 36.21, -34.09) pressured the group after it announced that it was discontinuing Revusiran developments. The stock plunged 48.5% on the news. Mylan (MYL 36.84, -1.19) underperformed amid continued scrutiny of its EpiPen. Reports indicated that the company misclassified the device under the Medicaid Drug Rebate program.
The financial sector (+0.1%) outperformed as a steepening in the yield curve was seen as improving the earnings potential for the group. The SPDR S&P Bank ETF (KBE 34.20, +0.03) rose 0.1%, extending its weekly gain to 2.4%. MetLife (MET 47.15, +1.16) jumped 2.5% after confirming that Brighthouse Financial filed forms with the SEC to distribute common stock to MetLife shareholders. This is a crucial step in MetLife's plan to separate into two publicly traded companies.
In the technology space (+0.2%), top-weighed Apple (AAPL 113.89, +0.84) gained 0.7% after Canaccord Genuity issued a bullish note on iPhone sales. On the flipside, Twitter (TWTR 19.87, -5.00) tumbled 20.2% after reports signaled that Apple (AAPL 113.89, +0.84), Alphabet (GOOG 776.86, +0.39), and Disney (DIS 92.83, +0.38) are unlikely to pursue bids for Twitter.
Today's participation was below the recent average as more than 796 million shares changed hands at the NYSE floor.
Today's economic data was limited to Challenger Job Cuts for September and weekly initial claims:
September Challenger Job Cuts reported in at 44,300, which compares to the prior month's reading of 32,200.
For the week ending October 1, initial claims decreased by 5,000 to 249,000 (Briefing.com consensus 258,000).
Continuing claims for the week ending September 24 fell by 6,000 to 2.058 million.
For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.
Tomorrow's economic data will include the 8:30 a.m. ET release of the Employment Situation Report for September. The Briefing.com consensus expects the report to show an increase of 176,000 in nonfarm payrolls. Meanwhile, August Wholesale Inventories (Briefing.com consensus -0.1%) and August Consumer Credit (Briefing.com consensus$18.0 billion) will cross the wires at 10:00 a.m ET and 3:00 p.m. ET, respectively. DJ30 -12.53 NASDAQ -9.17 SP500 +1.04 NASDAQ Adv/Vol/Dec 1110/1.520 bln/1712 NYSE Adv/Vol/Dec 1297/795.5 mln/1632
3:30 pm :
The dollar index was +0.6% around the 96.71 level, weighed on precious metals
Commodities, as measured by the Bloomberg Commodity Index, were -0.2% around the 85.51 level
Crude oil extended yesterday's post-EIA rally and ended above the $50.00/barrel resistance zone ahead of tomorrow's rig count data
November crude oil futures rose $0.68 (+1.4%) to $50.44/barrel
Baker Hughes rig count data will be released tomorrow at 10:30 am ET
Crude oil futures extended their rally after headlines crossed about oil ministers from OPEC and non-OPEC producers gathering in Istanbul to discuss details of last week's OPEC production cut to 32.5 mln barrels/day, compared to July production levels around 33.1 mln barrels/day.
The next official OPEC meeting will take place in Vienna, Austria on November 30
Natural gas ended nearly unchanged after an initial drop below the $3.00/MMBtu support level after EIA data showed a larger-than-expected build compared to Consensus
November Natural gas closed $0.01 higher (+0.3%) at $3.05/MMBtu
EIA highlights:
Working gas in storage was 3,680 Bcf as of Friday, September 30, 2016, according to EIA estimates.
Natural gas inventory showed a build of +80 bcf vs expectations for inventory to be a build of approximately +70 bcf.
Stocks were 74 Bcf higher than last year at this time and 205 Bcf above the five-year average of 3,475 Bcf.
At 3,680 Bcf, total working gas is above the five-year historical range.
In precious metals, gold dropped to multi-month lows, outpaced by the losses in silver, the gold:silver ratio increased for the third consecutive session
December gold ended today's session down $15.10 (-1.2%) to $1253.10/oz
As noted earlier, there aren't any direct headlines moving precious metals or the underlying Gold Miners (GDX, GDXJ). Continued strength in the US Dollar and Treasury Yields plays a role, which fueled this week's breakdown in gold prices to 3-month lows.
The 200-day simple moving average is challenged, along with the bullish gap zone from mid-June, bringing some buyers off the sidelines to play a bounce. The headlines that ECB Vice President Constancio has refuted the reports from earlier in the week that the ECB is looking at tapering its asset purchases also helped. Whether they can maintain this strength off morning lows for a bigger retracement remains to be seen.
The gold:silver ratio was ~72.3, compared to yesterday's pit trading close ratio of ~71.7
December silver closed today's session $0.35 lower (-2.0%) at $17.34/oz
Equity indices began the day under modest selling pressure as rising global interest rates continued to weigh. The latest round of selling pressure came despite some dovish-sounding minutes from the September 8 ECB meeting. The minutes did not mention a potential tapering of the bank's asset purchase program. However, participants evidently remained concerned about the notion that ECB officials might have begun discussing potential tapering measures after the meeting.
The stock market reversed course in a precipitous manner, though, shortly before midday following reports that ECB Vice President Constncio denied the earlier reports suggesting ECB officials have held discussions.
Market data today included the September Challenger Job Cuts report, which came in at 44,300 compared to the prior month's reading of 32,200. Additionally, for the week ending October 1, initial claims decreased by 5,000 to 249,000.
When Thursday came to a close, the stock market had traded at a stable, albeit split clip for the majority of the session. Thus was the design of the close, as only the S&P 500 managed gains, up 1.04 points (+0.05%) to 2160.77. The Nasdaq Composite was pressured the most, shedding 9.17 points (-0.17%) to 5306.85, and the Dow Jones Industrial Average lost 12.53 points (-0.07%) to 18268.50. Top weighted S&P 500 components XOM +0.05%, FB +0.21%, JPM +0.27%, PG +0.42%, GOOGL +0.23% and WFC +0.42% helped the index escape the clutches of negative territory.
Technology (XLK 47.75, +0.11 +0.23%) finished the Thursday affair modestly in the green, but was bested only by Materials among S&P sectors. Component Lam Research (LRCX 100.19 +4.02 +4.18%) was the best performing component today on the back of news out last night after the close which confirmed that LRCX and KLA-Tencor (KLAC 71.79, +0.58 +0.81%) had terminated their merger agreement. Other sectors as measured by the S&P ended the session XLB +0.82%, XLRE +0.19%, XLP +0.19%, XLE +0.14%, XLY +0.07%, XLFS +0.06%, XLI +0.05%, XLF +0.05%, XLU -0.04%, IYZ -0.35%, XLV -0.44% with Healthcare, Telecoms and Utilities lagging.
In the S&P 500 Information Technology (802.67, +1.80 +0.22%) sector, the Thursday session ended on a plateaued positive tick. Component Salesforce.com (CRM 71.26, +2.84 +4.15%) was another hot name today as the rumor mill was again warm with speculation that CRM was the lone remaining bidder for Twitter (TWTR 19.87, -5.00 -20.10%) after Disney (DIS 92.83, +0.38 +0.41%) and Alphabet's (GOOG 776.86, +0.39 +0.05%) Google reportedly ducked out of the running. Other names in the space which performed well today included SWKS +2.05%, FIS +1.83%, QRVO +1.54%, FISV +1.12%, QCOM +1.05%, APH +0.96%, AAPL +0.74%.
Other notable news items among sector components:
KLA-Tencor (KLAC) and Lam Research (LRCX) have agreed to terminate their proposed merger agreement. The parties decided to it was not in the best interests of their respective stakeholders to continue pursuing the merger after the U.S. DoJ advised KLAC and LRCX that it would not continue with a consent decree that the parties had been negotiating. No termination fees will be payable by either company in connection with the termination of the Merger Agreement.
Twitter (TWTR) had a volatile session following a Re/Code report that Alphabet's (GOOG) Google will not move forward with an offer for the company and that Apple (AAPL 113.89, +0.84 +0.74%) is unlikely to be a possible bidder. Re/Code further reported that Disney (DIS) has decided not to make a formal offer for TWTR as well.
Alliance Data's (ADS 214.05, -2.23 -1.03%) Epsilon signed a new multi-year agreement with Red Roof for email marketing services. Financial terms of the deal were not disclosed.
The Western Union Company (WU 20.40, +0.10 +0.49%) rolled out Western Union Money Transfer services across OXXO, Mexico's largest convenience store chain geographically.
Monotype (TYPE 21.33, +0.12 +0.57%) partnered with Alphabet's (GOOG) Google to create a typography project -- Google Noto. Google Noto now covers more than 800 languages and 100 writing scripts, which includes letters in multiple serif and sans serif styles across up to eight weights, as well as numbers, emoji, symbols and musical notations.
eBay (EBAY 32.14, -0.01 -0.03%) to acquire image recognition technology company Corrigon Ltd. Financial terms of the deal were not disclosed.
Cognizant (CTSH 51.21, +0.31 +0.61%) has been selected by Future Group as a strategic partner for Future Consumer.
Microsoft (MSFT 57.74, +0.10 +0.17%) and Powel AS announced a pilot project that will help create a more efficient, flexible and intelligent grid of the future.
Elsewhere in the tech space:
Semtech (SMTC 27.66, -0.08 -0.29%) confirmed an agreement with Comcast (CMCSA 65.41, -0.39 -0.59%) to deploy trial LoRaWAN network in the United States. The deal provides warrant for CMCSA to acquire up to $30 million of common stock. As such, updated its GAAP outlook for Q3 of fiscal year 2017 and now expects GAAP net sales to be in the range of $130-138 million compared to the prior range of $134-142 million. GAAP earnings per diluted share are now expected to be in the range of $0.43-0.47 compared to prior range of $0.49-0.53.
AT&T (T 39.11, -0.05 -0.13%) announced a new multi-year relationship with Amazon (AMZN 841.66, -2.70 -0.32%) Web Services to integrate cloud and networking capabilities. Financial details were not disclosed.
Samsung (SSNLF 1600.00, flat) agreed to acquire Viv Labs for an undisclosed amount.
Science Applications (SAIC 69.05, +0.42 +0.61%) was awarded a $575 million contract by the U.S. Army Corps.
ATRM Holdings (ATRM 1.85, +0.35 +23.33%) acquired certain assets of Edgebuilder Wall Panels and Glenbrook Lumber & Supply. Consideration for the acquisition includes $4 million in cash (including $3 million paid at closing and $1 million in deferred payments to be made in quarterly installments over the next year), and 100,000 shares of ATRM common stock.
Consolidated Comms Illinois (CNSL 24.82, +0.08 +0.32%) completed refinancing of secured term debt resulting in extension of maturities, significant interest savings and an increase to its revolving loan facility.
DTS (DTSI 42.43, +0.02 +0.05%) acquired Arctic Palm Technology for an undisclosed amount.
Gogo (GOGO 10.91, -0.36 -3.19%) shares were active today following an update from Verizon (VZ 50.26, -0.01 -0.02%) on its commercial connectivity trials. VZ has deemed its 4G LTE 700 MHz network safe for in-flight wireless connectivity.
According to Bloomberg, NXP Semi (NXPI 103.49, +0.99 +0.97%) and Qualcomm (QCOM 67.54, +0.70 +1.05%) could be less than 10% apart regarding value of an M&A deal.
Analyst actions:
KLAC was upgraded to Buy from Neutral at B. Riley & Co.,
BAH was upgraded to Outperform from Mkt Perform at Raymond James,
CBB was upgraded to Buy from Hold at Gabelli & Co,
JASO, YGE and TSL were upgraded to Buy from Sell at Axiom Capital,
SCTY was upgraded to Hold from Sell at Axiom Capital;
IMPV was downgraded to Neutral from Buy at DA Davidson;
TTD was initiated with a Buy at Cantor Fitzgerald,
TUBE was initiated with a Buy at B. Riley & Co.,
GIMO was initiated with a Mkt Perform at JMP Securities,
SQ was initiated with a Mkt Perform at Keefe Bruyette
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