Sector Investing

[ReturntoSender]

Roller Coaster Ride Ends on a Mixed Note
24-Jan-18 16:30 ET
Dow +41.31 at 26252.12, Nasdaq -45.23 at 7415.05, S&P -1.59 at 2837.54

https://www.briefing.com/investor/markets/stock-market-update/2018/1/24/roller-coaster-ride-ends-on-a-mixed-note.htm

[BRIEFING.COM] Wall Street went on a roller coaster ride on Wednesday as investors tried to extend the new year rally, but struggled to justify further gains.

Stocks got off to a good start with the Dow, the S&P 500, and the Nasdaq up between 0.4% and 0.7% shortly after the opening bell. However, the bears took control about an hour into the session and pushed the major averages into negative territory; at their worst marks the day, the Dow, the S&P 500, and the Nasdaq held respective losses of 0.4%, 0.5%, and 1.1%.

In the end, the Dow finished higher by 0.2%, closing at a new all-time high, while the S&P 500 and the tech-heavy Nasdaq lost 0.1% and 0.6%, respectively. Today's loss breaks a three-session winning streak for the S&P 500, but the index still remains solidly higher for the week (+1.0% WTD) and for the year (+6.1% YTD).

Heavily-weighted sectors like financials (+0.7%), health care (+0.3%), and consumer discretionary (+0.4%) did relatively well on Wednesday, but the underperformance of the top-weighted technology space (-0.9%) kept the S&P 500 in check.

Texas Instruments (TXN 109.70, -10.19) was the weakest tech component in the S&P 500, tumbling 8.5%, after its latest earnings report came in as expected, but didn't impress investors enough to justify the chipmaker's 25.0% gain over the last seven weeks. Apple (AAPL 174.22, -2.82) was also weak, losing 1.6%, after Bernstein analyst Toni Sacconaghi said iPhone sales for the current quarter may be disappointing.

In other corporate news, United Continental (UAL 69.05, -8.92) plunged 11.4% after announcing a plan to boost capacity growth 4-6% in 2018 and likely in 2019 and 2020 as well. The concern is, if demand starts to slow, the airline might have to slash its prices to fill the extra seats, which in turn could fuel a price war within the industry. The U.S. Global Jets ETF (JETS 33.00, -1.44) moved in tandem with United, losing 4.2%.

General Electric (GE 16.44, -0.45) dropped 2.7% after reporting below-consensus earnings and revenues for the fourth quarter. However, GE did reaffirm its profit guidance for 2018, prompting a sigh of relief from investors, who have suffered major losses as of late; GE shares dropped 13.3% last week and 44.8% over the course of 2017. Meanwhile, fellow industrial giant United Tech (UTX 135.68, -0.35) slipped 0.3% on Wednesday despite beating earnings and revenue estimates for Q4.

In the health care space, Abbott Labs (ABT 61.72, +2.49) had a positive showing, jumping 4.2% to a new all-time high, after reporting above-consensus earnings and revenues for the fourth quarter and issuing positive guidance for Q1.

The U.S. Dollar Index fell 0.9% to 89.05, hitting a fresh three-year low, after U.S. Treasury Secretary Steven Mnuchin said he welcomed a weakening of the greenback. However, Mr. Mnuchin later clarified that he wasn't "advocating" for a weaker dollar. The U.S. dollar lost 0.8% against the euro (1.2401), 1.5% against the British pound (1.4210), and 1.1% against the Japanese yen (109.13).

In the bond market, U.S. Treasuries fell on Wednesday, pushing yields higher across the curve. The yield on the benchmark 10-yr Treasury note climbed three basis points to 2.65%, while the 2-yr yield also tacked on three basis points, closing at 2.08%.

Elsewhere, the major stock indices in Europe ended on a lower note, closing at their worst marks of the day; Germany's DAX and the UK's FTSE dropped 1.1% apiece, while France's CAC declined 0.7%. The European Central Bank will meet on Thursday, but it's expected to leave rates unchanged. Investors will be interested in ECB President Mario Draghi's press conference, however, as he could attempt to talk down the strengthening euro.

In the Asia-Pacific region, equity indices had a mixed outing with Japan's Nikkei (-0.8%) showing relative weakness. China's Shanghai Composite was the top performer, adding 0.4%.

Reviewing Wednesday's batch of economic data, which included Existing Home Sales for December, the FHFA Housing Price Index for November, and the weekly MBA Mortgage Applications Index:

Existing home sales decreased 3.6% in December to an annualized rate of 5.57 million units (Briefing.com consensus 5.70 million). The November reading was revised to 5.78 million from 5.81 million.
The key takeaway from the report is that notable supply constraints remain, which will continue to act as a drag on overall sales due to the limited inventory and the high prices on available inventory that is crimping affordability, particularly for first-time buyers.
The FHFA Housing Price Index rose 0.4% in November (Briefing.com consensus +0.4%), while the October increase was revised to 0.6% from 0.5%.
The weekly MBA Mortgage Applications Index increased 4.5% to follow last week's 4.1% rise.

On Thursday, investors will receive several pieces of economic data, including weekly Initial Claims (Briefing.com consensus 240K), New Home Sales for December (Briefing.com consensus 679K), Advance International Trade in Goods for December (Briefing.com consensus -$68.5 billion), Advance Wholesale Inventories for December (Briefing.com consensus +0.3%), and Leading Indicators for December (Briefing.com consensus +0.5%). Leading Indicators will be released at 10:00 AM ET, while the rest will cross the wires at 8:30 AM ET.

Nasdaq Composite: +7.4% YTD
Dow Jones Industrial Average: +6.2% YTD
S&P 500: +6.1% YTD
Russell 2000: +4.2% YTD