Tuesday, 25 Nov 2014 - AMC

     

Market Summary

from Briefing.com
[BRIEFING.COM] The stock market ended the Tuesday session on a flat note. The S&P 500 shed 0.1% after spending the day in a ten-point range while the other indices also settled near their unchanged levels.

Despite the flat finish, equity indices rallied at the start after the second revision to Q3 GDP surprised to the upside (3.9%; Briefing.com consensus 3.2%). However, the opening spike marked the session high for the S&P 500, which returned to unchanged by the end of the first hour.

The S&P 500 dipped into the red during morning action with the move taking pace amid weakness in the energy sector (-1.6%). The growth-sensitive group widened its week-to-date loss to 2.3% after a meeting between Russia, Saudi Arabia, Mexico, and Venezuela did not produce an agreement to reduce output. Crude oil also retreated on the news, but saw a short-lived spike on its way down in reaction to reports OPEC members may opt to cut supply at Thursday's meeting in order to stem the recent decline in price. The energy component ended lower by 2.2% at $74.09/bbl.

The energy sector was the lone decliner of note while most of the remaining groups ended with modest gains. The consumer discretionary space (+0.3%) finished in the lead after a few names reported earnings. Brown Shoe (BWS 31.29, +2.81), DSW (DSW 34.39, +0.74), and Signet Jewelers (SIG 131.59, +8.60) beat estimates while Tiffany & Co (TIF 107.62, +2.61) missed by a penny. The sector finished in the lead even though homebuilders lagged with the iShares Dow Jones US Home Construction ETF (ITB 25.93, -0.15) shedding 0.6%.

Elsewhere, the industrial sector (+0.2%) also finished near the lead with help from transport stocks. The Dow Jones Transportation Average extended to a fresh record, ending higher by 0.4%. Airlines benefitted from lower fuel prices with Delta Air Lines (DAL 44.08, +0.57) advancing 1.3%.

Another cyclical sector—technology—led at the start, but narrowed its gain to just 0.1% by the close. Apple's (AAPL 117.61, -1.02) market cap briefly crossed the $700 billion mark in the morning, but the top-weighted sector component retreated into the close. Unlike Apple, the sector was able to avoid turning negative thanks to gains in other large components like Intel (INTC 36.32, +0.07) and Facebook (FB 75.63, +1.62).

Treasuries notched their lows in reaction to the GDP report, but rallied throughout the day. The 10-yr yield ended lower by five basis points at 2.26%.

Participation was ahead of average with more than 830 million shares changed hands at the NYSE floor.

Economic data included Q3 GDP, Case-Shiller 20-city Index, FHFA Housing Price Index, and Consumer Confidence:

• Third quarter GDP was revised up to 3.9% in the second estimate from 3.5% while the Briefing.com consensus expected a reading of 3.2% 
• All of the gain in third quarter GDP resulted from an upward swing in inventories 
• Real final sales were revised down to 4.1% from 4.2% 
• The positive surprise was mostly the result of an unexpected upward revision to personal consumption expenditures with goods spending in the third quarter revised up to 4.3% from 3.1% 
• The Case-Shiller 20-city Index for September rose 4.9%, which was ahead of the Briefing.com consensus (4.6%) 
• The September FHFA Housing Price Index was unchanged to follow last month's 0.4% uptick 
• The Consumer Confidence Index dropped to 88.7 in November from a downwardly revised 94.1 (from 94.5) while the Briefing.com consensus expected an increase to 96.0. 
• The Present Conditions Index declined to 91.3 from 94.4 while the Expectations Index fell to 87.0 from 93.8 

Economic Data

• GDP – 2nd Estimate (08:30) : 3.9% vs 3.3% (Prior 3.5%)
• GDP Deflator – 2nd Est (08:30) : 1.4% vs 1.3% (Prior 1.3%)
• Case-Shiller 20-city Index (09:00) : 4.9% vs 4.6% (Prior 5.6%)
• FHFA Housing Price Index (09:00) : 0.0 (Prior 0.4%▼)
• Consumer Confidence (10:00) : 88.7 vs 96.0 (Prior 94.1▼)

Technical Update

Under Construction

Market Internals

NYSE :
Higher than prev day volume @ 846.4M vs 709.5M
Advancers outpaced Decliners(adv/dec): 1647M/1423M
New highs outpaced low(high/low): 186/23

NASDAQ :
Higher than prev day volume @ 1652.7M vs 1555.5M
Decliners outpaced Advancers(adv/dec): 1337M/1383M
New highs outpaced low(high/low): 142/46


Advancers outpaced Decliners by an average 1.06 to 1 on higher volumes than prev day (+234.1 +10.34%)

Bonds, Currencies & Commodities

from Briefing.com

Bonds

Yields Break Support:

• Treasuries ended on session highs, propelled by the superb 5Y note auction. 
• The complex held small gains into the cash open following more warnings of downside risks to the global economy.
• Maturities slid back to their respective breakeven lines after Q3 GDP - Second Estimate (3.9% actual v. 3.2% expected, 3.5% previous) surprised to the upside. 
• However, buyers emerged in defense of the flat line as housing prices saw mixed results. 
• Trade chopped around with slight gains into the $35 bln 5Y note auction. The auction drew 1.595% (WI 1.612%) and a superb 2.91x bid/cover. Indirect (65.0%) bids posted their best showing in 10 years while directs (9.9%) were a bit light. Primary dealers ended up with just 25.1% of the supply. 
• Aggressive buying developed in response to the strong auction, pushing yields below key support that had been in place over the past month. 
• Up front, the 2Y ended @ 0.516% after seeing an adjustment following yesterday's auction. 
• In the belly, the 5Y slid -3.5bps to 1.568%. The yield broke below support in the 1.600% area and closed at its lowest level since October 28. 
• The 10Y shed -5bps to 2.260%. The benchmark yield ended at its own one-month low as action dipped below 2.300% support. 
• Outperformance at the long end dropped the 30Y -5.3bps to 2.966%. The yield on the long bond posted its lowest close since October 20. 
• Aggressive flattening along the yield curve dropped the 2-10-yr spread below 175bps for the first time since May 2013. 
• Also notable was the 5-30-yr spread narrowing to 140 bps for the first time since January 2009 and the 10-30-yr spread tightening to 70bps for the first time since March 2009. 
• Precious metals gained as gold added +$2 to $1198 and silver climbed +$0.21 to $16.59. 
• Data: MBA Mortgage Index (7), initial and continuing claims, durable orders, personal income and spending, PCE Prices - Core (8:30), Chicago PMI (9:45), Michigan Sentiment -Final (9:55), new home sales, and pending home sales (10). 
• Auction: $29 bln 7Y notes (11:30).

Currencies

Dollar Dips Below 88.00:

• The Dollar Index holds on session lows near 87.85 as sellers remain in control for a second session. 
• The recent weakness has many participants turning their attention towards 87.50 support. 
• EURUSD is +35 pips @ 1.2475 as action continues its climb off 1.2400 support. The single currency pressed to its worst levels of the session following the strong U.S. GDP number, but has seen steady buying over the remainder of the session as home prices and consumer confidence were light. A run through 1.2600 and the 50 dma (1.2630) helps the bull case. 
• GBPUSD is +10 pips @ 1.5715 as trade contends with a two-week high. Sterling was punished in early trade after the latest Bank of England Inflation Report showed a split Monetary Policy Committee, but has attracted bids amid the broad based dollar weakness. British data scheduled for tomorrow includes Second Estimate GDP, preliminary business investment, and CBI Realized Sales. 
• USDCHF is -25 pips @ .9640 as trade continues to slide off 16-month highs. An absence of news and data out of Switzerland has kept the pair tightly correlated to the euro.
• USDJPY is -50 pips @ 117.75 as trade tests the lower end of the 117.50/118.50 range that has been in place for much of the past week. The pair failed to rally following further promises of more easing by Bank of Japan Governor Haruhiko Kuroda. 
• AUDUSD is -80 pips @ .8530 as action looks likely to close at its lowest level in 52 months. The hard currency has seen selling after comments from Reserve Bank of Australia Deputy Governor Lowe suggested the exchange rate remains too high. Australia's construction work done will cross the wires tonight. 
• USDCAD is -40 pips @ 1.1235 as action flirts with the 50 dma. Today's selling comes following the mixed core retail sales (0.0% MoM actual v. 0.4% MoM expected) and retail sales (0.8% MoM actual v. 0.6% MoM expected) data.

Commodities

• Crude oil is a big story right now. The energy component was volatile again today as headlines about OPEC hit newswires
• Crude was recovering some of yesterday's losses before really losing steam in mid-morning activity
• Jan crude oil ended today's session $1.66/barrel lower at $74.09/barrel. Crude fell as low as $73.78/barrel
• The big catalyst right now is the OPEC meeting coming up on Thursday
• Dec gold rose $1.70 today to $1197.30/oz, while Dec silver rose 17 cents to $16.55/oz.
• Dec copper fell 4 cents to $2.96/lb

Preview: Wednesday, 26 Nov 2014

Economic Data

• MBA Mortgage Index (07:00) : Prior 4.9%
• Initial Claims (08:30) : 286K (Prior 291K)
• Continuing Claims (08:30) : 2373K (Prior 2330K)
• Durable Orders (08:30) : -0.7% (Prior -1.3%)
• Durable Goods ex-trans (08:30) : 0.5% (Prior -0.2%)
• Personal Income (08:30) : 0.4% (Prior 0.2%)
• Personal Spending (08:30) : 0.3% (Prior -0.2%)
• PCE Prices – Core (08:30) : 0.1% (Prior 0.1%)
• Chicago PMI (09:45) : 63.0 (Prior 66.2)
• Michigan Sentiment – Final (09:55) : 89.9 (Prior 89.4)
• New Home Sales (10:00) : 469K (Prior 467K)
• Pending Home Sales (10:00) : 0.8% (Prior 0.3%)
• Crude Inventories (10:30) : Prior 2.608M
• Natural Gas Inventories (12:00) : Prior -17bcf

Other Events of Interest

Commentary