Market Summary
from Briefing.com[BRIEFING.COM] The stock market began the new trading week on an unassuming note. The S&P 500 (+0.1%) added just over a point while the Nasdaq (-0.4%) and Russell 2000 (-0.8%) underperformed throughout the session.
The benchmark index started under modest pressure, but was able to finish near its best level of day with help from countercyclical sectors. News from overseas contributed to the early weakness as Japan's preliminary GDP report for Q3 revealed the second consecutive decline (-0.4%; expected 0.5%), meaning the country is now in recession. The news gave an overnight boost to the yen, but the currency was back to unchanged against the dollar (116.20) by the start of the U.S. session. The yen weakened a bit during the session, sending the dollar/yen pair to 116.50.
Although the S&P 500 started in the red, the index was back near its flat line in the first hour with help from comments made by European Central Bank President Mario Draghi. Mr. Draghi appeared in front of a European parliamentary committee and provided another reminder that the ECB stands ready to act if downside risks continue mounting.
The combination of Mr. Draghi's comments and the relative strength in countercyclical sectors kept the S&P 500 from dipping too far into the red. However, the index never climbed too far above its flat line either with participants reluctant to take on additional risk after an 11.2% rally over the past month. Below-average participation spoke to the cautious posture as fewer than 675 million shares changed hands at the NYSE floor.
As mentioned earlier, countercyclical sectors displayed strength with consumer staples (+0.6%), health care (+0.5%), and utilities (+1.3%) registering solid gains while the telecom services sector (-0.2%) underperformed.
The staples sector rallied behind Tyson Foods (TSN 43.01, +2.35), which spiked 5.8% in reaction to a bottom-line beat. Elsewhere, health care was underpinned by news indicating Actavis (ACT 247.94, +4.17) agreed to acquire Allergan (AGN 209.20, +10.55) for $219/share in cash and stock. Biotechnology displayed intraday strength, but the iShares Nasdaq Biotechnology ETF (IBB 288.84, +0.67) narrowed its gain to 0.2% by the close.
M&A activity was not isolated to the health care sector as Halliburton (HAL 49.23, -5.85) agreed to acquire Baker Hughes (BHI 65.23, +5.34) for $78.62/share, representing a 40.8% premium to BHI's price on October 10 before the initial offer was made. As for energy, the sector narrowed its loss to 0.4%, but still ended at the bottom of the leaderboard. Crude oil registered another decline, sliding 0.3% to $75.61/bbl.
The remaining growth-sensitive sectors settled closer to their flat lines, but the relative weakness among chipmakers kept the Nasdaq in the red throughout the session. The PHLX Semiconductor Index lost 0.5% while the technology sector shed 0.2%.
Treasuries ended near their lows with the 10-yr higher by a basis point at 2.33%.
Economic Data
Technical Update
Under Construction
Market Internals
NYSE :Lower than prev day volume @ 693.7M vs 704.8M
Decliners outpaced Advancers(adv/dec): 1382M/1731M
New highs outpaced low(high/low): 147/42
NASDAQ :
Lower than prev day volume @ 1679.1M vs 1728.2M
Decliners outpaced Advancers(adv/dec): 934M/1795M
New highs outpaced low(high/low): 79/62
VOLATILITY S&P500 (VIX)
13.99 +0.68(5.11%)
Decliners outpaced Advancers by an average 1.52 to 1 on lower volumes than prev day (-60.2 -2.47%)
Bonds, Currencies & Commodities
from Briefing.comBonds
Treasuries Slip Amid Sleepy Trade:
- Treasuries booked small losses amid an uneventful session.
- The complex was bid into the cash open before disappointing economic data brought sellers out of the woodwork.
- The Empire Manufacturing (10.2 actual v. 12.0 expected) miss got the selling started, and maturities put in session lows shortly after this morning's second batch of disappointing data.
- Industrial production (-0.1% MoM actual v. 0.2% MoM expected) and capacity utilization (78.9% actual v. 79.3% expected) followed Empire Manufacturing in falling short of estimates.
- A choppy trade would persist throughout the remainder of the day, keeping yields in a tight 1bp range.
- Up front, the 2Y was flat @ 0.512%. Action remains trapped between 0.500% and 0.550% as it has for the past three weeks.
- In the belly, the 5Y ticked up +2.3bps to 1.627%. Resistance in the 1.650% area is defended by the 50, 100, and 200 dma.
- The 10Y tacked on +2bps to 2.340%. The benchmark yield has been trapped between 2.300% and 2.400% throughout the month of November.
- Slight outperformance at the long end saw the 30Y edge up +1.7bps to 3.059%. A stubborn trade over the past month has kept the yield on the long bond between 3.00% and 3.100%.
- A slightly steeper curve took hold as the 2-10-yr spread widened to 183bps.
- Precious metals were mixed as gold held steady @ $1185 and silver slumped -$0.19 to $16.12.
- Data: PPI (8:30), NAHB Housing Market Index (10), and Net Long-Term TIC Flows (16).
- Fed Speak: Minny's Kocherlakota discusses "Clarifying the Objectives of Monetary Policy" (13:30).
Currencies
Dollar Continues to Test 88.00:
- The Dollar Index drifts on session highs near 87.90 amid a rather uneventful session.
- Action has spent virtually the entire U.S. session stuck in a 10 cent range.
- EURUSD is -70 pips @ 1.2450 as trade presses session lows. The single currency neared 1.2600 in early trade, but was battered as European Central Bank President Mario Draghi reiterated sovereign bond buying cannot be ruled out. Critical support in the 1.2400 area will remain in focus as eurozone and German ZEW Economic Sentiment data crosses the wires tomorrow.
- GBPUSD is -25 pips @ 1.5640 as sellers remain in control for a fourth day. Today's weakness comes following a further let up in home prices, and has sterling on track to close at a 14-month low British data out tomorrow includes CPI, PPI Input, RPI.
- USDCHF is +60 pips @ .9650 as action holds just off 16-month highs. Early selling provided a test of .9550 support, but that level was able to hold as buying emerged in response to some selling in the euro.
- USDJPY is +15 pips @ 116.45 as trade flirts with a fresh seven-year high. The pair crossed 117.00 in overnight action as the Japanese economy slid back into recession; however, aggressive selling developed and pushed trade back below the level.
- AUDUSD is -40 pips @ .8715 after early buying was rejected at the 50 dma (.8805). Today's selling has the hard currency lower for just the second time in seven sessions, and has many traders focused on the lower end of the .8650/.8850 range that has been in place for much of the past six weeks. The latest Reserve Bank of Australia minutes are due out tonight. Reserve Bank of Australia head Glenn Stevens will speak tomorrow morning in Melbourne.
- USDCAD is +15 pips @ 1.1300 as trade ticks higher amid a mostly eventful session. Canada's foreign securities purchases (CAD4.37 bln actual v. CAD11.32 bln expected) fell well short of estimates, but have had little impact on the pair.
Commodities
- Crude oil remained in negative territory all day today, falling as low as $74.72/barrel. By the end of today's session, Dec crude closed 21 cents at $75.61/barrel
- Natural gas futures surged higher today on current weather conditions/current outlook
- As a results, Dec nat gas rose 8% to $4.34/MMBtu
- Dec gold fell 0.7% to $1186.20/oz, while Dec silver -1.4% at $16.06/oz
- Dec copper lost 1 cent to $3.04/lb
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