Market Summary
from Briefing.com[BRIEFING.COM] The major averages ended Tuesday near their highs with the S&P 500 (+0.5%) registering its fifth consecutive advance. The benchmark index settled at a fresh record at 2,051.80 high while the Nasdaq Composite (+0.7%) outperformed after struggling yesterday.
The Tuesday session began on an unassuming note, but the health care sector (+1.6%) quickly pulled away from its flat line thanks to significant strength in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 295.25, +6.41) jumped 2.2% and contributed to the relative strength of the Nasdaq.
In addition to drawing support from biotech, the Nasdaq received a solid boost from chipmakers after SunEdison (SUNE 21.50, +4.89) agreed to acquire First Wind for $2.40 billion as part of a joint venture with TerraForm Power (TERP 32.75, +6.91). Shares of SUNE soared 29.4% while the broader PHLX Semiconductor Index spiked 1.9% with all but two components registering gains.
The broad strength among chipmakers was not enough to bring the technology sector (+0.4%) in line with the benchmark index as Google (GOOGL 544.51, -2.13), IBM (IBM 161.89, -2.27), and Microsoft (MSFT 48.74, -0.41) weighed.
Meanwhile, the remaining cyclical sectors registered gains across the board with materials (+1.1%) leading the bunch. Fertilizer stocks like Mosaic (MOS 46.77, +1.50) and Potash (POT 35.41, +1.62) underpinned the sector after world's largest potash miner, Uralkali, suspended operations due to elevated levels of brine.
For its part, the other commodity-related sector, energy, started in the lead, but narrowed its gain to just 0.1% by the close. Crude oil factored into the sector's retreat from highs, falling 1.4% to $74.60/bbl. The energy component finished near its low even as the Dollar Index (87.58, -0.35) lost 0.4%.
Today's dollar weakness was driven by a better than expected ZEW Sentiment Survey in Germany, which gave a boost to the euro and helped the DAX settle higher by 1.6%. The greenback did show some intraday strength against the yen after Nikkei reported Japan's Prime Minister Shinzo Abe plans to cut the corporate tax next year. The report followed an overnight announcement from the premier, who said he will dissolve parliament, call for a snap election, and delay the impending sales tax hike by at least 18 months.
On the downside, the telecom services sector (-0.2%) was the lone decliner while the consumer discretionary sector (+0.1%) climbed out of the red in the early afternoon. Retailers kept the discretionary space under pressure with Home Depot (HD 95.98, -2.05) and Urban Outfitters (URBN 28.79, -2.04) losing 2.1% and 6.6%, respectively. Urban Outfitters missed estimates while Dow component Home Depot beat by a penny.
Interestingly, the advance to a new record did not lure money out of the Treasury market. The 10-yr note registered a modest gain with its yield slipping two basis points to 2.32%.
Participation was in-line with long-term average as roughly 710 million shares changed hands at the NYSE floor.
Economic data was limited to PPI and NAHB Housing Market Index:
- Producer prices edged up 0.2% in October after declining 0.1%, while the Briefing.com consensus a decline of 0.2%
- The upside surprise in producer price growth was a result of a sharp 0.5% increase in prices of final demand for services, which was the largest increase since a similar 0.5% gain was recorded in July 2013. The services component was added to the PPI when the new methodology was introduced last year and is difficult to estimate.
- Final demand of finished goods, which was the headline PPI index under the previous methodology, fell 0.3% in October and was much closer to expectation.
- The decline in crude and gasoline prices led to a 3.0% drop in the energy price index, while a 5.3% increase in meat prices led to a 1.0% overall increase in food in October
- Excluding food and energy, core prices rose 0.4% in October after reporting no change in September while the consensus expected an increase of 0.1%.
- The NAHB Housing Market Index for November jumped to 58 from 54 while the Briefing.com consensus expected an uptick to 55
Economic Data
- PPI – 08:30 : 0.2% vs -0.2% , Prior -0.1%
- Core PPI – 08:30 : 0.4% vs 0.1%, Prior 0.0%
- NAHB Housing Market Index – 10:00 : 58 vs 55, Prior 54
- Net Long-Term TIC Flows – 16:00 : $164.3B, Prior $52.1B
Technical Update
Under Construction
Market Internals
NYSE :Higher than prev day volume @ 730.8M vs 693.7M
Advancers outpaced Decliners(adv/dec): 1875M/1223M
New highs outpaced low(high/low): 172/35
NASDAQ :
Higher than prev day volume @ 1640.2M vs M
Advancers outpaced Decliners(adv/dec): 1652M/1090M
New highs outpaced low(high/low): 107/62
VOLATILITY S&P500 (VIX)
13.86 -0.13(-0.93%)
Advancers outpaced Decliners by an average 1.52 to 1 on higher volumes than prev day (+1677.3 +241.79%)
Bonds, Currencies & Commodities
from Briefing.comBonds
Treasuries Edge Up in Sleepy Trade:
- Treasuries booked slim gains amid another sleepy session.
- Yields across the curve held in a tight 3bp range throughout the U.S. session and remained trapped in their ranges that have been in place over the past couple of weeks.
- The complex raised to its best levels of the day shortly after the hot PPI (+0.2% actual v. -0.2% expected) and core PPI (+0.4% actual v. +0.1% expected) readings crossed the wires, but retreated back to the unchanged line as the numbers were digested.
- Action saw little response to the strong NAHB Housing Market Index (58 actual v. 55 expected, 54 previous) number, and held in a tight range for the remainder of the session.
- Up front, the 2Y slipped -1.2bps to 0.500%. The yield ended the day on support that dates back to the beginning of November.
- In the belly, the 5Y eased -1.8bps to 1.609%. Action continues to test support in the 1.600% area has held up since the end of October.
- The 10Y fell -1.8bps to 2.322%. The benchmark yield continues to test support in the 2.300% area that has held up for the past three weeks.
- Light buying at the long end dropped the 30Y -1.6bps to 3.043%. The yield on the long bond has been stuck between 3.000% and 3.100% since October 23.
- A slightly flatter curve took hold as the 2-10-yr spread narrowed to 182bps.
- Precious metals gained as gold climbed $11 to $1194 and silver added +$0.08 to $16.14.
- Data: MBA Mortgage Index (7), housing starts, building permits (8:30), and the FOMC minutes (14).
Currencies
Dollar Drifts Aimlessly:
- The Dollar Index continues to test session lows near 87.55.
- Action has held in an extremely tight five cent range since shortly before the lunchtime hour.
- EURUSD is +90 pips @ 1.2540 as trade holds at the best levels of the day. The single currency saw early support after the better than expected eurozone and German ZEW Economic Sentiment numbers, but has struggled to reclaim the 1.2550 level. Today's bid has action contending with its best close of November.
- GBPUSD is -5 pips @ 1.5635 as trade fights to avoid a fifth straight day of losses. Action has seen little reaction to the in-line inflation data with trade so far able to hold the lows of the past two sessions. The most recent Bank of England votes will cross the wires tomorrow.
- USDCHF is -70 pips @ .9580 as action flirts with its lowest close of November. A lack of news and data out of Switzerland has kept the pair tightly correlated to the euro.
- USDJPY is +15 pips @ 116.80 after Prime Minister Abe announced the second phase of the consumption tax hike would be delayed 18 months and parliament would be dissolved. Overnight buying threatened the 117.00 level for a second session, but that level has once again managed to hold strong. A Nikkei report out during U.S. trade suggested the corporate tax cuts were likely to begin in 2015. The Bank of Japan holds its latest policy meeting tonight.
- AUDUSD is +25 pips @ .8730 as bulls look to remain in control for the sixth time in eight days. The hard currency has held its own despite Chinese new home prices slumping in 69 of 70 cities.
- USDCAD is -5 pips @ 1.1300 amid an uneventful trade. Minor support in the 1.1250 area has been tested over the past several sessions, but has been able to hold.
Commodities
- Copper and oil futures remained in the red all session and finished the day at today's lows
- Dec crude closed 1.4% lower at $74.60/barrel
- Dec copper ended down 1.3% at $3.00/lb
- Natural gas sunk lower this morning, but recovered some. Ultimately, Dec nat gas ended 2.2% lower at $4.25/MMBtu
- Dec gold gained 1.1% to $1196.30/oz, while Dec silver +0.8% at $16.18/oz
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