Market Summary
from Briefings.com
Industry Watch
Strong: Health Care, Telecom Services, UtiltiesWeak: Consumer Discretionary, Energy, Industrials, Technology
Market Moving Factors
- Small caps underperform
- Manufacturing PMI readings from China (50.1 from 50.3) and eurozone (50.6 from 50.8) decline
- Euro slides to 1.2050 versus dollar after Draghi op-ed calls for more integration in the eurozone
[BRIEFING.COM] The stock market began 2015 on a cautious note with the major averages surrendering their opening gains. The S&P 500 ended flat while the Dow Jones Industrial Average (+0.1%) settled just above its flat line.
Equity indices started the day with broad-based gains, but the early buying spree ended in a flash. The S&P 500 marked its high 11 minutes after the start of the session before reversing course. The index continued its retreat through the 9:00 ET release of disappointing Construction Spending and ISM reports, and marked its session low shortly after 13:30 ET.
The S&P 500 tried to fight its way back into the green during the afternoon, but losses among influential sectors like consumer discretionary (-0.7%), consumer staples (-0.4%), industrials (-0.2%), and technology (-0.2%) proved too large to overcome.
Notably, the discretionary sector suffered from broad weakness. Homebuilders and retailers lagged with iShares Dow Jones US Home Construction ETF (ITB 25.67, -0.21) and SPDR S&P Retail ETF (XRT 95.34, -0.67) falling 0.8% and 0.7%, respectively. The two groups helped the sector finish at the bottom of the leaderboard.
Elsewhere, industrials contributed to the persistent pressure as transport stocks underperformed. The Dow Jones Transportation Average lost 0.5% with all but five components ending in the red. Shipper Kirby (KEX 81.53, +0.79) outperformed while freight carrier CH Robinson (CHRW 73.84, -1.05) brought up the rear.
Similar to industrials, the technology sector kept the market under pressure during the afternoon. Large cap listings settled in mixed fashion, but Apple (AAPL 109.33, -1.05) fell 1.0%, which contributed to the underperformance of the Nasdaq Composite. However, chipmakers lagged early, but climbed into the afternoon, allowing the PHLX Semiconductor Index to end flat.
On the upside, the utilities sector (+0.6%) ended in the lead, but more notable was the outperformance of health care (+0.4%). The countercyclical group benefitted from daylong strength in biotechnology that sent the iShares Nasdaq Biotechnology ETF (IBB 306.34, +2.99) higher by 1.0%.
Also of note, the energy sector (+0.4%) ended in the green even as crude oil continued its retreat, dropping 1.6% to $52.57/bbl. Greenback strength factored into the move as the Dollar Index jumped 0.9% to 91.12. The dollar picked up about 1.5% against the British pound and 1.0% against the euro, with the latter sliding after a Financial Times op-ed penned by Mario Draghi was viewed as a preamble to a sovereign QE announcement from the European Central Bank.
Treasuries registered solid gains after erasing their overnight losses. The benchmark 10-yr yield fell five basis points to 2.12%.
Participation was in-line with recent totals as 628 million shares changed hands at the NYSE floor.
Economic data was limited to Construction Spending and ISM:
Equity indices started the day with broad-based gains, but the early buying spree ended in a flash. The S&P 500 marked its high 11 minutes after the start of the session before reversing course. The index continued its retreat through the 9:00 ET release of disappointing Construction Spending and ISM reports, and marked its session low shortly after 13:30 ET.
The S&P 500 tried to fight its way back into the green during the afternoon, but losses among influential sectors like consumer discretionary (-0.7%), consumer staples (-0.4%), industrials (-0.2%), and technology (-0.2%) proved too large to overcome.
Notably, the discretionary sector suffered from broad weakness. Homebuilders and retailers lagged with iShares Dow Jones US Home Construction ETF (ITB 25.67, -0.21) and SPDR S&P Retail ETF (XRT 95.34, -0.67) falling 0.8% and 0.7%, respectively. The two groups helped the sector finish at the bottom of the leaderboard.
Elsewhere, industrials contributed to the persistent pressure as transport stocks underperformed. The Dow Jones Transportation Average lost 0.5% with all but five components ending in the red. Shipper Kirby (KEX 81.53, +0.79) outperformed while freight carrier CH Robinson (CHRW 73.84, -1.05) brought up the rear.
Similar to industrials, the technology sector kept the market under pressure during the afternoon. Large cap listings settled in mixed fashion, but Apple (AAPL 109.33, -1.05) fell 1.0%, which contributed to the underperformance of the Nasdaq Composite. However, chipmakers lagged early, but climbed into the afternoon, allowing the PHLX Semiconductor Index to end flat.
On the upside, the utilities sector (+0.6%) ended in the lead, but more notable was the outperformance of health care (+0.4%). The countercyclical group benefitted from daylong strength in biotechnology that sent the iShares Nasdaq Biotechnology ETF (IBB 306.34, +2.99) higher by 1.0%.
Also of note, the energy sector (+0.4%) ended in the green even as crude oil continued its retreat, dropping 1.6% to $52.57/bbl. Greenback strength factored into the move as the Dollar Index jumped 0.9% to 91.12. The dollar picked up about 1.5% against the British pound and 1.0% against the euro, with the latter sliding after a Financial Times op-ed penned by Mario Draghi was viewed as a preamble to a sovereign QE announcement from the European Central Bank.
Treasuries registered solid gains after erasing their overnight losses. The benchmark 10-yr yield fell five basis points to 2.12%.
Participation was in-line with recent totals as 628 million shares changed hands at the NYSE floor.
Economic data was limited to Construction Spending and ISM:
- Construction spending in November declined 0.3% from October, which was revised up to show an increase of 1.2% versus 1.1% previously
- The November reading was below the Briefing.com consensus estimate, which called for a 0.1% increase
- The disappointment was rooted in public construction spending, which declined 1.7% to a seasonally adjusted annual rate of $277.30 billion largely due to a 2.5% pullback in educational construction spending
- The ISM Index for December checked in at 55.5, down 3.2 percentage points from the high 58.7 reading in November
- The December reading marked the 19th consecutive month of expansion; however, it was weaker than the Briefing.com consensus estimate, which was pegged at 57.5
- A number above 50 denotes expansion, so the pullback in December doesn't connote weakness so much as it connotes the manufacturing sector cooling down from a very hot November
Economic Data
Technical Updates
Market Internals
NYSE :
Lower than prev day volume @ 598.6M vs 655M
Advancers outpaced Decliners(adv/dec): 1715M/1377M
New highs outpaced low(high/low): 80/17
NASDAQ :
Lower than prev day volume @ 1056.4M vs 1360M
Decliners outpaced Advancers(adv/dec): 1155M/1605M
New highs outpaced low(high/low): 51/22
Decliners outpaced Advancers by an average 1.04 to 1 on lower volumes than prev day (-360 -17.87%)
Bonds, Currencies & Commodities
from Briefings.com
Bonds
Treasuries Reverse Early Losses, Gain on First Trading Day of New Year:
- Treasuries gained on the first trading day for the fourth consecutive year.
- The complex saw overnight weakness, but recouped those losses and climbed into positive territory as yields across much of the eurozone put in all-time lows and U.S. economic data missed estimates.
- Yields in France, Germany, Italy and Spain all put in record lows after European Central Bank President Mario Draghi hinted low inflation may provoke a sovereign bond buying spree.
- U.S. economic data disappointed as both ISM Index (55.5 actual v. 57.5 expected) and construction spending (-0.3% actual v. 0.1% expected) fell short of expectations.
- Up front, the 2Y slipped -0.4bps to 0.665%. The yield pulled back onto support in the 0.650% area that dates back to the beginning of December.
- In the belly, the 5Y shed -3.5bps to 1.618%. The yield failed at 1.700% early before pressing below the 100 and 200 dma and closing on the 50 dma.
- The 10Y fell -4.7bps to 2.123%. The benchmark yield is now testing trendline support near 2.100%.
- Outperformance at the long end dropped the 30Y -5.2bps to 2.697%. The yield on the long bond flirted matched its lowest print since September 2012.
- Curve flattening caused the 2-10-yr spread to narrow to 146bps.
- Precious metals edged up as gold added +$1 to $1185 and silver tacked on +$0.11 to $15.71.
- Data: Auto/truck sales (14).
Currencies
Dollar Crosses 91.00:The Dollar Index holds near session highs as trade probes the 91.00 level and readies for its best close in none years.
EURUSD is -90 pips @ 1.2015 as trade slides to its worst levels since June 2010. Weighing on the single currency were comments from ECB President Mario Draghi suggesting inflation was slowing and a sovereign bond buying program may be needed. The psychologically important 1.2000 level remains under close watch. Eurozone data scheduled for Monday includes German preliminary CPI and Spanish unemployment change.
GBPUSD is -230 pips @ 1.5350 as action breaks down to its worst levels since August 2013. Today's disappointing Manufacturing PMI number provided a backdrop for today's weakness, but a lot of it was due to the broad-based strength of the greenback. Britain's Construction PMI will cross the wires Monday.
USDCHF is +80 pips @ 1.0010. Today's advance ran action to parity for the first time in four years.
USDJPY is +65 pips @ 120.35 as trade tests minor resistance in the area. A breakout above the level will put the December highs near 122.00 in focus.
AUDUSD is -70 pips @ .8110 as trade flirts with a fresh 54-month low. The December lows at .8100 are under scrutiny.
USDCAD is +130 pips @ 1.1745 as trade surges to its best levels since May 2009. Minor resistance appears to be located in the 1.1950/1.200 region.
Commodities
Commodities endured a volatile session that was accentuated by a rally in the greenback that pushed the Dollar Index (91.10, +0.83) higher by 0.9%.
Crude oil traded just below the $54.00/bbl level overnight, but slumped as low as $52.15/bbl during morning action. The energy component rallied off its low after the start of the pit session, but was unable to stay in the green. A return into the neighborhood of the morning low locked in a decline of 1.6% at $52.57/bbl.
Natural gas climbed through the majority of the trading day, but a wave of selling just ahead of the close narrowed its gain to 2.5% at $2.98/MMbtu.
Precious metals spent some time on either side of their flat lines, but ultimately ended in the green. Gold added 0.2%, settling at $1,186.10/ozt while silver climbed 0.8% to $15.73/ozt.
Copper teetered on its December support level in the $2.810/lb area before settling lower by 0.3% at $2.8175/lb.
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