Market Summary
from Briefing.comIndustry Watch
Strong: Energy, Utilities
Weak: Consumer Staples, Industrials, Materials, Technology
Market Moving Factors
- Disappointing earnings/guidance from Caterpillar (CAT), DuPont (DD), Microsoft (MSFT), Pfizer (PFE), Procter & Gamble (PG), and United Technologies (UTX): strong dollar cited
- December Durable Orders miss expectations (-3.4%; Briefing.com consensus 0.5%)
- S&P 500 loses 50-day moving average (2,047) once again
[BRIEFING.COM] The major averages stumbled on Tuesday with the S&P 500 (-1.3%) returning below its 50-day moving average (2,047). The benchmark index settled ahead of the Dow Jones Industrial Average (-1.7%), but behind the Russell 2000 (-0.5%).
Stocks careened lower at the start of today's session after several large companies cautioned that dollar strength will present a headwind to their future earnings. Most notably, Caterpillar (CAT 79.92, -6.11), DuPont (DD 73.18, -0.93), Microsoft (MSFT 42.66, -4.35), and Procter & Gamble (PG 86.49, -3.09) lost between 1.3% and 9.3% while Pfizer (PFE 32.60, -0.20), and United Technologies (UTX 119.16, +0.41) held up relatively well despite their warnings.
However, cautious guidance from six Dow components was not the only issue as investors had to digest a disappointing Durable Orders report while Consumer Confidence and New Home Sales beat expectations.
The Russell 2000 was able to stay ahead of the broader market as domestically-oriented small cap stocks benefitted from having limited exposure to currency fluctuations. Today's outperformance lifted the small-cap index ahead of the S&P 500 for the month of January. The Russell is lower by 0.8% since the end of 2014 while the S&P 500 has surrendered 1.4% so far this month.
Overall, cyclical sectors bore the brunt of today's losses with the top-weighted technology sector tumbling 3.3%. Microsoft's 9.3% decline was a notable drag on the index, but other large cap names also registered losses. Google (GOOGL 521.55, -15.17) and Intel (INTC 34.19, -1.62) lost 2.8% and 4.5%, respectively, while Apple (AAPL 109.13, -3.97) fell 3.5% ahead of its quarterly report. Investors are likely to pay close attention to Apple's guidance to see if the company joins the chorus of influential names voicing concern over greenback strength.
Elsewhere, the industrial sector (-1.3%) was the only other underperformer on the cyclical side, but the group caught up to the S&P 500 just ahead of the close. Caterpillar's 7.2% dive pressured the sector while transport stocks settled just ahead of the broader market. The Dow Jones Transportation Average fell 1.2%.
Over on the countercyclical side, consumer staples (-1.2%) finished in-line with the S&P 500 while health care (-0.8%), telecom services (-1.1%), and utilities (+0.2%) outperformed.
Similar to utilities, the energy sector (-0.2%) spent the day ahead of the broader market with crude oil lending support. The energy component rose 2.3% to $46.21/bbl while the energy sector narrowed its weekly gain to 1.2%.
Treasuries round tripped, spiking in the morning just to spend the remainder of the session in a slide from highs. The benchmark 10-yr yield slipped one basis point to 1.81% after testing the 1.76% level in the morning.
Today's participation was below average with fewer than 700 million shares changing hands at the NYSE floor.
Economic data included Durable Orders, Consumer Confidence, New Home Sales, and Case-Shiller 20-city Index:
- Durable goods orders declined 3.4% in December after declining a downwardly revised 2.1% (from -0.9%) while the Briefing.com consensus expected an increase of 0.5%
- A significant portion of the negative surprise came from seasonal adjustments in the aircraft sector. Even though Boeing (BA 132.48, -1.59) reported a positive increase in orders on a month-to-month basis, sales actually declined significantly once seasonal factors were taken into consideration. Aircraft orders declined 46.4% in December, which led to a 9.2% decline in overall transportation orders
- Excluding transportation, durable goods orders fell 0.8% in November after declining a downwardly revised 1.3% (from -0.7%) while the Briefing.com consensus expected an increase of 0.7%
- New home sales increased 11.6% in December to 481,000 from a downwardly revised 431,000 (from 438,000) while the Briefing.com consensus expected a reading of 450,000
- That was the most new homes sold since 487,000 were sold in June 2008
- Total sales in 2014 were marginally better than 2013, inching up 1.2% to 435,000 from 429,000 in 2013
- The Case-Shiller 20-city Home Price Index for November rose 4.3%, which is what the consensus expected
- The Conference Board's Consumer Confidence Index jumped to 102.9 in January from an upwardly revised 93.1 (from 92.6) while the Briefing.com consensus expected an increase to 96.0
- According to the index, consumer confidence is at its strongest level since August 2007 when the index reached 105.6
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Economic Data
from Briefing.com
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 27 | 08:30 | Durable Orders | Dec | -3.4% | -3.2% | 0.5% | -2.1% | -0.9% |
| Jan 27 | 08:30 | Durable Goods –ex transportation | Dec | -0.8% | 0.5% | 0.7% | -1.3% | -0.7% |
| Jan 27 | 09:00 | Case-Shiller 20-city Index | Nov | 4.3% | 4.3% | 4.3% | 4.5% | |
| Jan 27 | 10:00 | Consumer Confidence | Jan | 102.9 | 96.0 | 96.0 | 93.1 | 92.6 |
| Jan 27 | 10:00 | New Home Sales | Dec | 481K | 430K | 450K | 431K |
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Technical Update
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Market Internal
NYSE :Lower than prev day volume @ 711.2M vs 796M
Decliners outpaced Advancers(adv/dec): 1331M/1744M
New highs outpaced low(high/low): 334/54
NASDAQ :
Higher than prev day volume @ 1914.8M vs 1708.1M
Decliners outpaced Advancers(adv/dec): 1034M/1724M
New highs outpaced low(high/low): 71/52
Decliners outpaced Advancers by an average 1.47 to 1 on higher volumes than prev day (+121.9 +4.87%)
VOLATILITY S&P500 (VIX) :
17.22 1.70(10.95%)
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Bonds, Currencies & Commodities
from Briefing.comBonds
Treasuries Give Up Early Gains, End Little Changed:- Treasuries retreated sharply off their early highs and finished on their worst levels of the day.
- The complex held small gains into the cash open before the weak durable orders (-3.4% MoM actual v. +0.5% MoM expected) data sparked a flight to safety into the complex.
- Maturities lingered near their highs following the impressive consumer confidence (102.9 actual v. 96.0 expected) and new home sales (481K actual v. 450K expected) data, and only began to slide as stocks started to claw back their early losses.
- Late-morning selling persisted throughout the afternoon and pushed maturities back onto their overnight lows ahead of the cash close.
- Up front the 2Y slipped -1bp to 51bps. The area remains in focus as it has served as a key pivot since June.
- In the belly, the 5Y eased -1.8bps to 1.332%.
- The 10Y slipped -0.3bps to 1.825%. The benchmark yield once again found support in the 1.800% area.
- Light selling at the long end ran the 30Y up +0.4bps to 2.402%. The yield on the long bond touched a record low 2.329% before reversing.
- The yield curve steepened slightly as the 2-10-yr spread widened to 131.5bps.
- Precious metals as gold added +$14 to $1294 and silver climbed +$0.13 to $18.11.
- Data: MBA Mortgage Index (7). The latest FOMC rate decision (14) will be announced.
- Auction: $26B 2Y notes.
Currencies
Dollar Pulls Back to 94.00 :- The Dollar Index is on track for just its second loss in eight sessions as action probes 94.00.
- Today's weakness has dropped the greenback off 11-year highs.
- EURUSD is +120 pips @ 1.1355 as buying develops for a second day. The single currency has found bids even as skepticism remains over whether or not Greece will make good on its debt obligations. The first test will come in March when a EUR4.3 bln payment is due.
- GBPUSD is +130 pips @ 1.5205 as trade contends with its best close in three weeks. Sterling has been squeezing higher throughout the day despite today's Preliminary GDP miss.
- USDCHF is -5 pips @ .9020 after surrendering its early gains. Overnight, the pair hit a high of .9166, marking its best levels since the Swiss National Bank's surprise removal of its EUCHF1.20 floor on January 15.
- USDJPY is -55 pips @ 117.85 as action remains trapped in its recent range. The pair has been stuck between 117.20/118.80 for the past six sessions.
- AUDUSD is flat @ .7925. Today's action gives some hope to the bulls as yesterday's five year lows have managed to hold. Australia's CPI and Trimmed Mean CPI are due out tonight.
- USDCAD is -75 pips @ 1.2395 as sellers take control for the first time in six days. Today's losses have pushed the pair off six-year highs.
Commodities
Oil Closes Higher, Above $46/Barrel:- WTI traded modestly higher today this morning, but gained steam in mid-to-late morning trading activity
- Mar crude rose as high as $46.55/barrel, but ended today's session $1.04 higher at $46.21/barrel
- Natural gas traded in positive territory all day. The Mar contract closed today's session $0.05 higher at $2.93/MMBtu
- Due to the weakness in the dollar index today, precious metals were able to hold gains
- Both Feb gold and Mar silver ended the day near today's high.
- Feb gold rose +12.70/oz to $1292.10, while Mar silver gained +0.10/oz to $18.08/oz
- Mar copper closed $0.08 lower at $2.46/lb
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Preview: Wednesday, 28 Jan 2015
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 28 | 07:00 | MBA Mortgage Index | 01/24 | NA | NA | 14.2% | ||
| Jan 28 | 10:30 | Crude Inventories | 01/24 | NA | NA | 10.071M | ||
| Jan 28 | 14:00 | FOMC Rate Decision | Jan | 0.25% | 0.25% | 0.25% |
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