Market Summary
from Briefing.comIndustry Watch
Strong: Energy, Health Care, Utilities
Weak: Consumer Discretionary, Financials, Industrials, Materials
Market Moving Factors
- World Bank lowers 2015 GDP target to 3.0% from 3.4%: copper futures plummet
- December Retail Sales miss expectations (-0.9%; Briefing.com consensus +0.1%)
- JPMorgan Chase (JPM) reports below-consensus results
- S&P 500 looks to hold 100-day moving average (2007)
Equities faced selling pressure from the start after the overnight session failed to alleviate the growth concerns that contributed to the recent weakness. Instead, the concerns grew larger, starting with the World Bank's reduced growth outlook for 2015 (to 3.0% from 3.4%) and 2016 (to 3.3% from 3.5%).
The lowered outlook pressured commodities, and especially copper, which remained under pressure throughout the day, ending lower by 4.9% at $2.51/lb after hitting a low near the $2.45/lb level. Crude oil, however, traded in the red during morning action, but rocketed into the pit close, which helped the broader market climb off its intraday low. As for crude, the energy component spiked 5.7% to $48.55/bbl.
The rebound in crude helped the energy sector (+0.1%) finish in the green, but other cyclical groups did not fare as well. Notably, the financial sector (-1.4%) ended at the bottom of the leaderboard, which was largely due to a 3.5% decline in JPMorgan Chase (JPM 56.81, -2.03) after the industry giant reported below-consensus earnings and revenue. For its part, Wells Fargo (WFC 51.25, -0.60) delivered an in-line report, but still lost 1.2%.
Financials inched away from their lows during afternoon action, but could not catch up to the broader market, which was also the case with the consumer discretionary sector (-1.2%). The fourth-largest sector by weight retreated following the disappointing December Retail Sales report (-0.9%; Briefing.com consensus 0.1%) while homebuilders lagged early, but ended just ahead of the broader market with the iShares Dow Jones US Home Construction ETF (ITB 25.90, -0.09) falling 0.4%.
Elsewhere among cyclical sectors, technology (-0.5%) finished just ahead of the broader market while chipmakers kept pace with the S&P 500. Shares of BlackBerry (BBRY 12.60, +2.88) spiked almost 30.0% in afternoon action after Reuters reported the company has been approached by Samsung about a potential takeover.
Unlike cyclical sectors, the four defensively-oriented groups spent the day ahead of the broader market. Health care (-0.1%) settled just below its flat line while the iShares Nasdaq Biotechnology ETF (IBB 315.57, +0.60) added 0.2%. The utilities sector (+0.9%) was the lone advancer on the countercyclical side, extending its January advance to 1.4%.
Treasuries jumped following this morning's data before surrendering a portion of their gains. The 10-yr yield fell six basis points to 1.84%. Also of note, the 30-yr yield ended at 2.45% (-3 bps), which represented the lowest close on record.
Today's participation was ahead of average with more than 900 million shares changing hands at the NYSE floor.
Economic data included Retail Sales, Import/Export Prices, Business Inventories, and the MBA Mortgage Index:
- Retail sales fell 0.9% in December after increasing a downwardly revised 0.4% (from 0.7%) in November, while the Briefing.com consensus expected an increase of 0.1%.
- The sharp pullback in sales was a direct result of poor income growth. The December employment report showed a contraction in the average hourly wage, which resulted in flat aggregate income growth after accounting for payrolls gains
- Without income growth, the only way for sales to improve was for consumers to dip into their savings. Households have been very reluctant to do so, which meant retail sales were poised for a pullback in December
- Excluding motor vehicles, sales declined 1.0% after increasing a downward revised 0.1% (from 0.5%) in November
- The consensus expected these sales to increase 0.1%
- Export prices, excluding agriculture, decreased 1.2% in December after decreasing 1.2% in the prior reading
- Excluding oil, import prices ticked down 0.1%, which followed last month's 0.3% decline
- Business Inventories rose 0.2% in November, while the Briefing.com consensus expected an increase of 0.3%
- The prior month's reading was left unrevised at +0.2%
- The weekly MBA Mortgage Index saw its biggest spike since November 2008, surging 49.1% to follow the previous 11.1% spike
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Economic Data
from Briefing.com
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 14 | 07:00 | MBA Mortgage Index | 01/10 | 49.1% | NA | NA | 11.1% | |
| Jan 14 | 08:30 | Retail Sales | Dec | -0.9% | -0.2% | 0.1% | 0.4% | 0.7% |
| Jan 14 | 08:30 | Retail Sales ex-auto | Dec | -1.0% | 0.0% | 0.1% | 0.1% | 0.5% |
| Jan 14 | 08:30 | Export Prices ex-ag. | Dec | -1.2% | NA | NA | -1.0% | -1.2% |
| Jan 14 | 08:30 | Import Prices ex-oil | Dec | -0.1% | NA | NA | -0.3% | -0.2% |
| Jan 14 | 10:00 | Business Inventories | Nov | 0.2% | 0.4% | 0.3% | 0.2% | |
| Jan 14 | 10:30 | Crude Inventories | 01/10 | 5.389M | NA | NA | -3.062M | |
| Jan 14 | 14:00 | Fed's Beige Book | Jan | NA | NA | NA |
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Technical Update
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Market Internal
NYSE :Higher than prev day volume @ 928.6M vs 875.9M
Decliners outpaced Advancers(adv/dec): 1235M/1881M
New lows outpaced highs(high/low): 132/218
NASDAQ :
Lower than prev day volume @ 2058.5M vs 2153.6M
Decliners outpaced Advancers(adv/dec): 1004M/1755M
New lows outpaced highs(high/low): 51/142
Decliners outpaced Advancers by an average 1.62 to 1 on lower volumes than prev day (-42.4 -1.40%)
VOLATILITY S&P500 (VIX) :
21.48 +0.92 (+4.47)
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Bonds, Currencies & Commodities
from Briefing.comBonds
30Y Closes at 2.451%, Lowest on Record:- Treasuries gained for the 13th time in 14 days.
- The complex held small gains into the cash open and raced to its best levels of the day as retail sales (-0.9% actual v. +0.1% expected) and retail sales ex-auto (-1.0% actual v. +0.1% expected) both missed estimates by a wide margin.
- Business inventories (0.2% actual v. 0.3% expected), export prices ex-ag (-1.2%), and import prices ex-oil (-0.1%) also posted uninspiring results.
- Yields would bottom as the data was digested and spend the remainder of the session in a steady climb higher.
- Up front, the 2Y fell -5.2bps to 0.485%. Support at the level dates back to Halloween.
- In the belly, the 5Y eased -5.6bps to 1.303%. The yield finished on the 50 mma while posting its lowest close since October 2013.
- The 10Y ended -5.3bps @ 1.837%. The benchmark yield broke below the October 15 panic low and settled at levels last seen in May 2013.
- Buying at the long end pressured the 30Y lower by -3.1bps to 2.451%. The yield on the long bond broke below 2.400% early and managed to close at a record low.
- Little change along the curve saw the 2-10-yr spread hold near 135bps.
- Precious metals lost ground with gold slipping -$2 to $1232 and silver sliding -$0.19 to $16.97.
- Data: Initial and continuing claims, PPI, Empire Manufacturing (8:30) and Philly Fed (10).
Currencies
Dollar Struggles Near 92.30:- Natural gas futures surged higher today and have extended gains in electronic trading
- Nat gas closed today's session, but is now over 11% higher
- WTI crude oil made a strong recovery off of today's lows. Near the end of today's pit trading session, crude gained some steam and rallied higher
- Feb crude almost hit $49/barrel. At the end of the session earlier, Feb crude finished +6% at $48.55/barrel
- Feb nat gas closed 10% higher at $3.23/MMBtu
- Feb gold rose $1.20 higher to $1235/oz, while Mar silver lost $0.14 to $16.9/oz.
Commodities
- In electronic trade, WTI crude oil rallied back into positive territory, erasing today's losses
- Feb crude oil closed pit trading $0.15 lower at $45.95/barrel, but is now up 1% at $46.50/barrel.
- Natural gas futures also rallied in electronic trade, extending gains
- Feb nat gas is now +6% at $2.96/MMBtu
- Feb gold rose $5 today to $1233.80/oz, while Mar silver ran notable higher today, ending $4% higher at $17.13/oz
- Copper remained in the red all day, closing today's session at $0.09 lower at $2.64/lb
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Preview: Thursday, 15 Jan 2015
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 14 | 07:00 | MBA Mortgage Index | 01/10 | 49.1% | NA | NA | 11.1% | |
| Jan 14 | 08:30 | Retail Sales | Dec | -0.9% | -0.2% | 0.1% | 0.4% | 0.7% |
| Jan 14 | 08:30 | Retail Sales ex-auto | Dec | -1.0% | 0.0% | 0.1% | 0.1% | 0.5% |
| Jan 14 | 08:30 | Export Prices ex-ag. | Dec | -1.2% | NA | NA | -1.0% | -1.2% |
| Jan 14 | 08:30 | Import Prices ex-oil | Dec | -0.1% | NA | NA | -0.3% | -0.2% |
| Jan 14 | 10:00 | Business Inventories | Nov | 0.2% | 0.4% | 0.3% | 0.2% | |
| Jan 14 | 10:30 | Crude Inventories | 01/10 | 5.389M | NA | NA | -3.062M | |
| Jan 14 | 14:00 | Fed's Beige Book | Jan | NA | NA | NA |
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