Market Summary
from Briefing.comIndustry Watch
Strong: Energy, Financials, Health Care, Materials
Weak:Consumer Staples, Technology, Telecom Services, Utilities
Market Moving Factors
- Greek Finance Minister met with his German counterpart, but the meeting has not produced any results
- Pfizer (PFE) acquires Hospira (HSP) for $90/share
Dow +211.86
at 17884.88,
Nasdaq +48.39
at 4765.10,
S&P +21.01
at 2062.52
[BRIEFING.COM] The major averages zoomed higher on Thursday, allowing the S&P 500 (+1.0%) to reclaim its loss from yesterday and then some. The benchmark index erased the remainder of its decline from January while the Dow (+1.2%) and Russell 2000 (+1.3%) outperformed.
Equity indices made the bulk of their advance during the opening hour and spent the rest of the trading day in narrow ranges near their highs. The opening spike took place after investors realized that yesterday's ECB decision to lift a waiver that allowed for the acceptance of Greek government bonds as collateral was political at its core.
For the time being, Greek banks are still allowed to turn to the Bank of Greece, which in turn has access to funds through Emergency Liquidity Assistance from the European Central Bank. To that point, Germany's Die Welt reported that the ECB has granted up to EUR60 billion in funding to the Bank of Greece through ELA channels.
That being said, the negotiations are unlikely to unfold without a hitch, evidenced by today's press conference after Greece's Finance Minister Yanis Varoufakis met with his German counterpart Wolfgang Schaeuble. Mr. Schaeuble said he was advised to say the two "Agreed to disagree," but Mr. Varoufakis countered, saying "We didn't even agree to disagree."
The S&P 500 opened just above its 50-day moving average (2,044) and built on its early gain with the assistance from most sectors. The materials space (+2.4%) finished in the lead while health care (+1.6%) and energy (+1.4%) also outperformed.
The energy sector received a helping hand from crude oil, which followed yesterday's 9.3% plunge with a 4.2% spike to $50.47/bbl. Despite the surge, the energy component remains below its 50-day moving average, which resides in the $55.00/bbl area.
Meanwhile, the health care sector benefitted from strength in the biotech group with the iShares Nasdaq Biotechnology ETF (IBB 319.91, +7.36) climbing 2.4% to snap its four-day losing streak. Furthermore, Dow component Pfizer (PFE 32.99, +0.92) added 2.9% after agreeing to acquire Hospira (HSP 87.64, +22.84) for $90/share, which represents a 38.9% premium to HSP's closing price from yesterday.
Elsewhere among influential sectors, financials (+1.0%), industrials (+1.0%), and technology (+0.9%) finished near the broader market while the consumer discretionary sector (+0.6%) underperformed. Homebuilders struggled amid today's increase in Treasury yields with the iShares Dow Jones US Home Construction ETF (ITB 26.20, -0.15) shedding 0.6%. Also of note, apparel names ended in mixed fashion with Michael Kors (KORS 69.77, -1.61) falling 2.3% after cautious guidance and below-consensus comparable store sales overshadowed a bottom-line beat.
Treasuries retreated, ending near their lows with the 10-yr yield higher by six basis points at 1.81%.
Today's participation was below average with roughly 775 million shares changing hands at the NYSE floor.
Economic data included Initial Claims, Trade Deficit, Productivity/Unit Labor Cost Data, and Challenger Job Cuts:
Equity indices made the bulk of their advance during the opening hour and spent the rest of the trading day in narrow ranges near their highs. The opening spike took place after investors realized that yesterday's ECB decision to lift a waiver that allowed for the acceptance of Greek government bonds as collateral was political at its core.
For the time being, Greek banks are still allowed to turn to the Bank of Greece, which in turn has access to funds through Emergency Liquidity Assistance from the European Central Bank. To that point, Germany's Die Welt reported that the ECB has granted up to EUR60 billion in funding to the Bank of Greece through ELA channels.
That being said, the negotiations are unlikely to unfold without a hitch, evidenced by today's press conference after Greece's Finance Minister Yanis Varoufakis met with his German counterpart Wolfgang Schaeuble. Mr. Schaeuble said he was advised to say the two "Agreed to disagree," but Mr. Varoufakis countered, saying "We didn't even agree to disagree."
The S&P 500 opened just above its 50-day moving average (2,044) and built on its early gain with the assistance from most sectors. The materials space (+2.4%) finished in the lead while health care (+1.6%) and energy (+1.4%) also outperformed.
The energy sector received a helping hand from crude oil, which followed yesterday's 9.3% plunge with a 4.2% spike to $50.47/bbl. Despite the surge, the energy component remains below its 50-day moving average, which resides in the $55.00/bbl area.
Meanwhile, the health care sector benefitted from strength in the biotech group with the iShares Nasdaq Biotechnology ETF (IBB 319.91, +7.36) climbing 2.4% to snap its four-day losing streak. Furthermore, Dow component Pfizer (PFE 32.99, +0.92) added 2.9% after agreeing to acquire Hospira (HSP 87.64, +22.84) for $90/share, which represents a 38.9% premium to HSP's closing price from yesterday.
Elsewhere among influential sectors, financials (+1.0%), industrials (+1.0%), and technology (+0.9%) finished near the broader market while the consumer discretionary sector (+0.6%) underperformed. Homebuilders struggled amid today's increase in Treasury yields with the iShares Dow Jones US Home Construction ETF (ITB 26.20, -0.15) shedding 0.6%. Also of note, apparel names ended in mixed fashion with Michael Kors (KORS 69.77, -1.61) falling 2.3% after cautious guidance and below-consensus comparable store sales overshadowed a bottom-line beat.
Treasuries retreated, ending near their lows with the 10-yr yield higher by six basis points at 1.81%.
Today's participation was below average with roughly 775 million shares changing hands at the NYSE floor.
Economic data included Initial Claims, Trade Deficit, Productivity/Unit Labor Cost Data, and Challenger Job Cuts:
- The initial claims level increased to 278,000 from an upwardly revised 267,000 (from 265,000) while the Briefing.com consensus expected an increase to 290,000
- For the first few weeks of January, the initial claims level suddenly accelerated above 300,000. There was no supporting evidence that explained the increase, but we assumed that it must have been the result of increased layoff activities in the oil and gas sector
- The trade deficit widened to $46.60 billion in December from a downwardly revised $39.8 billion ($39.0 billion) in November while the consensus expected a decrease to $38.00 billion
- According to the advance fourth quarter GDP report, the BEA assumed that the trade deficit would widen in December to roughly $45.00 billion. Not only did the December deficit exceed those expectations but inclusion of the downside November revisions means that the trade deficit will subtract more from GDP growth in the second estimate than it did in the advance release
- Nonfarm labor productivity declined 1.8% in the fourth quarter after increasing an upwardly revised 3.7% (from 2.3%) in Q3 2014 while the Briefing.com consensus expected an increase of 0.2%
- Unit labor costs increased 2.7% in the fourth quarter after declining in both the second and third quarters. The increase resulted from a 0.9% jump in hourly compensation coupled with lower output gain
- The Challenger Job Cuts report for January indicated a 17.6% increase to follow the prior rise of 6.6%
- Nasdaq Composite +0.6% YTD
- Dow Jones Industrial Average +0.4% YTD
- Russell 2000 +0.3% YTD
- S&P 500 +0.2% YTD
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Economic Data
from Briefing.com
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Feb 05 | 07:30 | Challenger Job Cuts | Jan | 17.6% | NA | NA | 6.6% | |
| Feb 05 | 08:30 | Initial Claims | 01/31 | 278K | 300K | 290K | 267K | 265K |
| Feb 05 | 08:30 | Continuing Claims | 01/24 | 2400K | 2375K | 2388K | 2394K | 2385K |
| Feb 05 | 08:30 | Trade Balance | Dec | -$46.6B | -$43.0B | -$38.0B | -$39.8B | -$39.0B |
| Feb 05 | 08:30 | Productivity-Prel | Q4 | -1.8% | -0.5% | 0.2% | 3.7% | 2.3% |
| Feb 05 | 08:30 | Unit Labor Costs | Q4 | 2.7% | 1.0% | 1.2% | -2.3% | -1.0% |
| Feb 05 | 10:30 | Natural Gas Inventories | 01/31 | -115 bcf | NA | NA | -94 bcf |
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Technical Update
DOW
NASDAQ
S&P500
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Market Internal
NYSE :Lower than average volume @ 793.7M vs 848.024M
Advancers outpaced Decliners(adv/dec): 2366M/751M
New highs outpaced low(high/low): 138/14
NASDAQ :
Higher than average volume @ 2020.8M vs 1805.974M
Advancers outpaced Decliners(adv/dec): 2037M/730M
New highs outpaced low(high/low): 92/37
Advancers outpaced Decliners by 2.97 to 1 on higher volumes 2814.5 (+6.05%) than avg 2654 (+0.59%)
VOLATILITY S&P500 (VIX) :
16.85 -1.48(-8.07%)
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Bonds, Currencies & Commodities
from Briefing.comBonds
Roller-Coaster Ride:
- Treasuries were sold in overnight action and that's pretty much how they stayed throughout Thursday's trading, ending near their worst levels of the day
- 2-yr yield +2 bps at 0.51%
- 5-yr yield +4 bps at 1.29%
- 7-yr yield +5 bps at 1.61%
- 10-yr yield +6 bps at 1.81%
- 30-yr yield +7 bps at 2.42%
- Two key factors drove the defensive action
- Tempered angst over the European Central Bank's (ECB) decision to stop accepting Greek bonds as collateral for ECB funds, effective February 11
- Participants comforted by renewed focus on point that Greek banks can still get liquidity needs met by way of the Greek central bank through the Emergency Liquidity Assistance (ELA) program
- Underlying belief that a worst-case scenario won't unfold, even if things look and sound dicey between now and the end of the month (as they likely will)
- A solid rebound effort in the U.S. stock market that diminished some of the safe-haven appeal of the Treasury market
- Tempered angst over the European Central Bank's (ECB) decision to stop accepting Greek bonds as collateral for ECB funds, effective February 11
- Economic data were generally supportive of Treasuries, yet buyers kept to the sidelines ahead of the January Employment Situation report on Friday
- Initial claims for the week ending January 31 increased 11,000 to 278,000 (Briefing.com consensus 290,000)
- Pretty much on trend at levels that support nonfarm payroll growth in excess of 200,000
- The trade deficit widened to $46.6 billion in December (Briefing.com consensus -$38.0 bln) from a downwardly revised $39.8 bln in November
- Exports dropped by 0.8% to $194.9 billion while imports rose 2.2% to $241.4 billion
- The December report, coupled with the downward revision to November, means the trade deficit will subtract more from Q4 GDP growth in the second estimate than it did in the advance estimate.
- Q4 Productivity declined 1.8% (Briefing.com consensus +0.2%) while Unit Labor Costs rose 2.7% (Briefing.com consensus +1.2%)
- With a bigger increase in hours than output, compensation should be up modestly; however, hours growth is likely to decelerate considerably next quarter, which could mean softer payroll gains in 2015
- Initial claims for the week ending January 31 increased 11,000 to 278,000 (Briefing.com consensus 290,000)
- Central Bank Watch
- Boston Fed President Rosengren, citing total and core inflation trends, said being patient with raising rates is the right policy
- As expected, Bank of England left its key lending rate unchanged and size of its asset purchase program unchanged at 0.50% and GBP375 bln, respectively
- Denmark central bank cut rates 25 bps to -0.75% (fourth cut in three weeks as it aims to keep the krone pegged to the euro)
- Friday: Atlanta Fed President Lockhart (an FOMC voter) speaks at 12:45 ET on monetary policy and economic outlook
- U.S. Dollar Index was weak (-0.4% at 93.58) on the back of a stronger euro
- EUR/USD +1.3% to 1.1474
- Weaker dollar helped aid a rebound in oil prices. After dropping 9.0% on Wednesday, WTI crude rose 4.2% to settle at $50.47/bbl
- Friday Data: January Employment Situation report (08:30 ET), December Consumer Credit (15:00)
- Employment report expected to be a market mover. Average hourly earnings number (Briefing.com consensus +0.3%; prior -0.2%) will be in the spotlight.
Currencies
DXY Remains Offered
Euro Bounces Back: The Dollar Index continues to see selling pressure. The DXY is down over 1% this week as it appears to have finally met resistance at the 95 area. The Trade deficit widened to $46 bln today which is notable as most economists were expecting lower on falling oil prices. However volume was higher and erased some of the expected gains from the lower cost. Exports were also down mainly due to a weakening in non-monetary gold. Participants will be watching this closely to see the impact of weaker global markets and a strong dollar. The number also suggests a downside revision to Q4 GDP when it posts its second print at the end of the month. Initial Claims came in better than expected which will raise expectations for tomorrow's jobs report. Also of interest was the increase in Q4 Labor Unit Costs which rose 2.7%, well above the +1.2% expectations.
- The euro has regained some of yesterday's losses. The single currency was quickly dropped yesterday afternoon as headlines that the ECB would pull exemptions for Greece to borrow crossed wires. The ECB did leave open the ELA funding so it did not cut off Greece but the costs were likely to rise. Greece FM Varoufakis and German FM Schaubel met today in order to discuss the situation. There was no further developments but it would appear the two sides talking was enough to cool market tensions. This has helped the euro climb back over 1.14.Markets will continue to watch the 1.15 area closely to see if it continues to provide resistance.
- The pound is a big winner in the currency markets today. Sterling has been able to extend gains over the 1.52 level and is at tis best level since January 5. The Bank of England met today but did not make any changes to its rates or asset purchases. This was widely expected but it also highlighted that the BoE was not following the majority of central banks into further easing. This is helping provide a bid for cable.
- Global markets continue to gyrate but the yen is certainly not following suit. Yen continues to bounce around in the 117 area. This points to uncertainty on risk as traders would prefer to sit back and hold rather than get overly aggressive. Japan auctions off 30-year debt and saw the yield climb to 1.46% (prior 1.12%) while demand fell to 2.7x (prior 3.6x).
Commodities
- Oil was at it again today, which was driven by a few catalysts including rising violence in Libya and a declining dollar
- Mar crude oil rallied today as high as $52.10/barrel and closed pit trading $2.03 higher at $50.47/barrel
- Nat gas was in the red all morning/afternoon and closed $0.06 lower at $2.60/MMBtu
- Apr gold lost $1.60 to $1263/oz and Mar silver fell $0.22 to $17.19/oz
- Mar copper futures climb slowly higher today off its low and ended $0.01 higher at $2.60/lb
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Preview: Friday, 6 Feb 2015
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Feb 06 | 08:30 | Nonfarm Payrolls | Jan | 235K | 235K | 252K | ||
| Feb 06 | 08:30 | Nonfarm Private Payrolls | Jan | 225K | 225K | 240K | ||
| Feb 06 | 08:30 | Unemployment Rate | Jan | 5.6% | 5.6% | 5.6% | ||
| Feb 06 | 08:30 | Hourly Earnings | Jan | 0.2% | 0.3% | -0.2% | ||
| Feb 06 | 08:30 | Average Workweek | Jan | 34.6 | 34.6 | 34.6 | ||
| Feb 06 | 15:00 | Consumer Credit | Dec | $16.0B | $15.0B | $14.1B |
No comments:
Post a Comment