Market Summary
from Briefing.comIndustry Watch
Strong: Energy, Telecom Services
Weak: Consumer Discretionary, Health Care, Industrials, Technology
Market Moving Factors
- Retailers AutoZone (AZO), Best Buy (BBY), and Dick's Sporting Goods (DKS) report better than expected results
- High-beta biotech and chipmaker names underperform
[BRIEFING.COM] The first trading day of March was a good day for the stock market and a lousy day for the Treasury market. The former rallied, featuring a return above 5,000 for the Nasdaq Composite and new record closes for both the Dow Jones Industrial Average and S&P 500. The latter, meanwhile, languished and perhaps breathed some added life into the stock market on rebalancing efforts.
To be fair, both the stock and bond markets had reason to advance today. The People's Bank of China cut its key lending rate by 25 basis points to 5.35% and each piece of economic data out of the U.S. today fell short of consensus estimates.
While the rout in the Treasury market was unfolding, a rally in the stock market was playing out, suggesting perhaps that a rotational move out of Treasuries and into stocks was helping to support things. Whatever the case might have been, there was some seemingly equal and opposite action in stocks and Treasuries today.
The stock market didn't necessarily need that rotational trade to do well. It had identifiable catalysts in the rate cut out of China, the association that the first trading day of a new month often sees new inflows, and a spate of M&A activity that was highlighted by NXP Semiconductor's (NXPI 99.59, +14.69) $11.8 billion cash-and-stock offer to acquire Freescale Semiconductor (FSL 40.36, +4.25). Other notable deals included Hewlett-Packard (HPQ 34.92, +0.08) buying Aruba Networks (ARUN 24.61, -0.20) for $2.7 billion in cash, as previously rumored, and Cardinal Health (CAH 89.52, +1.53) acquiring Cordis from Johnson & Johnson (JNJ 103.22, +0.71) for $1.9 billion in cash.
Elsewhere, oil prices had a roller-coaster ride, trading below $49.00/bbl early, moving back above $51.00/bbl later, and then ultimately settling pit trading down $0.17 at $49.59/bbl.
The energy sector (-0.7%) was stuck in a rut all day, even when oil prices came storming back from early losses. The only other sector that fared worse on Monday was the utilities sector, which dropped 2.0%, clipped by the jump in long-term rates.
On the flip side, there was quality leadership in Monday's market from those sectors one would expect to see leading a charge to new highs. The consumer discretionary sector (+1.2%) led all gainers followed by the information technology (+1.0%), health care (+0.9%), financial (+0.8%), and industrials (+0.8%) sectors.
The CBOE Volatility Index ("the VIX") fell 3.2% to 12.92, ending at its lowest level since early December. The VIX Index has plunged 34% over the last month as the broader market has rallied to higher highs.
NYSE volume totaled 740 mln shares versus the 50-day average of 813 mln shares.
To be fair, both the stock and bond markets had reason to advance today. The People's Bank of China cut its key lending rate by 25 basis points to 5.35% and each piece of economic data out of the U.S. today fell short of consensus estimates.
- Personal income rose 0.3% in January (Briefing.com consensus +0.4%) while personal spending declined 0.2% (Briefing.com consensus -0.1%).
- Core PCE prices increased just 0.1% (Briefing.com consensus +0.2%) and are up just 1.3% year-over-year (total PCE prices are up only 0.2% year-over-year, well below the Fed's 2.0% inflation target).
- The February ISM Index slid to a 13-month low of 52.9 (Briefing.com consensus 53.0) from 53.5
- Construction spending declined 1.1% in January (Briefing.com consensus +0.2%) after an upwardly revised 0.8% increase (from +0.4%) in December
While the rout in the Treasury market was unfolding, a rally in the stock market was playing out, suggesting perhaps that a rotational move out of Treasuries and into stocks was helping to support things. Whatever the case might have been, there was some seemingly equal and opposite action in stocks and Treasuries today.
The stock market didn't necessarily need that rotational trade to do well. It had identifiable catalysts in the rate cut out of China, the association that the first trading day of a new month often sees new inflows, and a spate of M&A activity that was highlighted by NXP Semiconductor's (NXPI 99.59, +14.69) $11.8 billion cash-and-stock offer to acquire Freescale Semiconductor (FSL 40.36, +4.25). Other notable deals included Hewlett-Packard (HPQ 34.92, +0.08) buying Aruba Networks (ARUN 24.61, -0.20) for $2.7 billion in cash, as previously rumored, and Cardinal Health (CAH 89.52, +1.53) acquiring Cordis from Johnson & Johnson (JNJ 103.22, +0.71) for $1.9 billion in cash.
Elsewhere, oil prices had a roller-coaster ride, trading below $49.00/bbl early, moving back above $51.00/bbl later, and then ultimately settling pit trading down $0.17 at $49.59/bbl.
The energy sector (-0.7%) was stuck in a rut all day, even when oil prices came storming back from early losses. The only other sector that fared worse on Monday was the utilities sector, which dropped 2.0%, clipped by the jump in long-term rates.
On the flip side, there was quality leadership in Monday's market from those sectors one would expect to see leading a charge to new highs. The consumer discretionary sector (+1.2%) led all gainers followed by the information technology (+1.0%), health care (+0.9%), financial (+0.8%), and industrials (+0.8%) sectors.
The CBOE Volatility Index ("the VIX") fell 3.2% to 12.92, ending at its lowest level since early December. The VIX Index has plunged 34% over the last month as the broader market has rallied to higher highs.
NYSE volume totaled 740 mln shares versus the 50-day average of 813 mln shares.
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Economic Data
from Briefing.com
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Mar 02 | 08:30 | Personal Income | Jan | 0.3% | 0.5% | 0.4% | 0.3% | |
| Mar 02 | 08:30 | Personal Spending | Jan | -0.2% | -0.1% | -0.1% | -0.3% | |
| Mar 02 | 08:30 | PCE Prices - Core | Jan | 0.1% | 0.2% | 0.2% | 0.0% | |
| Mar 02 | 10:00 | ISM Index | Feb | 52.8 | 51.0 | 53.0 | 53.5 | |
| Mar 02 | 10:00 | Construction Spending | Jan | -1.1% | 0.2% | 0.2% | 0.8% | 0.4% |
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Technical Update
DOW
NASDAQ
S&P500
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Market Internal
NYSE :Lower than average volume @ 756.6M vs 824.884M
Advancers outpaced Decliners(adv/dec): 1866M/1219M
New highs outpaced low(high/low): 172/31
NASDAQ :
Higher than average volume @ 1916.3M vs 1829.398M
Advancers outpaced Decliners(adv/dec): 1810M/978M
New highs outpaced low(high/low): 160/33
Advancers outpaced Decliners by 1.67 to 1 on higher volumes 2672.9 (+0.70%) than avg 2654 (-0.26%)
VOLATILITY S&P500 (VIX) :
13.04 -0.30 (-2.25%)
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Bonds, Currencies & Commodities
from Briefing.comBonds
Treasuries Finish Near Lows:- After two strong, intraday rallies, the Treasury complex finished lower. With no significant economic data out today, bonds traded off of the equity sell-off and their own momentum from Monday's shellacking
- Once again, the 2-year note held up better than the belly and long end of the curve, falling only 2 bps to 0.69%
- Yield check:
- 2-yr: +2 bps to 0.69%
- 5-yr: +3 bps to 1.61%
- 10-yr: +4 bps to 2.12%
- 30-yr: +3 bps to 2.71%
- With little in the way of economic data today, Treasuries traded mostly in reaction to the equity market and off of their own momentum from yesterday. Monday was an ugly one for government bond investors, and there was a report today from Reuters that investors had pulled $525.8 million from one large BlackRock ETF on Monday. Real money withdrawals are more concerning than short-selling, as most short-sellers are quicker to cover their positions than people who have made a strategic decision to divest from Treasuries
- Commodities:
- WTI Crude rallied 78 cents (1.57%) to $50.37/bbl
- Gold futures for April delivery gave back yet another intraday rally. After trading as high as $1214.40/troy oz., they fell $5.30 on the day to 1202.90/troy oz.
- Copper fell 4 cents to $2.65/lb.
- Currencies:
- EUR/USD: -7 pips (-0.06%) to $1.1176
- USD/JPY: -40 pips (-0.33%) to 119.75
- The Day Ahead:
- Data Out Wednesday:
- MBA Mortgage Index for week ending 2/28 (07:00 ET)
- February ADP Employment Change (08:15 ET)
- February ISM Services (10:00 ET)
- Crude Inventories for the week ending 2/28 (10:30 ET)
- Fed's Beige Book for March (14:00 ET)
- Fed Speak:
- Chicago Fed President Evans (FOMC voter) speaks on current economic conditions and monetary policy before the Lake Forest-Lake Bluff Rotary Club 2015 Economic Breakfast (09:00 ET)
- Kansas City Fed President George (non-FOMC voter) speaks on the U.S. economy at an event hosted by Central Exchange (approx. 13:00 ET)
- Dallas Fed President Fisher speaks on "Reflections on 10 Years at the Fed & Farewell, El Paso" (19:00 ET)
- Data Out Wednesday:
Currencies
Dollar Pulls Back:- The U.S. Dollar Index lost ground on Tuesday to the Japanese Yen and the commodity currencies (Aussie, Kiwi, and the Loonie), but ended well off of session lows, down 15 ticks (-0.15%) to 95.31
- USD/JPY: -53 pips (-0.45%) to 119.61
- NZD/USD: -48 pips (-0.64%) to $0.7554
- USD/CAD: -60 pips (-0.48%) to 1.2481
- The Australian Dollar rallied overnight as the Reserve Bank of Australia surprised the market and left its policy rate unchanged at 2.25%. The AUD/USD pair rallied sharply on the news, but remains within its range of the past week
- AUD/USD: -66 pips (-0.85%) to $0.7829
- The Euro remained mostly unchanged against the U.S. Dollar. German Retail Sales and Spanish Unemployment both beat expectations, but Eurozone PPI missed the consensus estimate
- EUR/USD: -7 pips (-0.07%) to $1.1189
- The British Pound gained slightly on a better than expected February Construction PMI. It came in at 60.1, versus 59.1 in January
- GBP/USD: +15 pips (+0.1%) to $1.5374
Commodities
WTI Crude Oil Rises Above $51/Barrel , But Couldn’t Hold Gains, Closes Below $50:- The dollar index continued to hold modest gains today, which helped add some selling pressure on commodities today, including precious metals (gold and silver) and oil futures
- Apr crude oil futures started the morning off higher and rose as high as $51.04/barrel. However, these gains could not hold as bearish factors such as oversupply/storage capacity concerns continue to weigh on prices.
- Apr crude oil ended today's session $0.21 lower at $49.58/barrel. Meanwhile, Apr natural gas lost $0.03 to $2.70/MMBtu
- May copper futures remained near the unchanged line today , ultimately finished floor trading $0.01 lower at $2.70/lb
- Apr gold and May silver continued to inch lower in afternoon trading, leaving gold $5.10 lower on the day to $1208.00/oz and May silver $0.14 lower at $16.45/oz
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Preview: Tuesday, 3 Mar 2015
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Mar 03 | 14:00 | Auto Sales | Feb | NA | NA | 5.5M | ||
| Mar 03 | 14:00 | Truck Sales | Feb | NA | NA | 8.1M |
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