Market Summary
from Briefing.comIndustry Watch
Strong: -
Weak: -
- Global bourses tilt to the upside
- Dollar and market rates pull back
- German Chancellor Angela Merkel will seek a fourth term in 2017
- Oil rises on renewed output deal speculation
[BRIEFING.COM] The stock market ended an upbeat week on a modestly lower note as the major averages consolidated after an impressive post-election run. The S&P 500 lost 0.2%, narrowing its weekly gain to 0.8%. Separately, the Russell 2000 (+0.5%) and the Nasdaq Composite (-0.2%) outperformed, rising a respective 2.6% and 1.6% this week.
The major averages jumped out of the gate as the S&P 500 (-0.2%) and the Nasdaq Composite (-0.2%) each zeroed in on their respective all-time highs. The tech-heavy index notched a new all-time intraday high (5346.80), but was unable to establish a new closing high. The benchmark index, however, reversed just below the 2190 price level.
Equities were unable to regain their footing as investors assessed whether the broader market has risen too far, too fast. An appreciating US Dollar Index (101.28, +0.39, +0.39%), rising market rates, and volatility from the oil pit also worked to keep the broader market in check.
The long-end of the yield curve has been on the rise in recent days as investors mull rising inflation concerns and improving economic data. The combination has prompted an exodus from longer-dated issues. The yield on the benchmark 10-yr note increased four basis points to 2.34%, leaving the yield up 51 basis points since the end of October. An improving rate hike outlook has also dampened buying interest in the bond market.
Per the CME's FedWatch Tool, the implied probability of an interest rate hike at the December FOMC meeting has increased to 95.4% from yesterday's 90.6%. A number of Federal Reserve speakers contributed to the uptick, indicating that the FOMC will likely go ahead with its next rate hike in December.
The benchmark index finished just below its flat line with seven sectors ending in negative territory. The health care (-1.1%) space outpaced today's losses in the broader market while energy (+0.5%), telecom services (+0.5%), and financials (+0.1%) finished at the top of the sector leaderboard.
Biotechnology demonstrated relative weakness in the health care space (-1.1%), evidenced by the 1.3% loss in the iShares Nasdaq Biotechnology ETF (IBB 284.72, -3.80). The industry group has narrowed its gain in recent days as investors walk back their post-election reaction. Mylan (MYL 36.47, -1.09) ended lower by 2.9% after Mizuho trimmed its price target from $49 to $47. The broader sector lost 1.2% this week, but remains up 3.2% in November.
In the consumer discretionary space (-0.3%), Gap (GPS 25.61, -5.10, -16.6%) and Abercrombie & Fitch (ANF 14.60, -2.33, -13.8%) weighed on the broader retail sub-group. The two demonstrated relative weakness after disappointing participants with their quarterly results and guidance. Conversely, casual restaurant names outperformed after Yum! Brands (YUM 62.36, +1.60, +2.6%) added $2 billion to its share repurchase program.
The financial (+0.1%) group extended its recent winning streak as banking names continued to outperform. The industry group has surged in the aftermath of the election as steepening in the yield curve boosted the earnings prospects for the group. The SPDR S&P Bank ETF (KBE 40.41, +0.24) gained 0.6%, extending its November gain to 16.6%. This compares to a gain of 12.1% in the broader sector.
The commodity-sensitive energy sector (+0.5%) led the pack as investors reevaluated the likelihood of an OPEC supply cap agreement. WTI crude finished the day higher by 1.0% ($46.38/bbl; +$0.45).
Today's trading volume was below the recent average of one billion as fewer than 926 million shares changed hands at the NYSE floor.
Today's economic data was limited to Leading Indicators for October:
The stock market enjoyed its second consecutive week of gains that lifted the S&P 500 into the neighborhood of its record high. The benchmark index gained 0.8% for the week while the Nasdaq Composite (+1.6%) outperformed after lagging one week ago. Conversely, the Dow Jones Industrial Average (+0.1%) underperformed after showing relative strength during the election week.
The overall post-election narrative did not change much during the past week. Expectations for inflationary fiscal policy kept the bond market under pressure, driving the benchmark 10-yr yield up to a one-year high of 2.34% from last Friday's 2.14%. Continued steepening in the yield curve helped the financial sector extend its November gain to 12.3% while the U.S. Dollar Index (101.34) climbed to its best level since early 2003.
Market participants received a batch of quarterly earnings from the retail sector during the past week. Apparel retailers had a mixed showing while electronics retailer Best Buy (BBY) surpassed estimates and issued upbeat guidance for the holiday quarter. Home Depot (HD) also released upbeat earnings and guidance while Wal-Mart (WMT) struggled after its earnings beat was overshadowed by declining profitability. More than 95.0% of S&P 500 components have now reported their third-quarter results, showing an earnings growth rate of 3.0%.
Last week featured Janet Yellen's testimony before the Joint Economic Committee of Congress, but the appearance was free of any big surprises. Chair Yellen acknowledged that recent economic data has lived up to the Federal Reserve's expectations, and noted that a rate hike will be appropriate "relatively soon." Ms. Yellen's appearance had little impact on the fed funds futures market, which continues pointing to a near certainty of a rate hike in December. The implied probability of a December hike rose to 95.4% from last Friday's 81.1%.
The major averages jumped out of the gate as the S&P 500 (-0.2%) and the Nasdaq Composite (-0.2%) each zeroed in on their respective all-time highs. The tech-heavy index notched a new all-time intraday high (5346.80), but was unable to establish a new closing high. The benchmark index, however, reversed just below the 2190 price level.
Equities were unable to regain their footing as investors assessed whether the broader market has risen too far, too fast. An appreciating US Dollar Index (101.28, +0.39, +0.39%), rising market rates, and volatility from the oil pit also worked to keep the broader market in check.
The long-end of the yield curve has been on the rise in recent days as investors mull rising inflation concerns and improving economic data. The combination has prompted an exodus from longer-dated issues. The yield on the benchmark 10-yr note increased four basis points to 2.34%, leaving the yield up 51 basis points since the end of October. An improving rate hike outlook has also dampened buying interest in the bond market.
Per the CME's FedWatch Tool, the implied probability of an interest rate hike at the December FOMC meeting has increased to 95.4% from yesterday's 90.6%. A number of Federal Reserve speakers contributed to the uptick, indicating that the FOMC will likely go ahead with its next rate hike in December.
The benchmark index finished just below its flat line with seven sectors ending in negative territory. The health care (-1.1%) space outpaced today's losses in the broader market while energy (+0.5%), telecom services (+0.5%), and financials (+0.1%) finished at the top of the sector leaderboard.
Biotechnology demonstrated relative weakness in the health care space (-1.1%), evidenced by the 1.3% loss in the iShares Nasdaq Biotechnology ETF (IBB 284.72, -3.80). The industry group has narrowed its gain in recent days as investors walk back their post-election reaction. Mylan (MYL 36.47, -1.09) ended lower by 2.9% after Mizuho trimmed its price target from $49 to $47. The broader sector lost 1.2% this week, but remains up 3.2% in November.
In the consumer discretionary space (-0.3%), Gap (GPS 25.61, -5.10, -16.6%) and Abercrombie & Fitch (ANF 14.60, -2.33, -13.8%) weighed on the broader retail sub-group. The two demonstrated relative weakness after disappointing participants with their quarterly results and guidance. Conversely, casual restaurant names outperformed after Yum! Brands (YUM 62.36, +1.60, +2.6%) added $2 billion to its share repurchase program.
The financial (+0.1%) group extended its recent winning streak as banking names continued to outperform. The industry group has surged in the aftermath of the election as steepening in the yield curve boosted the earnings prospects for the group. The SPDR S&P Bank ETF (KBE 40.41, +0.24) gained 0.6%, extending its November gain to 16.6%. This compares to a gain of 12.1% in the broader sector.
The commodity-sensitive energy sector (+0.5%) led the pack as investors reevaluated the likelihood of an OPEC supply cap agreement. WTI crude finished the day higher by 1.0% ($46.38/bbl; +$0.45).
Today's trading volume was below the recent average of one billion as fewer than 926 million shares changed hands at the NYSE floor.
Today's economic data was limited to Leading Indicators for October:
- The Conference Board's Leading Economic Index increased 0.1% in October after increasing 0.2% in September.
- It was noted by the Conference Board that the six-month growth rate has moderated, but that the index still points to the economy continuing to expand into early 2017.
- Russell 2000: +15.9% YTD
- Dow Jones: +8.3% YTD
- S&P 500: +6.8% YTD
- Nasdaq Composite: +6.3% YTD
The stock market enjoyed its second consecutive week of gains that lifted the S&P 500 into the neighborhood of its record high. The benchmark index gained 0.8% for the week while the Nasdaq Composite (+1.6%) outperformed after lagging one week ago. Conversely, the Dow Jones Industrial Average (+0.1%) underperformed after showing relative strength during the election week.
The overall post-election narrative did not change much during the past week. Expectations for inflationary fiscal policy kept the bond market under pressure, driving the benchmark 10-yr yield up to a one-year high of 2.34% from last Friday's 2.14%. Continued steepening in the yield curve helped the financial sector extend its November gain to 12.3% while the U.S. Dollar Index (101.34) climbed to its best level since early 2003.
Market participants received a batch of quarterly earnings from the retail sector during the past week. Apparel retailers had a mixed showing while electronics retailer Best Buy (BBY) surpassed estimates and issued upbeat guidance for the holiday quarter. Home Depot (HD) also released upbeat earnings and guidance while Wal-Mart (WMT) struggled after its earnings beat was overshadowed by declining profitability. More than 95.0% of S&P 500 components have now reported their third-quarter results, showing an earnings growth rate of 3.0%.
Last week featured Janet Yellen's testimony before the Joint Economic Committee of Congress, but the appearance was free of any big surprises. Chair Yellen acknowledged that recent economic data has lived up to the Federal Reserve's expectations, and noted that a rate hike will be appropriate "relatively soon." Ms. Yellen's appearance had little impact on the fed funds futures market, which continues pointing to a near certainty of a rate hike in December. The implied probability of a December hike rose to 95.4% from last Friday's 81.1%.
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Economic Data
from Briefing.com-
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Technical Update
DOW JONES INDUSTRIAL AVERAGE18867.93 -35.89 (-0.19%)
Volume: 109.88 Mil above average of 97.79 Mil
Range: 18853.83 - 18915.74
S&P500 INDEX
2181.9 -5.22 (-0.24%)
Volume: 670.52 Mil above average of 623.62 Mil
Range: 2180.38 - 2189.89
DOW JONES TRANSPORTATION AVERAGE
8856.47 +65.24 (+0.74%)
Volume: 19.08 Mil above average of 17.63 Mil
Range: 8765.04 - 8859.06
NASDAQ COMPOSITE
5321.509766 -12.46 (-0.23%)
Volume: 1858.61 Mil below average of 1885.46 Mil
Range: 5315.529785 - 5346.799805
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Market Internal
NYSE :Higher than average volume @ 931.7M vs 929.0M
Decliners outpaced Advancers(adv/dec): 1418M/1551M
New highs outpaced low(high/low): 150/42
NASDAQ :
Lower than average volume @ 1826.2M vs 1856.8M
Advancers outpaced Decliners(adv/dec): 1533M/1292M
New highs outpaced low(high/low): 280/41
Advancers outpaced Decliners by 1.04 to 1 on lower volumes 2757.9 ( -1.00%) than avg 2786 (-0.35%)
VOLATILITY S&P500 (VIX) :
12.85 -0.50 (-3.75%)
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Bonds, Currencies & Commodities
from Briefing.comBonds
Treasury Yields Jump to Fresh 2016 Highs
- U.S. Treasuries lost more ground today, led lower by the 5 and 10-year notes, as the U.S. Dollar Index rallied for its 10th consecutive session (+0.33% to 101.22). The dominant theme in Treasuries remains the expectation of large fiscal stimulus in 2017 from the Republican government and a current firming of the pace of economic growth. Retail sales and housing starts data, released earlier this week, showed that the recovery is at low risk of faltering. The only significant U.S. economic report today was that Leading Indicators rose just 0.1% m/m in October, but there were a few Fed speakers. New York Fed President Dudley said that the Treasury market's reaction to the November 8 election was not concerning and that the U.S. economy is growing faster than its trend rate. Dallas Fed President Kaplan, who will vote in 2017, said that the Fed is making good progress toward its dual mandate (low unemployment and stable prices) and that he favors removing some monetary accommodation in the near future. St. Louis Fed President Bullard, who votes this year, said that he is leaning towards supporting a rate hike at the December 13-14 FOMC meeting. The S&P 500 now trades down 0.22% to 2,182.3
- Yield Check:
- 2-yr: unch at 1.05%
- 5-yr: +4 bps to 1.78%
- 10-yr: +4 bps to 2.34%
- 30-yr: unch at 3.01%
- News:
- New York Fed President Dudley (FOMC voter) said today that the U.S. economy is growing faster than its trend rate and that the Fed should be confident that it will meet its inflation target over the next few years
- Dudley went on to say that inflation expectations are well-anchored and that it is important not to jump to conclusions on how fiscal policy will evolve
- Dallas Fed President Kaplan will vote in 2017 and said this morning that the Fed is ready to remove accommodation in the near future and that the Fed is making good progress on its dual mandate
- Kansas City Fed President George (FOMC voter) said that the Fed should hike rates "sooner rather than later."
- She went on to voice concerns about financial instability and said that allowing the economy to overheat now would produce only short-term gains with higher longer-term costs
- The Conference Board's Leading Economic Index increased 0.1% m/m in October after increasing 0.2% in September.
- The jump in October was led by the interest rate spread (which should be an even bigger contributor in November) and average weekly hours, which were offset somewhat by weakness in the initial claims and new orders components
- The Coincident Economic Index also increased 0.1% in October following a 0.1% increase in September
- The Lagging Economic Index increased 0.2% on top of a 0.2% increase in September
- The Kansas City Fed's Manufacturing Index fell to 9 for November from 18 in October
- The New York Fed's nowcast for Q4 U.S. real GDP growth is up to 2.4% from 1.6% two weeks ago
- New York Fed President Dudley (FOMC voter) said today that the U.S. economy is growing faster than its trend rate and that the Fed should be confident that it will meet its inflation target over the next few years
- Commodities:
- WTI crude: +0.61% to $46.26/bbl.
- Gold: -0.65% to $1,209/troy oz.
- Copper: -0.84% to $2.47/lb.
- Currencies:
- EUR/USD: -0.16% to 1.0596
- USD/JPY: +0.41% to 110.62
- Week Ahead:
- Monday: $26 bln 2-year Treasury auction (results at 13:00 ET)
- Tuesday: October Existing Home Sales (10:00 ET); $34 bln 5-year Treasury auction (results at 13:00 ET)
- Wednesday: MBA Mortgage Index for the week ending 11/19 (07:00 ET); Initial Jobless Claims for the week ending 11/19 and Continuing Jobless Claims for the week ending 11/12 (08:30 ET); October Durable Goods Orders and Durable Goods ex-trans (08:30 ET); September FHFA Housing Price Index (09:00 ET); October New Home Sales (10:00 ET); November Michigan Sentiment – Final (10:00 ET); Crude Inventories for the week ending 11/19 (10:30 ET); Natural Gas Inventories for the week ending 11/19 (12:00 ET); $28 bln 7-year Treasury auction (results at 13:00 ET); November FOMC Minutes (14:00 ET)
- Thursday: (Thanksgiving holiday)
- Friday: Early close in cash market (14:00 ET)
Currencies
Commodities
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Preview: Week 21 - 25 November 2016
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Nov 22 | 10:00 | Existing Home Sales | Oct | 5.38M | 5.40M | 5.49M | 5.47M | |
| Nov 23 | 07:00 | MBA Mortgage Index | 11/19 | NA | NA | -9.2% | ||
| Nov 23 | 08:30 | Initial Claims | 11/19 | 245K | 243K | 235K | ||
| Nov 23 | 08:30 | Continuing Claims | 11/12 | NA | NA | 1977K | ||
| Nov 23 | 08:30 | Durable Orders | Oct | 2.2% | 1.1% | -0.1% | ||
| Nov 23 | 08:30 | Durable Orders, Ex- Transportation | Oct | 0.2% | 0.3% | 0.2% | ||
| Nov 23 | 09:00 | FHFA Housing Price Index | Sep | NA | NA | 0.7% | ||
| Nov 23 | 10:00 | New Home Sales | Oct | 580K | 587K | 593K | ||
| Nov 23 | 10:00 | Michigan Sentiment - Final | Nov | 91.8 | 91.6 | 91.6 | ||
| Nov 23 | 10:30 | Crude Inventories | 11/19 | NA | NA | 5.274M | ||
| Nov 23 | 12:00 | Natural Gas Inventories | 11/19 | NA | NA | 30 bcf | ||
| Nov 23 | 14:00 | FOMC Minutes | Nov 2 | NA | NA | NA | ||
| Nov 25 | 08:30 | International Trade in Goods | Oct | NA | NA | -$56.1B | ||
| Nov 25 | 08:30 | Advance Wholesale Inventories | Oct | 0.2% | 0.2% | +0.2% |
Other Events of Interest
Earnings
Commentary
Internals show a lack in strength in this downward movement. I expect the market to continue on its uptrend.
Direction for 21 - 25 November 2016: UP
Direction for 21 November 2016: UP
Direction for 21 - 25 November 2016: UP
Direction for 21 November 2016: UP
No comments:
Post a Comment