Market Summary
from Briefing.comIndustry Watch
Strong: Real Estate, Utilities, Consumer Staples, Health Care, Technology
Weak: Consumer Discretionary, Financials, Telecom Services
- Agreement to lower oil supply to 32.5 million barrels/day reached at OPEC meeting in Vienna
- Economic data remains supportive of December rate hike
- Month-end flows likely to boost volume
[BRIEFING.COM] The stock market ended a down week on a flat note. The S&P 500 surrendered a seven-point gain to end just above its flat line. For the week, the S&P 500 lost 1.0%, the Nasdaq fell 2.7%, and the Dow ticked up 0.1%.
Prior to the open, investors received the November Employment Situation report (178,000; Briefing.com consensus 180,000), which essentially matched estimates. It was a bit surprising to see a 0.1% decline in average hourly earnings (Briefing.com consensus 0.2%), but with the year-over-year rate hovering at 2.5%, the market does not expect this report to alter the rate hike picture. In fact, the implied probability of a rate hike, as indicated by the fed funds futures market, increased to 97.2% from yesterday's 92.7%.
Equity indices climbed through the first two hours of action, but relative strength among four of five countercyclical sectors was not enough to offset losses in heavily-weighted groups like consumer discretionary (-0.6%), financials (-0.9%), and industrials (-0.1%).
The financial sector narrowed its weekly gain to 0.9%, responding to some flattening in the yield curve as the 10-yr yield slipped six basis points to 2.39%. Treasuries climbed alongside other sovereign debt, as participants employed caution ahead of a weekend constitutional reform referendum in Italy. Polls conducted before the blackout period pointed to a likely victory for the ‘no' camp, which is expected to be met with Prime Minister Matteo Renzi's resignation. It was reported throughout the week that the European Central Bank is ready to step up its purchases of Italian bonds if there is an increase in volatility. This understanding was likely the driving force behind today's strength in Italian debt that sent the country's 10-yr yield lower by 13 basis points to 1.91%.
The consumer discretionary space spent the day in a slow retreat with Starbucks (SBUX 57.21, -1.30) acting as an overhang. The stock settled lower by 2.2% after the company announced that Chief Executive Officer Howard Schultz will be appointed Executive Chairman and a new CEO will be named. Elsewhere in the sector, other quick-service restaurant names and apparel names also struggled while homebuilders outperformed. Chipotle Mexican Grill (CMG 400.03, -2.35), Yum! Brands (YUM 62.42, -0.27) both lost near 0.5% while Gap (GPS 24.30, -0.75) surrendered 3.0% after a disappointing same-store sales report. Homebuilders bucked the trend within the sector with the Dow Jones US Home Construction ETF (ITB 27.04, +0.03) adding 0.1%.
On the upside, rate-sensitive real estate (+1.2%) and utilities (+0.9%) were bolstered by the decline in Treasury yields, while the technology sector (+0.4%) rebounded from yesterday's weakness, but still lost 2.9% for the week. Chipmakers contributed to today's strength in the top-weighted group, sending the PHLX Semiconductor Index higher by 1.3%. The high-beta index narrowed this week's loss to 4.9%. The energy sector (+0.1%) also settled among the outperformers, benefitting from continued strength in crude oil. WTI crude climbed 1.2% to $51.68/bbl, settling just below its 2016 high ($51.93) that was notched in late October.
The energy sector gained 2.6% for the week, ending well ahead of the remaining sectors.
Today's participation was shy of the 200-day average of 926 million as 882 million shares changed hands at the NYSE floor.
Taking another look at the November Employment Situation Report:
The stock market took a breather after three weeks of solid gains. The S&P 500 surrendered 1.0% for the week while the Nasdaq Composite continued its recent underperformance, falling 2.7%. It is worth noting that the blue chip Dow Jones Industrial Average (+0.1%) eked out a slim gain, logging its fourth consecutive weekly advance.
The outperformance of the Dow has been a common theme since the election as market participants piled into stocks of companies that are expected to benefit from increased infrastructure spending. A portion of the gains in growth-sensitive areas has come at the expense of technology stocks, leading to relative weakness in the Nasdaq. In addition, there has been some speculation that the immigration policy of the next administration could make things a bit more difficult for tech employees to obtain work visas in the US.
The trading week was highlighted by OPEC securing an official agreement to lower production to 32.5 million barrels per day after months of speculation about the likelihood of an agreement being struck. Crude oil responded by rallying into the area of its 2016 high (51.93).
With oil returning to its best level of the year, the energy component is now in position to contribute to an uptick in inflation expectations. Those expectations have already seen a notable uptick since the election as participants piled into stocks that should benefit from infrastructure spending. The 10-yr note registered its fourth consecutive weekly loss, driving its yield up to 2.39% after marking a 17-month high at 2.49%.
On Friday, investors received the November Employment Situation report (178,000; Briefing.com consensus 180,000), but the release did little to change rate hike expectations even though average hourly earnings declined 0.1% (Briefing.com consensus 0.2%). The fed funds futures market remains all but convinced (94.9%) that a rate hike will be announced on December 14.
Prior to the open, investors received the November Employment Situation report (178,000; Briefing.com consensus 180,000), which essentially matched estimates. It was a bit surprising to see a 0.1% decline in average hourly earnings (Briefing.com consensus 0.2%), but with the year-over-year rate hovering at 2.5%, the market does not expect this report to alter the rate hike picture. In fact, the implied probability of a rate hike, as indicated by the fed funds futures market, increased to 97.2% from yesterday's 92.7%.
Equity indices climbed through the first two hours of action, but relative strength among four of five countercyclical sectors was not enough to offset losses in heavily-weighted groups like consumer discretionary (-0.6%), financials (-0.9%), and industrials (-0.1%).
The financial sector narrowed its weekly gain to 0.9%, responding to some flattening in the yield curve as the 10-yr yield slipped six basis points to 2.39%. Treasuries climbed alongside other sovereign debt, as participants employed caution ahead of a weekend constitutional reform referendum in Italy. Polls conducted before the blackout period pointed to a likely victory for the ‘no' camp, which is expected to be met with Prime Minister Matteo Renzi's resignation. It was reported throughout the week that the European Central Bank is ready to step up its purchases of Italian bonds if there is an increase in volatility. This understanding was likely the driving force behind today's strength in Italian debt that sent the country's 10-yr yield lower by 13 basis points to 1.91%.
The consumer discretionary space spent the day in a slow retreat with Starbucks (SBUX 57.21, -1.30) acting as an overhang. The stock settled lower by 2.2% after the company announced that Chief Executive Officer Howard Schultz will be appointed Executive Chairman and a new CEO will be named. Elsewhere in the sector, other quick-service restaurant names and apparel names also struggled while homebuilders outperformed. Chipotle Mexican Grill (CMG 400.03, -2.35), Yum! Brands (YUM 62.42, -0.27) both lost near 0.5% while Gap (GPS 24.30, -0.75) surrendered 3.0% after a disappointing same-store sales report. Homebuilders bucked the trend within the sector with the Dow Jones US Home Construction ETF (ITB 27.04, +0.03) adding 0.1%.
On the upside, rate-sensitive real estate (+1.2%) and utilities (+0.9%) were bolstered by the decline in Treasury yields, while the technology sector (+0.4%) rebounded from yesterday's weakness, but still lost 2.9% for the week. Chipmakers contributed to today's strength in the top-weighted group, sending the PHLX Semiconductor Index higher by 1.3%. The high-beta index narrowed this week's loss to 4.9%. The energy sector (+0.1%) also settled among the outperformers, benefitting from continued strength in crude oil. WTI crude climbed 1.2% to $51.68/bbl, settling just below its 2016 high ($51.93) that was notched in late October.
The energy sector gained 2.6% for the week, ending well ahead of the remaining sectors.
Today's participation was shy of the 200-day average of 926 million as 882 million shares changed hands at the NYSE floor.
Taking another look at the November Employment Situation Report:
- Nonfarm payrolls increased by 178,000 (Briefing.com consensus 180,000). Job gains have averaged 180,000 per month so far this year versus an average monthly increase of 229,000 in 2015.
- October nonfarm payrolls revised to 142,000 from 161,000
- Private sector payrolls increased by 156,000 (Briefing.com consensus 170,000)
- October private sector payrolls revised to 135,000 from 142,000
- Unemployment rate was 4.6% (Briefing.com consensus 4.9%) versus 4.9% in October
- November average hourly earnings were down 0.1% (Briefing.com consensus +0.2%) after being up 0.4% in October
- Over the last 12 months, average hourly earnings have risen 2.5% versus 2.8% for the 12-month period ending in October
- The average workweek was unchanged at 34.4 hours (Briefing.com consensus 34.4)
- The labor force participation rate was 62.7% versus 62.8% in October
- Russell 2000 +15.7% YTD
- Dow Jones Industrial Average +10.0% YTD
- S&P 500 +7.2% YTD
- Nasdaq Composite +5.0% YTD
The stock market took a breather after three weeks of solid gains. The S&P 500 surrendered 1.0% for the week while the Nasdaq Composite continued its recent underperformance, falling 2.7%. It is worth noting that the blue chip Dow Jones Industrial Average (+0.1%) eked out a slim gain, logging its fourth consecutive weekly advance.
The outperformance of the Dow has been a common theme since the election as market participants piled into stocks of companies that are expected to benefit from increased infrastructure spending. A portion of the gains in growth-sensitive areas has come at the expense of technology stocks, leading to relative weakness in the Nasdaq. In addition, there has been some speculation that the immigration policy of the next administration could make things a bit more difficult for tech employees to obtain work visas in the US.
The trading week was highlighted by OPEC securing an official agreement to lower production to 32.5 million barrels per day after months of speculation about the likelihood of an agreement being struck. Crude oil responded by rallying into the area of its 2016 high (51.93).
With oil returning to its best level of the year, the energy component is now in position to contribute to an uptick in inflation expectations. Those expectations have already seen a notable uptick since the election as participants piled into stocks that should benefit from infrastructure spending. The 10-yr note registered its fourth consecutive weekly loss, driving its yield up to 2.39% after marking a 17-month high at 2.49%.
On Friday, investors received the November Employment Situation report (178,000; Briefing.com consensus 180,000), but the release did little to change rate hike expectations even though average hourly earnings declined 0.1% (Briefing.com consensus 0.2%). The fed funds futures market remains all but convinced (94.9%) that a rate hike will be announced on December 14.
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Economic Data
from Briefing.com| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Dec 02 | 08:30 | Nonfarm Payrolls | Nov | 178K | 165K | 180K | 142K | 161K |
| Dec 02 | 08:30 | Nonfarm Private Payrolls | Nov | 156K | 155K | 170K | 135K | 142K |
| Dec 02 | 08:30 | Hourly Earnings | Nov | -0.1% | 0.2% | 0.2% | 0.4% | -- |
| Dec 02 | 08:30 | Unemployment Rate | Nov | 4.6% | 4.9% | 4.9% | 4.9% | -- |
| Dec 02 | 08:30 | Average Workweek | Nov | 34.4 | 34.4 | 34.4 | 34.4 | -- |
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Technical Update
DOW JONES INDUSTRIAL AVERAGE19170.42 -21.51 (-0.11%)
Volume: 84.92 Mil below average of 93.59 Mil
Range: 19141.18 - 19196.14
S&P500 INDEX
2191.95 +0.87 (+0.04%)
Volume: 587.43 Mil below average of 608.09 Mil
Range: 2188.37 - 2197.95
DOW JONES TRANSPORTATION AVERAGE
9048.96 +11.76 (+0.13%)
Volume: 16.43 Mil below average of 16.91 Mil
Range: 9032.24 - 9075.82
NASDAQ COMPOSITE
5255.649902 +4.54 (+0.09%)
Volume: 1848.93 Mil above average of 1831.96 Mil
Range: 5239.27002 - 5274.540039
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Market Internal
NYSE :Lower than average volume @ 890.9M vs 922.4M
Advancers outpaced Decliners(adv/dec): 1617M/1334M
New highs outpaced low(high/low): 89/70
NASDAQ :
Higher than average volume @ 1831.2M vs 1828.8M
Advancers outpaced Decliners(adv/dec): 1443M/1375M
New highs outpaced low(high/low): 109/54
Advancers outpaced Decliners by 1.13 to 1 on lower volumes 2722.1 ( -1.05%) than avg 2751 (+0.70%)
VOLATILITY S&P500 (VIX) :
14.12 +0.05 (+0.36%)
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Bonds, Currencies & Commodities
from Briefing.comBonds
Treasuries Trim Week's Losses on Decline in Hourly Earnings
- U.S. Treasuries followed through on Thursday's afternoon rally today as average hourly earnings growth in the U.S. fell short of expectations for November. While the rest of the employment report painted a picture of steady jobs growth and sharply declining slack in the labor market, Treasuries were down quite sharply from November's slide and investors took advantage of the pause in positive economic surprises to lock in higher yields by buying bonds. The U.S. Dollar Index fell 0.27% to 100.77 as dollar bulls saw a chance to take profits and the S&P 500 is down 0.05% to 2,190. The Italian referendum will take place on Sunday and ISM Non-Manufacturing kicks off next week's U.S. data flow on Monday
- Yield Check:
- 2-yr: -4 bps to 1.11%
- 5-yr: -8 bps to 1.82%
- 10-yr: -6 bps to 2.39%
- 30-yr: -5 bps to 3.06%
- News:
- Nonfarm payrolls rose 178K in November versus the Briefing.com consensus of 180K. October's reading was revised down to 142K from 161K and September's number was revised to 208K from 191K
- Nonfarm private payrolls grew by 156K versus the Briefing.com consensus of 170K. October saw private payroll growth of 142K
- Average hourly earnings fell 0.1% m/m, missing the Briefing.com consensus for 0.2% growth. October's growth was 0.4%
- The unemployment rate fell to 4.6%, well below the Briefing.com consensus of 4.9%. The UE rate was 4.9% in October
- The average workweek remained at 34.4, in line with the Briefing.com consensus
- Commodities:
- WTI crude: +1.06% to $51.60/bbl.
- Gold: +0.53% to $1,173.1/troy oz.
- Copper: -0.62% to $2.6265/lb.
- Currencies:
- EUR/USD: -0.06% to 1.0658
- USD/JPY: -0.08% to 113.69
- Week Ahead:
- Monday: New York Fed President Dudley (FOMC voter) (08:30 ET); Chicago Fed President Evans (FOMC voter in 2017) (09:25 ET); November ISM Services (10:00 ET); St. Louis Fed President Bullard (FOMC voter in 2016) (14:05 ET)
- Tuesday: Q3 Productivity and Unit Labor Costs – Revised (08:30 ET); October Trade Balance (08:30 ET); October Factory Orders (10:00 ET)
- Wednesday: MBA Mortgage Index for the week ending 12/03 (07:00 ET); Crude Inventories for the week ending 12/03 (10:30 ET); October Consumer Credit (15:00 ET)
- Thursday: Initial Jobless Claims for the week ending 12/03 and Continuing Jobless Claims for the week ending 11/26 (08:30 ET); Natural Gas Inventories for the week ending 12/03 (10:30 ET)
- Friday: December Michigan Sentiment (10:00 ET); October Wholesale Inventories (10:00 ET)
Currencies
Commodities
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Preview: Week of 5 - 9 December 2016
Economic Data
-Other Events of Interest
Earnings
Commentary
-
Direction for Week of 5 - 9 December 2016: Direction for 5 December 2016:
Direction for Week of 5 - 9 December 2016: Direction for 5 December 2016:
No comments:
Post a Comment