Market Summary
from Briefing.comIndustry Watch
Strong: Health Care
Weak: Utilities, Telecom Services, Materials, Energy, Real Estate
- Banks are falling after showing relative strength earlier today. JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), and others reported quarterly results this morning.
- Risk-off action has pushed Treasuries up from their session lows.
[BRIEFING.COM] The major averages finished Friday's session mixed. The S&P 500 (+0.2%) and the Nasdaq (+0.5%) closed in the green, while the Dow (unch) finished in the red.
Investors had high hopes for today's earnings reports, looking for banks to validate the financial sector's 20.5% Q4 advance. What they received wasn't great, yet it wasn't all that bad either as Bank of America (BAC 23.01, +0.09), JPMorgan Chase (JPM 86.70, +0.46), and Wells Fargo (WFC 55.31, +0.81) came up short on revenue. Wells Fargo also missed bottom-line expectations while Bank of America and JPMorgan beat their respective earnings estimates.
Investors chose to run with the good news, pushing the financial sector, and the market, upward out of the gate. However, profit taking in the financial sector pressured the influential group off its high, leading to a sideways drift in the broader market as the session wore on. Bank of America (+0.4%), JPMorgan Chase (+0.5%), and Wells Fargo (+1.5%) finished off their session highs, but still outpaced the broader market. Similarly, the financial sector (+0.6%) ended atop the leaderboard, but only kept a portion of its opening gain.
Most cyclical sectors outperformed with consumer discretionary (+0.3%), industrials (+0.3%), and technology (+0.3%) closing in positive territory. The top-weighted technology sector had a mixed showing from its top components as Apple (AAPL 119.04, -0.21) lost 0.2% while Facebook (FB 128.34, +1.72) climbed 1.4%. On the other hand, chipmakers finished overwhelmingly in the green, with Qualcomm (QCOM 66.88, +0.76) pacing the advance. The PHLX Semiconductor Index closed higher by 0.7%.
On the countercyclical side, health care (+0.1%) outpaced its defensive peers. The space leaned on biotechnology to counter losses from large cap components like UnitedHealth (UNH 161.80, -0.56) and Bristol-Myers Squibb (BMY 56.22, -0.33) which lost 0.3% and 0.6%, respectively. The iShares Nasdaq Biotechnology ETF (IBB 280.01, +1.08) countered with a 0.4% gain. The remaining four countercyclical sectors finished just below their flat lines in negative territory.
For the week, the cyclical, non-cyclical trend continued as four of the six growth-sensitive sectors posted week-to-date gains. Comparatively, all five countercyclical sectors finished the week lower. The ends of the leaderboard were represented by consumer discretionary (+0.8%) at the top, riding a 0.7% week-to-date gain in the SPDR S&P 500 Retail ETF (XRT 44.01, +0.04), and real estate (-2.3%) at the bottom.
U.S. Treasuries were under moderate selling pressure early, sustaining losses immediately following the opening bell. The Treasury market recouped some of the loss, but still closed in negative territory with the 10-yr yield higher by two basis points at 2.39%.
Today's economic data included PPI, Retail Sales, Business Inventories, and the Michigan Sentiment Index:
The S&P 500 took a breather during the past week, logging a modest downtick of 0.1%, while the Nasdaq Composite added 1.0% thanks to relative strength in the technology sector.
The benchmark index spent the week inside a 25-point range as participants awaited the start of the fourth-quarter earnings season. On Friday, Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) got things going with a set of mixed results. Bank of America and JPMorgan Chase topped bottom-line expectations while Wells Fargo reported below-consensus results. The three names surged at the start of Friday's session, but saw intraday profit taking. It is worth remembering that the financial sector enjoyed a huge post-election run, soaring more than 15.0% in just one month. During the past week, the sector shed 0.1%.
Meanwhile, the top-weighted technology sector advanced 0.8% with chipmakers leading the way. The PHLX Semiconductor Index climbed 1.8% ahead of next week's release of quarterly results from index components like ASML (ASML), Linear Technology (LLTC), and Skyworks (SWKS).
Investors received a small batch of economic reports last week with the most noteworthy pair crossing the wires on Friday. December PPI (+0.3%; Briefing.com consensus +0.3%) and core PPI (+0.2%; Briefing.com consensus +0.1%) were close to expectations while December Retail Sales (+0.6%; Briefing.com consensus +0.7%) and Retail Sales ex-auto (+0.2%; Briefing.com consensus +0.6%) disappointed. Recall that two weeks ago, several apparel retailers made cautious comments about their expectations for fourth-quarter earnings. The consumer discretionary sector added 0.8% for the week, extending its January gain to 3.2%.
Rate hike expectations barely budged during the past week. The implied probability of a hike in June ticked up to 69.7% from last Friday's 69.0%, according to the fed funds futures market.
Investors had high hopes for today's earnings reports, looking for banks to validate the financial sector's 20.5% Q4 advance. What they received wasn't great, yet it wasn't all that bad either as Bank of America (BAC 23.01, +0.09), JPMorgan Chase (JPM 86.70, +0.46), and Wells Fargo (WFC 55.31, +0.81) came up short on revenue. Wells Fargo also missed bottom-line expectations while Bank of America and JPMorgan beat their respective earnings estimates.
Investors chose to run with the good news, pushing the financial sector, and the market, upward out of the gate. However, profit taking in the financial sector pressured the influential group off its high, leading to a sideways drift in the broader market as the session wore on. Bank of America (+0.4%), JPMorgan Chase (+0.5%), and Wells Fargo (+1.5%) finished off their session highs, but still outpaced the broader market. Similarly, the financial sector (+0.6%) ended atop the leaderboard, but only kept a portion of its opening gain.
Most cyclical sectors outperformed with consumer discretionary (+0.3%), industrials (+0.3%), and technology (+0.3%) closing in positive territory. The top-weighted technology sector had a mixed showing from its top components as Apple (AAPL 119.04, -0.21) lost 0.2% while Facebook (FB 128.34, +1.72) climbed 1.4%. On the other hand, chipmakers finished overwhelmingly in the green, with Qualcomm (QCOM 66.88, +0.76) pacing the advance. The PHLX Semiconductor Index closed higher by 0.7%.
On the countercyclical side, health care (+0.1%) outpaced its defensive peers. The space leaned on biotechnology to counter losses from large cap components like UnitedHealth (UNH 161.80, -0.56) and Bristol-Myers Squibb (BMY 56.22, -0.33) which lost 0.3% and 0.6%, respectively. The iShares Nasdaq Biotechnology ETF (IBB 280.01, +1.08) countered with a 0.4% gain. The remaining four countercyclical sectors finished just below their flat lines in negative territory.
For the week, the cyclical, non-cyclical trend continued as four of the six growth-sensitive sectors posted week-to-date gains. Comparatively, all five countercyclical sectors finished the week lower. The ends of the leaderboard were represented by consumer discretionary (+0.8%) at the top, riding a 0.7% week-to-date gain in the SPDR S&P 500 Retail ETF (XRT 44.01, +0.04), and real estate (-2.3%) at the bottom.
U.S. Treasuries were under moderate selling pressure early, sustaining losses immediately following the opening bell. The Treasury market recouped some of the loss, but still closed in negative territory with the 10-yr yield higher by two basis points at 2.39%.
Today's economic data included PPI, Retail Sales, Business Inventories, and the Michigan Sentiment Index:
- December producer prices increased 0.3%, which is in line with the Briefing.com consensus. Core producer prices increased 0.2% while the Briefing.com consensus expected an increase of 0.1%.
- The key takeaway from the report is that higher energy prices are driving up producer prices and continue to support the notion that inflation rates are apt to pick up in 2017.
- December retail sales increased 0.6%, which compares to the Briefing.com consensus of 0.7%. The prior month's reading was revised higher to 0.2% from 0.1%. Excluding autos, retail sales rose 0.2% while the consensus expected an uptick of 0.6%. The prior month's reading was revised higher to 0.3% from 0.2%.
- The key takeaway from the report is that consumers were somewhat guarded with their discretionary spending on goods in December despite some decent wage growth and reports of increased confidence.
- Business Inventories rose 0.7% in November while the Briefing.com consensus expected an uptick of 0.6%. The prior month's reading was revised to -0.1% from -0.2%.
- The key takeaway from the report is that business inventories continue to remain at an elevated level relative to sales, which will continue to weigh on pricing power.
- The preliminary reading of the Michigan Consumer Sentiment Index for January declined to 98.1 (Briefing.com consensus 98.5) from 98.2 in December.
- The key takeaway from the report is that there is a real divide between positive and negative concerns among consumers pertaining to the Trump Administration. However, when the outlook from consumers who didn't share any views on government is considered, the Expectations Index was a strong 90.9. The latter, according to the report, supports a real consumption growth rate of 2.7% in 2017.
- Russell 2000 +1.1% YTD
- Dow Jones Industrial Average +0.6% YTD
- S&P 500 +1.6% YTD
- Nasdaq Composite +3.6% YTD
The S&P 500 took a breather during the past week, logging a modest downtick of 0.1%, while the Nasdaq Composite added 1.0% thanks to relative strength in the technology sector.
The benchmark index spent the week inside a 25-point range as participants awaited the start of the fourth-quarter earnings season. On Friday, Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) got things going with a set of mixed results. Bank of America and JPMorgan Chase topped bottom-line expectations while Wells Fargo reported below-consensus results. The three names surged at the start of Friday's session, but saw intraday profit taking. It is worth remembering that the financial sector enjoyed a huge post-election run, soaring more than 15.0% in just one month. During the past week, the sector shed 0.1%.
Meanwhile, the top-weighted technology sector advanced 0.8% with chipmakers leading the way. The PHLX Semiconductor Index climbed 1.8% ahead of next week's release of quarterly results from index components like ASML (ASML), Linear Technology (LLTC), and Skyworks (SWKS).
Investors received a small batch of economic reports last week with the most noteworthy pair crossing the wires on Friday. December PPI (+0.3%; Briefing.com consensus +0.3%) and core PPI (+0.2%; Briefing.com consensus +0.1%) were close to expectations while December Retail Sales (+0.6%; Briefing.com consensus +0.7%) and Retail Sales ex-auto (+0.2%; Briefing.com consensus +0.6%) disappointed. Recall that two weeks ago, several apparel retailers made cautious comments about their expectations for fourth-quarter earnings. The consumer discretionary sector added 0.8% for the week, extending its January gain to 3.2%.
Rate hike expectations barely budged during the past week. The implied probability of a hike in June ticked up to 69.7% from last Friday's 69.0%, according to the fed funds futures market.
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Economic Data
from Briefing.com| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 13 | 08:30 | PPI | Dec | 0.3% | 0.3% | 0.3% | 0.4% | -- |
| Jan 13 | 08:30 | Core PPI | Dec | 0.2% | 0.1% | 0.1% | 0.4% | -- |
| Jan 13 | 08:30 | Retail Sales | Dec | 0.6% | 0.8% | 0.7% | 0.2% | 0.1% |
| Jan 13 | 08:30 | Retail Sales ex-auto | Dec | 0.2% | 0.6% | 0.6% | 0.3% | 0.2% |
| Jan 13 | 10:00 | Business Inventories | Nov | 0.7% | 0.5% | 0.6% | -0.1% | -0.2% |
| Jan 13 | 10:00 | Mich Sentiment - Prelim | Jan | 98.1 | 99.0 | 98.5 | 98.2 | -- |
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Technical Update
DOW JONES INDUSTRIAL AVERAGE19885.73 -5.27 (-0.03%)
Volume: 263.78 Mil above average of 209.13 Mil
Range: 19849.38 - 19952.03
S&P 500 INDEX
2274.64 +4.20 (+0.18%)
Volume: 1781.00 Mil above average of 1411.53 Mil
Range: 2271.51 - 2278.68
DOW JONES TRANSPORTATION AVERAGE
9202.34 +57.87 (+0.63%)
Volume: 48.28 Mil above average of 37.31 Mil
Range: 9152.02 - 9221.95
NASDAQ COMPOSITE
5574.120117 +26.63 (+0.48%)
Volume: 1605.11 Mil below average of 1897.36 Mil
Range: 5557.200195 - 5584.259766
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Market Internal
NYSE :Lower than average volume @ 744.5M vs 908.0M
Advancers outpaced Decliners(adv/dec): 1827M/1072M
New highs outpaced low(high/low): 123/8
NASDAQ :
Lower than average volume @ 1587.9M vs 1852.1M
Advancers outpaced Decliners(adv/dec): 2001M/854M
New highs outpaced low(high/low): 152/19
Advancers outpaced Decliners by 1.99 to 1 on lower volumes 2332.4 ( -15.49%) than avg 2760 (-0.22%)
VOLATILITY S&P500 (VIX) :
11.23 -0.31 (-2.69%)
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Bonds
from Briefing.comBonds
Market Moving Factors- December PPI: Actual 0.3%, Briefing.com consensus 0.3%, Prior 0.4%
- December Core PPI: Actual 0.2%, Briefing.com consensus 0.1%, Prior 0.4%
- December Retail Sales: Actual 0.6%, Briefing.com consensus 0.7%, Prior 0.2% (revised from 0.1%)
- December Retail Sales ex-auto: 0.2%, Briefing.com consensus 0.6%, Prior 0.3% (revised from 0.2%)
- November Business Inventories: Actual -0.1%, Briefing.com consensus 0.6%, Prior -0.2%
- January Michigan Sentiment: Actual 98.1, Briefing.com consensus 98.5, Prior 98.2
Treasuries Drop but Mitigate Losses
- U.S. Treasuries lost significant ground this morning after the release of U.S. PPI and retail sales data for December but rallied for the rest of the day to end well above their session lows. Retail sales excluding automobiles missed estimates in December despite improving economic sentiment, but the producer price index grew faster than expected and neither piece of news did much to disrupt the positive trend of sentiment since the November 8 election. The Atlanta Fed's Q4 U.S. real GDP growth estimate was revised down to 2.8% and the New York Fed's estimate for Q1 is just 1.9%. Canadian ratings agency DBRS downgraded Italy's sovereign credit rating to BBB, outlook stable from A, outlook negative. The S&P 500 is up 0.16% to 2,274.1 and the U.S. Dollar Index is down 0.17% to 101.18
- Yield Check:
- 2-yr: +2 bps to 1.20%
- 5-yr: +3 bps to 1.90%
- 10-yr: +2 bps to 2.39%
- 30-yr: +2 bps to 2.98%
- News:
- U.S. retail sales rose by 0.6% m/m in December, just missing the Briefing.com consensus for 0.7% growth. November's change was +0.1%
- Retail sales excluding automobiles were up just 0.2% m/m, missing the Briefing.com consensus of 0.6%. November also saw a 0.2% increase in retail sales ex-auto
- Retail sales excluding autos and gas grew at the slowest year-on-year pace since February 2014
- The producer price index climbed 0.3% m/m in December, in line with the Briefing.com consensus. November's increase was 0.4%
- The core PPI, which strips out food and energy prices, increased by 0.2% in December, exceeding the Briefing.com consensus for 0.1% growth. The core PPI jumped by 0.4% m/m in November
- The key takeaway from the report is that higher energy prices are driving up producer prices
- U.S. business inventories unexpectedly fell by 0.1% m/m in November, falling well short of the Briefing.com consensus for growth of 0.6%. October saw a dip of 0.2%
- The key takeaway from the report is that business inventories continue to remain at an elevated level relative to sales, which will weigh on pricing power for firms
- Michigan Sentiment fell to 98.1 for January from 98.2 for December, missing the Briefing.com consensus for an increase to 98.5
- Long-term inflation expectations rebounded to 2.5%
- The New York Fed's GDP Nowcast for Q4 real U.S. GDP growth is 1.9%, down from the previous estimate of 2.0%, and for Q1 2017, the estimate is 2.1%
- The Atlanta Fed revised its GDPNow model forecast for Q4 real U.S. GDP growth down to 2.8% from 2.9% on January 10
- U.S. retail sales rose by 0.6% m/m in December, just missing the Briefing.com consensus for 0.7% growth. November's change was +0.1%
- Commodities:
- WTI crude: -0.98% to $52.49/bbl.
- Gold: -0.13% to $1,198.2/troy oz.
- Copper: +0.71% to $2.69/lb.
- Currencies:
- EUR/USD: +0.33% to 1.0648
- USD/JPY: -0.30% to 114.51
- Week Ahead:
- Monday: (markets closed for MLK holiday)
- Tuesday: January Empire Manufacturing (08:30 ET); New York Fed President Dudley (FOMC voter) (08:45 ET); Fed Governor Brainard (FOMC voter) (10:00 ET); San Francisco Fed President William (non-FOMC voter) (18:00 ET)
- Wednesday: MBA Mortgage Index for the week ending 1/14 (07:00 ET); December CPI and Core CPI (08:30 ET); December Industrial Production and Capacity Utilization (09:15 ET); January NAHB Housing Market Index (10:00 ET); Minneapolis Fed President Kashkari (FOMC voter) (10:00 ET); January Fed Beige Book (14:00 ET); Fed Chair Yellen (FOMC voter) (15:00 ET); November Net Long-Term TIC Flows (16:00 ET)
- Thursday: Initial Jobless Claims for the week ending 1/14 and Continuing Jobless Claims for the week ending 1/7 (08:30 ET); December Housing Starts and Building Permits (08:30 ET); January Philadelphia Fed (08:30 ET); San Francisco Fed President Williams (non-FOMC voter) (10:00 ET); Natural Gas Inventories for the week ending 1/14 (10:30 ET); Crude Inventories for the week ending 1/14 (11:00 ET): $13 bln 10-year TIPS auction (results at 13:00 ET); Fed Chair Yellen (FOMC voter) (20:00 ET)
- Friday: Philadelphia Fed President Harker (FOMC voter) (09:00 ET); San Francisco Fed President Williams (non-FOMC voter) (13:00 ET)
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Preview: Week of 16 - 20 January 2017
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 17 | 08:30 | Empire Manufacturing | Jan | 6.5 | 8.0 | 8.3 | 9.0 | -- |
| Jan 18 | 07:00 | MBA Mortgage Index | 01/14 | NA | NA | 5.8% | ||
| Jan 18 | 08:30 | CPI | Dec | 0.3% | 0.3% | 0.2% | ||
| Jan 18 | 08:30 | Core CPI | Dec | 0.2% | 0.2% | 0.2% | ||
| Jan 18 | 09:15 | Industrial Production | Dec | 0.8% | 0.6% | -0.4% | ||
| Jan 18 | 09:15 | Capacity Utilization | Dec | 75.6% | 75.4% | 75.0% | ||
| Jan 18 | 10:00 | NAHB Housing Market Index | Jan | NA | NA | 70 | ||
| Jan 18 | 14:00 | Fed's Beige Book | Jan | NA | NA | NA | ||
| Jan 18 | 16:00 | Net Long-Term TIC Flows | Jan | NA | NA | $9.4B | ||
| Jan 19 | 08:30 | Initial Claims | 01/14 | 246K | 252K | 247K | ||
| Jan 19 | 08:30 | Continuing Claims | 01/07 | NA | NA | 2087K | ||
| Jan 19 | 08:30 | Housing Starts | Dec | 1200K | 1193K | 1090K | ||
| Jan 19 | 08:30 | Building Permits | Dec | 1230K | 1217K | 1201K | ||
| Jan 19 | 08:30 | Philadelphia Fed | Jan | 16.0 | 15.3 | 21.5 | ||
| Jan 19 | 10:30 | Natural Gas Inventories | 01/14 | NA | NA | -151 bcf | ||
| Jan 19 | 11:00 | Crude Inventories | 01/13 | NA | NA | +4.100M |
Commentary
The averages has been moving sideways for some time now, making it very difficult to call any directions. Based on internals alone, I would say that the bull does not have enough volumes to continue in its track.
Markets are closed on 16 Jan for Martin Luther King Jr. Day.
Direction for Tuesday, 17 January 2017: Down
Direction for Week of 16 - 20 January 2017: Down
Markets are closed on 16 Jan for Martin Luther King Jr. Day.
Direction for Tuesday, 17 January 2017: Down
Direction for Week of 16 - 20 January 2017: Down
Daily Accuracy: 4/8 50%
Weekly Accuracy: 1/1 100%
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