Market Summary
from Briefing.comIndustry Watch
Strong: Materials, Technology, Consumer Staples, Telecom Services
Weak: Industrials, Health Care, Utilities
- The wait-and-see mentality has resumed; only time will tell if the Trump administration lives up to the pro-growth hype.
[BRIEFING.COM] The rubber has finally met the road as Donald Trump became the 45th President of the United States on Friday. It will now be up to his administration to live up to the post-election hype that pushed the stock market up nearly 7.0% between the November 8th election and the S&P 500's record high on January 6th. So far so good, as the major averages finished with modest gains: S&P 500 (+0.3%), Nasdaq (+0.3%), Dow (+0.5%).
Much like the rest of the week, today's session was underpinned by a wait-and-see mentality as investors appeared to have already priced in Mr. Trump's pro-growth promises. The equity market opened the day immediately higher, but cut its gain in half during President Trump's inaugural address.
During the address, Mr. Trump struck a populist tone, reiterating his protectionist trade policy and promising to put American workers at the heart of every decision he makes. There wasn't really any new information in the President's address, just a fresh reminder of Mr. Trump's commitment to bring jobs back to America--a commitment that could hit manufacturers' bottom lines. The major averages responded by sliding from their highs, eventually ticking up in the final stretch of action.
Sector standings were consistent throughout the day, with telecom services (+0.9%) and materials (+0.9%) camping out at the top of the leaderboard, and health care (-0.3%) and industrials (unch) setting up shop at the bottom. Each of the remaining seven sectors closed in the green.
Energy (+0.5%) broke its two-session losing streak, piggybacking on crude oil's 2.1% advance. The commodity finished at $53.25/bbl, climbing for the second consecutive day as investors eyed this weekend's OPEC/non-OPEC compliance meeting, hoping for indications of a tightening market.
The financial sector (+0.5%) had a poor showing this week, despite ending Friday with an uptick. The space lost 1.6% for the week as better-than-expected quarterly earnings results from some of its top components were met with a sell-the-news response in the wake of the sector's huge 20.5% fourth quarter gain.
The top-weighted technology sector (+0.5%) also finished the day higher. Technology started the day on a positive note after both IBM (IBM 170.55, +3.74) and Skyworks Solutions (SWKS 88.67, +10.21) reported better-than-expected earnings, adding 2.2% and 13.0%, respectively. Skyworks Solutions' spike also had a ripple effect on other chipmakers, evidenced by the 1.3% increase in the PHLX Semiconductor Index.
In addition to IBM, three more Dow components reported before today's opening bell, including American Express (AXP 76.20, -0.49), General Electric (GE 30.53, -0.68), and Procter & Gamble (PG 87.45, +2.75). American Express and General Electric declined 0.6% and 2.1%, respectively after reporting disappointing results while Procter & Gamble jumped 3.3% on better than expected earnings-per-share and upbeat organic sales growth.
U.S. Treasuries finished their trading day mixed with the the 2-yr note higher while longer-dated issues ticked lower. The yield curve steepened with the 2-yr yield closing three basis points lower at 1.19% and the 30-yr yield finishing one basis point higher at 3.06%. The benchmark 10-yr yield closed unchanged at 2.47%.
Looking ahead, investors will not receive any economic data on Monday, but they will see a slew of earnings reports. Most notably, McDonald's (MCD 122.26, +0.08) and Halliburton (HAL 56.45, +1.11) will report before the open, while Yahoo! (YHOO 42.05, -0.04) will report after the close.
The stock market endured another range-bound week, which ended with the market remaining just below its record high from January 6. The S&P 500 shed 0.2% for the week while small caps underperformed, sending the Russell 2000 lower by 1.4%.
Bond and equity markets were closed on Monday for Martin Luther King Jr Day while the remainder of the week featured a sideways drift ahead of Friday's inauguration of Donald Trump as the 45th President of the United States. The stock market enjoyed a big post-election rally on hopes that deregulation and policies introduced by the new administration would boost economic growth. However, with the S&P 500 soaring nearly 7.0% in the month that followed Election Day, the past five weeks featured range-bound trade.
Only three sectors ended the week in negative territory with two registering weekly losses larger than 1.0%. The financial sector lost 1.6% for the week, but the decline took place after the sector soared nearly 20.0% in the five weeks after the election. The health care sector also underperformed, but the countercyclical group remained in the green for the month (+1.3%) despite surrendering 1.5% last week.
On the upside, consumer staples (+1.9%) and telecom services (+0.8%) recorded solid weekly gains. In the staples sector, Procter & Gamble (PG) jumped 3.3% on Friday after beating earnings expectations and raising its organic sales growth guidance.
Rate hike expectations solidified a bit with the fed funds futures market projecting a 70.3% implied likelihood of a rate hike in June, up from 69.0% at the end of last week.
Much like the rest of the week, today's session was underpinned by a wait-and-see mentality as investors appeared to have already priced in Mr. Trump's pro-growth promises. The equity market opened the day immediately higher, but cut its gain in half during President Trump's inaugural address.
During the address, Mr. Trump struck a populist tone, reiterating his protectionist trade policy and promising to put American workers at the heart of every decision he makes. There wasn't really any new information in the President's address, just a fresh reminder of Mr. Trump's commitment to bring jobs back to America--a commitment that could hit manufacturers' bottom lines. The major averages responded by sliding from their highs, eventually ticking up in the final stretch of action.
Sector standings were consistent throughout the day, with telecom services (+0.9%) and materials (+0.9%) camping out at the top of the leaderboard, and health care (-0.3%) and industrials (unch) setting up shop at the bottom. Each of the remaining seven sectors closed in the green.
Energy (+0.5%) broke its two-session losing streak, piggybacking on crude oil's 2.1% advance. The commodity finished at $53.25/bbl, climbing for the second consecutive day as investors eyed this weekend's OPEC/non-OPEC compliance meeting, hoping for indications of a tightening market.
The financial sector (+0.5%) had a poor showing this week, despite ending Friday with an uptick. The space lost 1.6% for the week as better-than-expected quarterly earnings results from some of its top components were met with a sell-the-news response in the wake of the sector's huge 20.5% fourth quarter gain.
The top-weighted technology sector (+0.5%) also finished the day higher. Technology started the day on a positive note after both IBM (IBM 170.55, +3.74) and Skyworks Solutions (SWKS 88.67, +10.21) reported better-than-expected earnings, adding 2.2% and 13.0%, respectively. Skyworks Solutions' spike also had a ripple effect on other chipmakers, evidenced by the 1.3% increase in the PHLX Semiconductor Index.
In addition to IBM, three more Dow components reported before today's opening bell, including American Express (AXP 76.20, -0.49), General Electric (GE 30.53, -0.68), and Procter & Gamble (PG 87.45, +2.75). American Express and General Electric declined 0.6% and 2.1%, respectively after reporting disappointing results while Procter & Gamble jumped 3.3% on better than expected earnings-per-share and upbeat organic sales growth.
U.S. Treasuries finished their trading day mixed with the the 2-yr note higher while longer-dated issues ticked lower. The yield curve steepened with the 2-yr yield closing three basis points lower at 1.19% and the 30-yr yield finishing one basis point higher at 3.06%. The benchmark 10-yr yield closed unchanged at 2.47%.
Looking ahead, investors will not receive any economic data on Monday, but they will see a slew of earnings reports. Most notably, McDonald's (MCD 122.26, +0.08) and Halliburton (HAL 56.45, +1.11) will report before the open, while Yahoo! (YHOO 42.05, -0.04) will report after the close.
- Russell 2000 -0.4% YTD
- Dow Jones Industrial Average +0.3% YTD
- S&P 500 +1.5% YTD
- Nasdaq Composite +3.2% YTD
The stock market endured another range-bound week, which ended with the market remaining just below its record high from January 6. The S&P 500 shed 0.2% for the week while small caps underperformed, sending the Russell 2000 lower by 1.4%.
Bond and equity markets were closed on Monday for Martin Luther King Jr Day while the remainder of the week featured a sideways drift ahead of Friday's inauguration of Donald Trump as the 45th President of the United States. The stock market enjoyed a big post-election rally on hopes that deregulation and policies introduced by the new administration would boost economic growth. However, with the S&P 500 soaring nearly 7.0% in the month that followed Election Day, the past five weeks featured range-bound trade.
Only three sectors ended the week in negative territory with two registering weekly losses larger than 1.0%. The financial sector lost 1.6% for the week, but the decline took place after the sector soared nearly 20.0% in the five weeks after the election. The health care sector also underperformed, but the countercyclical group remained in the green for the month (+1.3%) despite surrendering 1.5% last week.
On the upside, consumer staples (+1.9%) and telecom services (+0.8%) recorded solid weekly gains. In the staples sector, Procter & Gamble (PG) jumped 3.3% on Friday after beating earnings expectations and raising its organic sales growth guidance.
Rate hike expectations solidified a bit with the fed funds futures market projecting a 70.3% implied likelihood of a rate hike in June, up from 69.0% at the end of last week.
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Economic Data
from Briefing.comNo Data
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Technical Update
DOW JONES INDUSTRIAL AVERAGE19827.25 +94.85 (+0.48%)
Volume: 435.26 Mil above average of 225.56 Mil
Range: 19759.14 - 19843.94
S&P 500 INDEX
2271.31 +7.62 (+0.34%)
Volume: 2311.81 Mil above average of 1520.76 Mil
Range: 2265.01 - 2276.96
DOW JONES TRANSPORTATION AVERAGE
9224.57 +60.61 (+0.66%)
Volume: 96.24 Mil above average of 42.69 Mil
Range: 9135.12 - 9227.81
NASDAQ COMPOSITE
5555.330078 +15.25 (+0.28%)
Volume: 1740.32 Mil below average of 1874.22 Mil
Range: 5542.22998 - 5574.350098
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Market Internal
NYSE :Higher than average volume @ 973.3M vs 890.1M
Advancers outpaced Decliners(adv/dec): 1850M/1046M
New highs outpaced low(high/low): 83/16
NASDAQ :
Lower than average volume @ 1713.3M vs 1836.6M
Advancers outpaced Decliners(adv/dec): 1707M/1078M
New highs outpaced low(high/low): 102/39
Advancers outpaced Decliners by 1.67 to 1 on lower volumes 2686.6 ( -1.47%) than avg 2727 (-0.39%)
VOLATILITY S&P500 (VIX) :
11.54 -1.24 (-9.70%)
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Bonds
from Briefing.comMarket Moving Factors
- Fed Chair Yellen said on Thursday night that wages have risen "only modestly" and that the manufacturing sector is operating well below capacity. She went on to say that the economic expansion "seems unlikely to pick up markedly in the near term" given a weak external environment and a gradual tightening of monetary policy
- China's gross domestic product grew 1.7% q/q in the fourth quarter (6.8% y/y), in line with estimates but a tick slower than Q3's 1.8%
- Philadelphia Fed President Harker (FOMC voter): 3 rate hikes appropriate in 2017; economy is displaying considerable strength; labor force participation is lower than he would like; should consider stopping Fed's balance sheet reinvestment once Fed funds rate touches 1%
- Dave Nason, GE executive and former official in Bush 43 Treasury Dept., is front runner to be Fed vice chair for supervision
- Treasuries jump on the beginning of President Trump's inaugural speech
- San Francisco Fed President Williams (non-FOMC voter): Fed needs to start pulling back on stimulus; he wants to stabilize unemployment -- not see it continue to drift lower
Yield Curve Steepens
- U.S. Treasuries zigzagged to small gains today as the U.S. dollar and equities retreated a bit following President Trump's inaugural speech. Trump took a more populist tack than his cabinet nominees would indicate so, while talk is cheap, markets still took a cautious approach and dialed back their expectations for traditional supply-side fiscal and regulatory policy. The S&P 500 is up just 0.26% to 2,269.6 from an intraday high of 2,277 and the U.S. Dollar Index is down 0.31% to 100.84. Some of the new administration's choices for Fed governors have been made public but little is known about their monetary policy inclinations. Philadelphia Fed President Harker said today that he thought that winding down the Fed's balance sheet might be appropriate later this year. Harker does vote in 2017. San Francisco Fed President Williams, who does not vote this year, said that the Fed needs to start hiking rates
- Yield Check:
- 2-yr: -3 bps to 1.19%
- 5-yr: -2 bps to 1.94%
- 10-yr: unch at 2.47%
- 30-yr: +1 bp to 3.06%
- News:
- Philadelphia Fed President Patrick Harker (FOMC voter) said today that once the Fed funds rate gets to 1%, which may be this year, the FOMC should consider running off its balance sheet rather than reinvesting the proceeds from maturing securities
- Fed Chair Yellen said in December that the balance sheet should not be brought down until "the process of normalizing the federal funds rate is well underway"
- San Francisco Fed President Williams (non-FOMC voter) said that the Fed needs to start withdrawing monetary accommodation
- One seat on the Federal Reserve Board is set aside for a community banker and the Trump administration is now considering its options. Two candidates, Cynthia Blankenship of Bank of the West and Mainstreet Bancshares Inc. CEO Jeff Dick, have already had meetings with Trump's advisers. As a Fed governor, the eventual appointee would vote at every FOMC meeting
- David Nason, a GE executive, is said to be the front runner to become the Fed's vice chair for supervision
- Philadelphia Fed President Patrick Harker (FOMC voter) said today that once the Fed funds rate gets to 1%, which may be this year, the FOMC should consider running off its balance sheet rather than reinvesting the proceeds from maturing securities
- Commodities:
- WTI crude: +1.87% to $52.33/bbl.
- Gold: +0.63% to $1,209.1/troy oz.
- Palladium: +5.04% to $789/oz., a one-year high
- Copper: +0.42% to $2.6215/lb.
- Currencies:
- EUR/USD: +0.36% to 1.0694
- USD/JPY: +0.26% to 114.51
- Week Ahead:
- Monday: (no scheduled market-moving events)
- Tuesday: December Existing Home Sales (10:00 ET); $26 bln 2-year Treasury auction (results at 13:00 ET)
- Wednesday: MBA Mortgage Index for the week ending 1/121 (07:00 ET); November FHFA Housing Price Index (09:00 ET); Crude Inventories for the week ending 1/21 (10:30 ET); $34 bln 5-year Treasury auction (results at 13:00 ET)
- Thursday: December Adv. International Trade in Goods (08:30 ET); Initial Jobless Claims for the week ending 1/21 and Continuing Jobless Claims for the week ending 1/14 (08:30 ET); December Leading Indicators (10:00 ET); December New Home Sales (10:00 ET); Natural Gas Inventories for the week ending 1/21 (10:30 ET); $28 bln 7-year Treasury auction (results at 13:00 ET)
- Friday: Q4 GDP and GDP Deflator -- Advanced Estimate (08:30 ET); December Durable Goods Orders and Durable Goods Orders ex-transportation (08:30 ET); January Michigan Sentiment -- Final (10:00 ET)
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Preview: Week of 23 - 27 January 2017
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 24 | 10:00 | Existing Home Sales | Dec | 5.58M | 5.55M | 5.61M | ||
| Jan 25 | 07:00 | MBA Mortgage Applications Index | 01/21 | NA | NA | 0.8% | ||
| Jan 25 | 09:00 | FHFA Housing Price Index | Nov | NA | NA | 0.4% | ||
| Jan 25 | 10:30 | Crude Inventories | 01/21 | NA | NA | +2.300M | ||
| Jan 26 | 08:30 | Adv. International Trade in Goods | Dec | -$65.1B | -$65.0M | -$65.3B | ||
| Jan 26 | 08:30 | Initial Claims | 01/21 | 242K | 246K | 234K | ||
| Jan 26 | 08:30 | Continuing Claims | 01/21 | NA | NA | 2046K | ||
| Jan 26 | 10:00 | Leading Indicators | Dec | 0.4% | 0.5% | 0.0% | ||
| Jan 26 | 10:00 | New Home Sales | Dec | 600K | 589K | 592K | ||
| Jan 26 | 10:30 | Natural Gas Inventories | 01/21 | NA | NA | -243 bcf | ||
| Jan 27 | 08:30 | GDP-Adv. | Q4 | 2.5% | 2.2% | 3.5% | ||
| Jan 27 | 08:30 | GDP Deflator | Q4 | 2.1% | 2.1% | 1.4% | ||
| Jan 27 | 08:30 | Durable Orders | Dec | 4.0% | 3.0% | -4.6% | ||
| Jan 27 | 08:30 | Durable Goods –ex transportation | Dec | 0.6% | 0.5% | 0.5% | ||
| Jan 27 | 10:00 | Michigan Sentiment - Final | Jan | 97.9 | 98.0 | 98.1 |
Commentary
The market is cautious on Trump's Inauguration speech, Bonds has shown signs of short term fear. Major averages are at strong resistance and have been consolidating for some time. The MACD is hinting of more down side to come.
Direction for Monday, 23 January 2017: Down
Direction for Week of 23 - 27 January 2017: Down
Daily Accuracy: 6/10 60%
Weekly Accuracy: 2/2 100%
Direction for Monday, 23 January 2017: Down
Direction for Week of 23 - 27 January 2017: Down
Daily Accuracy: 6/10 60%
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