Market Summary
from Briefing.comIndustry Watch
Strong: Technology, Health Care, Telecom Services
Weak: Financials, Energy, Consumer Discretionary, Consumer Staples, Real Estate
- Slightly disappointing results from today's Q4 GDP and Dec. Durable Orders reports.
- Mixed reaction to earnings reports from a host of large-cap names including Alphabet (GOOGL), Intel (INTC), Starbucks (SBUX), American Airlines (AAL), Wynn Resorts (WYNN), Chevron (CVX), and Colgate-Palmolive (CL).
- Heavily-weighted sectors are split fairly equally with technology and health care posting gains while financials and consumer discretionary sit lower.
[BRIEFING.COM] It appears that investors ran out of ink after rewriting the record book during Wednesday's session as the major averages closed the week relatively unchanged from those record levels. The S&P 500 (-0.1%) finished Friday's session just below its flat line, while the Nasdaq (+0.1%) performed just slightly better.
To illustrate the minimal change numerically, the five heaviest weighted sectors--technology, financials, health care, consumer discretionary, and industrials-- changed only marginally since Wednesday's close, seeing gains/losses of no more than 0.1%. Sectors like consumer staples and energy saw more substantial movement due to a number of factors, but generally, the stock market appears to be in wait-and-see mode, eyeing President Trump and his ability to implement the pro-growth agenda he ran his presidential campaign on.
However, despite minimal movement in the key indices, earnings season remained alive and well on Friday with technology names headlining the action. The results were mixed with Alphabet (GOOGL 845.03, -11.95) ticking down 1.4% in reaction to below-consensus earnings, while Intel (INTC 37.98, +0.42) and Microsoft (MSFT 65.78, +1.51) climbed 1.1% and 2.4%, respectively, after beating top and bottom line estimates.
The positives outweighed the negatives in the technology sector (+0.3%), which left the sector as one of the few spaces to close the day higher. Health care and telecom services were fortunate enough to do the same, adding 0.8% and 0.7%, respectively.
On the flip side, real estate (-0.9%) and energy (-0.9%) finished at the bottom of the day's leaderboard, with the latter fighting a battle on multiple fronts. The first attack against the energy space's came from Chevron (CVX 113.79, -2.76) after the company disappointed investors with its quarterly earnings report. Crude oil also weighed, slipping 1.1% to $53.18/bbl, as increased U.S. production overshadowed supply cut efforts by OPEC and non-OPEC members.
Consumer staples (-0.6%) also finished near the bottom of the leaderboard following a negative reaction to Colgate-Palmolive's (CL 64.68, -3.56) quarterly report. The company slipped 5.2% after missing revenue estimates and forecasting a low-single digit net sales increase for 2017.
For the week, cyclical sectors had the upper hand as materials (+3.4%) led five of the six spaces higher. Conversely, each countercyclical sector closed the week lower, with telecom services (-1.7%) falling the farthest.
U.S. Treasuries also closed Friday's session with a week-to-date loss. However, the Treasury market did end the week on an upbeat note, closing in positive territory around its highest levels of the day. The 10-yr yield settled two basis points lower at 2.48%.
Friday's economic data included advance fourth quarter GDP, December Durable Orders, and the final reading of the University of Michigan Sentiment Index for January:
Week in Review: New Records Set
The stock market enjoyed a solid week, which saw the three major averages climb to fresh record highs. The S&P 500 gained 1.0% for the week while the Dow Jones Industrial Average (+1.3%) and Nasdaq Composite (+1.9%) outperformed. The Dow received added attention in the media during the second half of the week after making its first appearance above the 20000 level on Wednesday.
The past week was highlighted by a healthy dose of quarterly reports from influential market components like Alphabet (GOOGL), Boeing (BA), Microsoft (MSFT), McDonald's (MCD), Intel (INTC), Texas Instruments (TXN), and Qualcomm (QCOM) among others. In general, results from the tech sector were strong while earnings from other areas of the market were more mixed.
At the end of the week, roughly 34% of S&P 500 components had reported their results, showing a blended earnings growth rate of 4.0% versus market expectations for growth of 5.2%, according to FactSet.
The economic calendar also featured a fair share of reports, but the market did not appear particularly concerned with disappointing December Existing Home Sales (5.49 million; Briefing.com consensus 5.55 million), December New Home Sales (536,000; Briefing.com consensus 589,000), advance fourth quarter GDP (+1.9%; Briefing.com consensus 2.2%), nor December Durable Orders (-0.4%; Briefing.com consensus 3.0%).
Rate hike expectations held firm with the fed funds futures market pointing to a 71.9% implied likelihood of a rate hike in June.
To illustrate the minimal change numerically, the five heaviest weighted sectors--technology, financials, health care, consumer discretionary, and industrials-- changed only marginally since Wednesday's close, seeing gains/losses of no more than 0.1%. Sectors like consumer staples and energy saw more substantial movement due to a number of factors, but generally, the stock market appears to be in wait-and-see mode, eyeing President Trump and his ability to implement the pro-growth agenda he ran his presidential campaign on.
However, despite minimal movement in the key indices, earnings season remained alive and well on Friday with technology names headlining the action. The results were mixed with Alphabet (GOOGL 845.03, -11.95) ticking down 1.4% in reaction to below-consensus earnings, while Intel (INTC 37.98, +0.42) and Microsoft (MSFT 65.78, +1.51) climbed 1.1% and 2.4%, respectively, after beating top and bottom line estimates.
The positives outweighed the negatives in the technology sector (+0.3%), which left the sector as one of the few spaces to close the day higher. Health care and telecom services were fortunate enough to do the same, adding 0.8% and 0.7%, respectively.
On the flip side, real estate (-0.9%) and energy (-0.9%) finished at the bottom of the day's leaderboard, with the latter fighting a battle on multiple fronts. The first attack against the energy space's came from Chevron (CVX 113.79, -2.76) after the company disappointed investors with its quarterly earnings report. Crude oil also weighed, slipping 1.1% to $53.18/bbl, as increased U.S. production overshadowed supply cut efforts by OPEC and non-OPEC members.
Consumer staples (-0.6%) also finished near the bottom of the leaderboard following a negative reaction to Colgate-Palmolive's (CL 64.68, -3.56) quarterly report. The company slipped 5.2% after missing revenue estimates and forecasting a low-single digit net sales increase for 2017.
For the week, cyclical sectors had the upper hand as materials (+3.4%) led five of the six spaces higher. Conversely, each countercyclical sector closed the week lower, with telecom services (-1.7%) falling the farthest.
U.S. Treasuries also closed Friday's session with a week-to-date loss. However, the Treasury market did end the week on an upbeat note, closing in positive territory around its highest levels of the day. The 10-yr yield settled two basis points lower at 2.48%.
Friday's economic data included advance fourth quarter GDP, December Durable Orders, and the final reading of the University of Michigan Sentiment Index for January:
- Advance fourth quarter GDP pointed to an expansion of 1.9%, while the Briefing.com consensus expected a reading of 2.2%. The fourth quarter GDP Deflator came in at 2.1%, which is what the Briefing.com consensus expected.
- The key takeaway from this report is that fourth quarter activity revealed the strong third quarter growth was as an aberration, yet that point aside, the salient takeaway for many is that this is a backward-looking report and the markets have their sights set on a brighter economic outlook for 2017, which is expected to feature deregulation, tax reform, and infrastructure spending among other items.
- December durable goods orders declined 0.4%, while the Briefing.com consensus expected a 3.0% increase. The prior month's reading was revised to -4.8% (from -4.6%). Excluding transportation, durable orders rose 0.5% (Briefing.com consensus +0.5%) to follow the prior month's revised gain of 1.0% (from 0.5%).
- The key takeaway from this report is that business investment remained on a positive trajectory.
- The final reading of the University of Michigan Consumer Sentiment Index for January rose to 98.5 (Briefing.com consensus 98.0) from 98.1 in the preliminary reading.
- The key takeaway from the report is that consumer confidence is rising on the back of an improved outlook for economic growth, job growth, and personal finances in the year ahead
- Nasdaq Composite 5.2% YTD
- S&P 500 2.5% YTD
- Dow Jones Industrial Average +1.7% YTD
- Russell 2000 +1.0% YTD
Week in Review: New Records Set
The stock market enjoyed a solid week, which saw the three major averages climb to fresh record highs. The S&P 500 gained 1.0% for the week while the Dow Jones Industrial Average (+1.3%) and Nasdaq Composite (+1.9%) outperformed. The Dow received added attention in the media during the second half of the week after making its first appearance above the 20000 level on Wednesday.
The past week was highlighted by a healthy dose of quarterly reports from influential market components like Alphabet (GOOGL), Boeing (BA), Microsoft (MSFT), McDonald's (MCD), Intel (INTC), Texas Instruments (TXN), and Qualcomm (QCOM) among others. In general, results from the tech sector were strong while earnings from other areas of the market were more mixed.
At the end of the week, roughly 34% of S&P 500 components had reported their results, showing a blended earnings growth rate of 4.0% versus market expectations for growth of 5.2%, according to FactSet.
The economic calendar also featured a fair share of reports, but the market did not appear particularly concerned with disappointing December Existing Home Sales (5.49 million; Briefing.com consensus 5.55 million), December New Home Sales (536,000; Briefing.com consensus 589,000), advance fourth quarter GDP (+1.9%; Briefing.com consensus 2.2%), nor December Durable Orders (-0.4%; Briefing.com consensus 3.0%).
Rate hike expectations held firm with the fed funds futures market pointing to a 71.9% implied likelihood of a rate hike in June.
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Economic Data
from Briefing.com| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 26 | 08:30 | Adv. International Trade in Goods | Dec | -$65.0B | -$65.1B | -$65.0B | -$65.3B | -- |
| Jan 26 | 08:30 | Initial Claims | 01/21 | 259K | 242K | 246K | 237K | 234K |
| Jan 26 | 08:30 | Continuing Claims | 01/14 | 2100K | NA | NA | 2059K | 2046K |
| Jan 26 | 10:00 | Leading Indicators | Dec | 0.5% | 0.4% | 0.5% | 0.1% | 0.0% |
| Jan 26 | 10:00 | New Home Sales | Dec | 536K | 600K | 589K | 598K | 592K |
| Jan 26 | 10:30 | Natural Gas Inventories | 01/21 | -119 bcf | NA | NA | -243 bcf |
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Technical Update
DOW JONES INDUSTRIAL AVERAGE20093.78 -7.13 (-0.04%)
Volume: 343.13 Mil above average of 250.51 Mil
Range: 20072.64 - 20115.97
S&P 500 INDEX
2294.69 -1.99 (-0.09%)
Volume: 1999.26 Mil above average of 1669.48 Mil
Range: 2291.62 - 2299.02
DOW JONES TRANSPORTATION AVERAGE
9444.28 -24.49 (-0.26%)
Volume: 92.58 Mil above average of 48.39 Mil
Range: 9392.23 - 9480.68
NASDAQ COMPOSITE
5660.779785 +5.60 (+0.10%)
Volume: 1663.40 Mil below average of 1808.37 Mil
Range: 5643.899902 - 5667.450195
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Market Internal
NYSE :Lower than average volume @ 656.8M vs 876.8M
Decliners outpaced Advancers(adv/dec): 1229M/1670M
New highs outpaced low(high/low): 123/17
NASDAQ :
Lower than average volume @ 1646.3M vs 1803.5M
Decliners outpaced Advancers(adv/dec): 1308M/1501M
New highs outpaced low(high/low): 142/33
Decliners outpaced Advancers by 1.25 to 1 on lower volumes 2303.1 ( -14.07%) than avg 2680 (-1.15%)
VOLATILITY S&P500 (VIX) :
10.58 -0.05 (-0.47%)
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Bonds
from Briefing.comMarket Moving Factors
- Q4 GDP -- Advanced Estimate: Actual 1.9%, Briefing.com consensus 2.2%, Prior 3.5%
- GDP Deflator -- Advanced Estimate: Actual 2.1%, Briefing.com consensus 2.1%, Prior 1.4%
- December Durable Goods Orders: Actual -0.4%, Briefing.com consensus 3.0%, Prior -4.8% (revised from -4.6%)
- Durable Goods Orders ex-transportation: Actual 0.5%, Briefing.com consensus 0.5%, Prior 1.0% (revised from 0.5%)
- January Michigan Sentiment -- Final: Actual 98.5, Briefing.com consensus 98.0, Prior 98.1
Treasuries End Week on Strong Note
- U.S. Treasuries traded modestly higher today as U.S. GDP growth for the fourth quarter was reported to be a seasonally adjusted annualized rate of 1.9% (Briefing.com consensus 2.2%). The action in global equity markets has been very strong this week and some profit-taking there (S&P 500: -0.15% to 2,293.2) encouraged safe-haven buying in Treasuries. U.S. durable goods orders missed expectations in December, but some of the internals of the report were more encouraging. The FOMC meets next Tuesday and Wednesday and is virtually guaranteed to keep monetary policy hold. Major economic releases next week include the ISM indices and the January employment report. The U.S. Dollar Index is up 0.19% to 100.57
- Yield Check:
- 2-yr: -2 bps to 1.21%
- 5-yr: -2 bps to 1.95%
- 10-yr: -2 bps to 2.48%
- 30-yr: -3 bps to 3.06%
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Preview: Week of 30 January - 3 February 2017
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Jan 30 | 08:30 | Personal Income | Dec | 0.4% | 0.4% | 0.1% | 0.0% | |
| Jan 30 | 08:30 | Personal Spending | Dec | 0.4% | 0.4% | 0.2% | -- | |
| Jan 30 | 08:30 | PCE Prices - Core | Dec | 0.2% | 0.2% | 0.0% | -- | |
| Jan 30 | 10:00 | Pending Home Sales | Dec | 1.0% | 1.3% | -2.5% | ||
| Jan 31 | 08:30 | Employment Cost Index | Q4 | 0.6% | 0.6% | 0.6% | -- | |
| Jan 31 | 09:00 | S&P Case Shiller Home Price Index | Nov | 5.1% | 5.0% | 5.1% | ||
| Jan 31 | 09:45 | Chicago PMI | Jan | 55.5 | 55.0 | 53.9 | 54.6 | |
| Jan 31 | 10:00 | Consumer Confidence | Jan | 114.0 | 112.5 | 113.3 | 113.7 | |
| Feb 01 | 07:00 | MBA Mortgage Applications Index | 01/28 | NA | NA | 4.0% | ||
| Feb 01 | 08:15 | ADP Employment Change | Jan | 180K | 165K | 153K | ||
| Feb 01 | 10:00 | ISM Index | Jan | 55.2 | 55.0 | 54.7 | ||
| Feb 01 | 10:00 | Construction Spending | Dec | 0.4% | 0.2% | 0.9% | ||
| Feb 01 | 10:30 | Crude Inventories | 01/28 | NA | NA | +2.840M | ||
| Feb 01 | 14:00 | FOMC Rate Decision | Feb | 0.625% | 0.625% | 0.625% | ||
| Feb 01 | 14:00 | Auto Sales | Jan | NA | NA | 5.30M | ||
| Feb 01 | 14:00 | Truck Sales | Jan | NA | NA | 9.25M | ||
| Feb 02 | 07:30 | Challenger Job Cuts | Jan | NA | NA | 42.4% | ||
| Feb 02 | 08:30 | Initial Claims | 01/28 | 248K | 250K | 259K | ||
| Feb 02 | 08:30 | Continuing Claims | 01/28 | NA | NA | 2100K | ||
| Feb 02 | 08:30 | Productivity-Prel | Q4 | 1.4% | 1.0% | 3.1% | ||
| Feb 02 | 08:30 | Unit Labor Costs | Q4 | 2.3% | 1.9% | 0.7% | ||
| Feb 02 | 10:30 | Natural Gas Inventories | 01/28 | NA | NA | -119 bcf | ||
| Feb 03 | 08:30 | Nonfarm Payrolls | Jan | 185K | 170K | 156K | ||
| Feb 03 | 08:30 | Nonfarm Private Payrolls | Jan | 180K | 175K | 144K | ||
| Feb 03 | 08:30 | Unemployment Rate | Jan | 4.7% | 4.7% | 4.7% | ||
| Feb 03 | 08:30 | Avg. Hourly Earnings | Jan | 0.3% | 0.3% | 0.4% | ||
| Feb 03 | 08:30 | Average Workweek | Jan | 34.3 | 34.3 | 34.3 | ||
| Feb 03 | 10:00 | Factory Orders | Dec | 0.8% | 1.4% | -2.4% | ||
| Feb 03 | 10:00 | ISM Services | Jan | 56.9 | 57.0 | 57.2 |
Commentary
The market is now reacting to trump's actions, which dwarfs the reaction from any other economic news. Weak Internals, with a tinge of downside.
Direction for Monday, 30 January 2017: Down
Direction for Week of 30 January - 3 February 2017: Down
Daily Accuracy: 9/16 56%
Weekly Accuracy: 2/3 67%
Direction for Monday, 30 January 2017: Down
Direction for Week of 30 January - 3 February 2017: Down
Daily Accuracy: 9/16 56%
Weekly Accuracy: 2/3 67%
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