Market Summary
from Briefing.comIndustry Watch
Strong: Consumer Discretionary, Industrials
Weak: Health Care, Consumer Staples, Utilities
- Investors are cautious to push further after indices hit record highs on Wednesday.
- Mixed, but generally negative reactions to earnings reports from a host of large-cap names including Comcast (CMCSA), Biogen (BIIB), Bristol-Myers Squibb (BMY), Qualcomm (QCOM), Ford Motor (F), and Raytheon (RTN), among others.
- Initial Claims and New Home Sales showed slightly disappointing results.
- Mexican President Enrique Pena Nieto officially canceled his upcoming meeting with President Trump. Questions surround Mr. Trump's ability to connect with foreign leaders.
[BRIEFING.COM] Investors were very selective of their pitches when they stepped up to the plate on Thursday, ultimately choosing to take ball four rather than risking a swing and miss. Despite news, earnings, and economic data, the major averages finished in the neighborhood of where they began, with the S&P 500 (-0.1%) closing just a tick lower.
Conversely, Donald Trump did take a swing today tweeting that Mexican President Enrique Pena Nieto should cancel his upcoming meeting with the U.S. President "if Mexico is unwilling to pay for the badly needed wall." The Mexican President responded by doing just that.
The market ticked down ever so slightly on Mr. Pena Nieto's response, but regardless, the incident does highlight some concerns about Mr. Trump's ability to play nice with foreign leaders. Only time will tell if President Trump's international agenda will be as friendly to the stock market as his domestically focused, pro-growth one has been so far.
Sector standings looked just as unenthusiastic as the market itself with some sectors green, some red, but no one space swinging too far from its flat line. Cyclical sectors had a slight edge over the defensive groups, with four of the six finishing higher. Technology (-0.2%) and energy (unch) bucked the trend, however, with the latter sector ignoring crude oil's 1.9% climb. The energy component closed its trading day at $53.75/bbl.
The downtick in technology stemmed from a downbeat response to Qualcomm's (QCOM 54.05, -2.85) quarterly report. The company finished 5.0% lower after missing on revenues, signaling a possible slowdown in demand for semiconductors, which are a component of nearly every modern technological device.
Industrials (+0.3%) finished near the top of the leaderboard, beside financials (+0.3%), as airlines willed the industrial sector to a modest gain. Southwest Airlines (LUV 53.92, +4.46) added 9.0% after reporting favorable earnings per share, however, the industrial sector's gains were capped by a lackluster earnings report from Caterpillar (CAT 97.22, -0.93) and continued weakness from United Technologies (UTX 110.36, -0.60), who reported quarterly results before yesterday's session. The two names finished down 1.0% and 0.5%, respectively.
On the countercyclical side, health care (-0.7%) finished in last place after Bristol-Myers Squibb (BMY 46.82, -2.73) missed earnings per share estimates and issued downbeat guidance. The company slipped 5.5%, putting pressure on its fellow health care components. Consumer staples (-0.4%) finished just a hair better than the health care sector, while the lightly-weighted telecom services, utilities, and real estate sectors finished near their flat lines.
U.S. Treasuries closed modestly higher, bouncing back in the afternoon after succumbing to morning selling pressure. The benchmark 10-yr yield finished one basis point lower at 2.50%.
Today's economic data included Initial Claims, International Trade in Goods, New Home Sales, and Leading Indicators:
Conversely, Donald Trump did take a swing today tweeting that Mexican President Enrique Pena Nieto should cancel his upcoming meeting with the U.S. President "if Mexico is unwilling to pay for the badly needed wall." The Mexican President responded by doing just that.
The market ticked down ever so slightly on Mr. Pena Nieto's response, but regardless, the incident does highlight some concerns about Mr. Trump's ability to play nice with foreign leaders. Only time will tell if President Trump's international agenda will be as friendly to the stock market as his domestically focused, pro-growth one has been so far.
Sector standings looked just as unenthusiastic as the market itself with some sectors green, some red, but no one space swinging too far from its flat line. Cyclical sectors had a slight edge over the defensive groups, with four of the six finishing higher. Technology (-0.2%) and energy (unch) bucked the trend, however, with the latter sector ignoring crude oil's 1.9% climb. The energy component closed its trading day at $53.75/bbl.
The downtick in technology stemmed from a downbeat response to Qualcomm's (QCOM 54.05, -2.85) quarterly report. The company finished 5.0% lower after missing on revenues, signaling a possible slowdown in demand for semiconductors, which are a component of nearly every modern technological device.
Industrials (+0.3%) finished near the top of the leaderboard, beside financials (+0.3%), as airlines willed the industrial sector to a modest gain. Southwest Airlines (LUV 53.92, +4.46) added 9.0% after reporting favorable earnings per share, however, the industrial sector's gains were capped by a lackluster earnings report from Caterpillar (CAT 97.22, -0.93) and continued weakness from United Technologies (UTX 110.36, -0.60), who reported quarterly results before yesterday's session. The two names finished down 1.0% and 0.5%, respectively.
On the countercyclical side, health care (-0.7%) finished in last place after Bristol-Myers Squibb (BMY 46.82, -2.73) missed earnings per share estimates and issued downbeat guidance. The company slipped 5.5%, putting pressure on its fellow health care components. Consumer staples (-0.4%) finished just a hair better than the health care sector, while the lightly-weighted telecom services, utilities, and real estate sectors finished near their flat lines.
U.S. Treasuries closed modestly higher, bouncing back in the afternoon after succumbing to morning selling pressure. The benchmark 10-yr yield finished one basis point lower at 2.50%.
Today's economic data included Initial Claims, International Trade in Goods, New Home Sales, and Leading Indicators:
- The latest weekly initial jobless claims count totaled 259,000 while the Briefing.com consensus expected a reading of 246,000. Today's tally was above the revised prior week count of 237,000 (from 234,000). As for continuing claims, they rose to 2.100 million from the revised count of 2.059 million (from 2.046 million).
- The headline for initial claims was a bit disappointing, yet the key takeaway is that there wasn't really any major deviation from the underlying trend considering how low the initial claims reading has been in recent weeks.
- The Advance report for International Trade in Goods for December showed a deficit of $65.0 billion, down from a deficit of $65.3 billion for November.
- New Home Sales in December hit an annualized rate of 536,000, which was below the revised November rate of 598,000 (from 592k), and less than the 589,000 that was expected by the Briefing.com consensus.
- The key takeaway from the report is that the combination of higher prices and higher mortgage rates appears to have squeezed the home-buying capability of lower-income consumers, evidenced by the drop in sales of new homes priced under $299,999.
- The Conference Board's Leading Indicators report for December ticked up 0.5% (Briefing.com consensus +0.5%) after a 0.1% increase (from 0.0%) in November.
- The key takeaway from the December report is that the component indexes suggest the economic expansion should continue and possibly increase in the near term.
- Russell 2000 +1.4% YTD
- Dow Jones Industrial Average +1.7% YTD
- S&P 500 +2.6% YTD
- Nasdaq Composite +5.1% YTD
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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 AVERAGE20100.91 +32.40 (+0.16%)
Volume: 356.73 Mil above average of 245.52 Mil
Range: 20067.53 - 20125.58
S&P 500 INDEX
2296.68 -1.69 (-0.07%)
Volume: 2333.68 Mil above average of 1637.50 Mil
Range: 2294.08 - 2300.99
DOW JONES TRANSPORTATION AVERAGE
9468.77 +47.76 (+0.51%)
Volume: 98.23 Mil above average of 46.83 Mil
Range: 9403.5 - 9502.5
NASDAQ COMPOSITE
5655.180176 -1.16 (-0.02%)
Volume: 1827.49 Mil above average of 1822.48 Mil
Range: 5647.649902 - 5669.609863
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Market Internal
NYSE :Lower than average volume @ 829.2M vs 888.4M
Decliners outpaced Advancers(adv/dec): 1400M/1523M
New highs outpaced low(high/low): 257/8
NASDAQ :
Higher than average volume @ 1826.4M vs 1823.1M
Decliners outpaced Advancers(adv/dec): 1102M/1743M
New highs outpaced low(high/low): 219/28
Decliners outpaced Advancers by 1.31 to 1 on lower volumes 2655.6 ( -2.06%) than avg 2711 (+0.14%)
VOLATILITY S&P500 (VIX) :
10.63 -0.18 (-1.67%)
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Bonds
from Briefing.comMarket Moving Factors
- December Adv. International Trade in Goods: Actual -$65.0 bln, Briefing.com consensus -$65.0 bln, Prior -$65.3 bln
- Initial Jobless Claims for the week ending 1/21: Actual 259K, Briefing.com consensus 246K, Prior 237K (revised from 234K)
- Continuing Jobless Claims for the week ending 1/14: Actual 2100K, Prior 2059K (revised from 2046K)
- December Leading Indicators: Actual 0.5%, Briefing.com consensus 0.5%, Prior 0.0%
- December New Home Sales: Actual 536K, Briefing.com consensus 589K, Prior 592K
- Natural Gas Inventories for the week ending 1/21: Actual -119 bcf, Expected -117 bcf
- $28 bln 7-year Treasury auction: High yield 2.335% (0.3-basis point stop-through), Bid-to-cover 2.45, Indirect bid 72.8%, Direct bid 6.6%
Treasuries Bounce Back as Stocks Trade Sideways
- U.S. Treasuries recovered early losses today to close with modest gains, finding buying interest from an unexpected plunge in new home sales for December and solid demand for the 7-year Treasury auction. Initial jobless claims reportedly rose more than expected last week to 259K (Briefing.com consensus 246K) but the absolute level of claims remains near historic lows and unemployment is a lagging indicator anyway. Why should begin to see any initial signs of economic weakness elsewhere. The aforementioned drop in new home sales was sharp indeed but those sales are volatile month-to-month and 2016 was still a much better year than 2015. If we see successive months of poor readings and mortgage rates stay higher, perhaps there will be cause for concern. The 7-year auction was met with the highest indirect bid since at least 2010 and Treasuries traded higher after the release of the results. The S&P 500 now sits 0.01% lower at 2,298.2 and the U.S. Dollar Index is up 0.32% to 100.35
- Yield Check:
- 2-yr: -1 bp to 1.22%
- 5-yr: -2 bps to 1.96%
- 10-yr: -1 bp to 2.51%
- 30-yr: -1 bps to 3.09%
- News:
- U.S. new home sales fell in December to a seasonally adjusted annual rate of 563K/month, a 10-month low. This data series is volatile, so new home sales for FY 2016 were still up 12.2% to 563K
- The median sales price was up 7.9% y/y (4.3% m/m) to $322,500
- Lower sales pushed available supply up to 5.8 months of sales
- U.S. Leading Indicators rose 0.5% in December, in line with the Briefing.com consensus. The index was unchanged in November
- Initial jobless claims jumped to 259K for the week ending January 21 from the prior reading of 237K (revised up from 234K). The Briefing.com consensus was 246K
- Initial claims remain near historic lows but there are reasons to believe that this data series has less usefulness than it has in the past. Nevertheless, the job market remains quite healthy
- Continuing claims rose to 2100K from 2059K (revised up from 2046K)
- December's international trade deficit in goods was $65.0 bln, in line with the Briefing.com consensus. The prior reading was $65.3 bln
- IHS Markit's U.S. Services PMI rose to 55.1 for January from 53.9 in December
- $28 bln 7-year Treasury auction
- High yield: 2.335% (0.3-basis point stop-through)
- Bid-to-cover: 2.45
- Indirect bid: 72.8%
- Direct bid: 6.6%
- U.S. new home sales fell in December to a seasonally adjusted annual rate of 563K/month, a 10-month low. This data series is volatile, so new home sales for FY 2016 were still up 12.2% to 563K
- Commodities:
- WTI crude: +1.93% to $53.77/bbl.
- Gold: -0.76% to $1,188.7/troy oz.
- Copper: -1.53% to 2.6685/lb.
- Currencies:
- EUR/USD: -0.60% to 1.0693
- USD/JPY: 1.09% to 114.42
- Data out 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: Friday, 27 January 2017
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| 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 Bulls have lost their momentum and Trump is not helping in any way.
Direction for Friday, 27 January 2017: DOWN
Daily Accuracy: 7/14 50%
Direction for Friday, 27 January 2017: DOWN
Daily Accuracy: 7/14 50%
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