Market Summary
from Briefing.comIndustry Watch
Strong: Consumer Discretionary, Energy, Consumer Staples, Utilities, Telecom Services, Real Estate
Weak: Financials, Industrials, Health Care, Information Technology
- Political concerns revolving around trade and tax policies
- Underperformance of the financial sector
- Sell-the-news response to better-than-expected earnings reports from Morgan Stanley (MS) and UnitedHealth Group (UNH), which has fueled some broader profit-taking activity
[BRIEFING.COM] The major averages opened the shortened week on a losing note, succumbing to profit-taking activity in the face of some political angst. The S&P 500 finished Tuesday's session 0.3% lower, while the Nasdaq (-0.6%) and Russell 2000 (-1.4%) underperformed, weighed down principally by losses in the financial, semiconductor, transportation, and biotech groups.
Over the weekend, President-elect Trump may have instilled a sense of doubt about his administration's ability to smoothly implement the pro-growth policies that the stock market has rallied around. Mr. Trump's comments raised some concerns that he and the GOP could be on different pages regarding tax policy and the repeal and replacement of Obamacare.
The President-elect also restated his claim that drug companies will have to negotiate with the government on prices for drugs in Medicare and Medicaid. That view prompted a pullback in drug stocks, like Merck (MRK 61.48, -0.86, -1.4%) and Pfizer (PFE 32.06, -0.46, -1.4%), as well as many biotech issues, which could be seen in the underperformance of the iShares Nasdaq Biotechnology ETF (IBB 274.52, -5.49). The S&P 500 health care sector closed the day 0.5% lower.
On the other hand, the retail space received a nice bump after Mr. Trump voiced his thoughts on a potential border tax, stating that the current GOP plan is too complicated. Retailers, many of which source their goods overseas, pushed the SPDR 500 Retail ETF (XRT 44.36, +0.35) 0.8% higher on the hope that a punitive border tax on imported goods won't come to fruition as feared. Naturally, the consumer discretionary sector also benefited, posting a 0.2% gain for the day.
Energy was the only other cyclical sector to finish Tuesday's session in the green, adding 0.6% on the back of an uptick in crude oil. The commodity ended its trading day far below its session high at $52.46/bbl, an increase of 0.2%. The gain came amid a weakening U.S. dollar, which fell 1.2%.
In addition to strength in the eruo and the Japanese yen, the British Pound had a hand in pushing the greenback lower, rallying 3.0% after a Brexit speech from UK Prime Minister Theresa May and a Consumer Price Index report showing the highest year-over-year pace for inflation (+1.6%) for the UK since July 2014. Ms. May confirmed that Britain will leave the single market, but that it is aiming for a flexible and phased Brexit transition, which will be put to a parliamentary vote. For good measure, President-elect Trump also expressed his belief that the dollar is "too strong."
On the earnings front, Morgan Stanley (MS 42.15, -1.66) reported better-than-expected top and bottom line results today, but traded down with the entire financial sector (-2.3%) as the stock saw some profit-taking activity. The negative response to Morgan Stanley's otherwise good news triggered some broader profit-taking efforts in the space. That selling picked up in the afternoon trade and drove the indices to new session lows before some late buying interest helped pare today's losses.
Financials will also headline tomorrow's earnings reports. Both Goldman Sachs (GS 235.74, -8.56) and Citigroup (C 58.38, -1.25) are scheduled to report before the opening bell. Investors will be looking for numbers that validate the sector's huge post-election run, but certainly after today's action, they will be watching more intently to see if Goldman Sachs and Citigroup report better-than-expected results and still trade lower.
In addition to energy and consumer discretionary, only four other sectors finished in positive territory -- utilities (+1.1%), real estate (+0.8%), telecom services (+0.4%), and consumer staples (+1.4%). Those four sectors combined have a roughly 18% weight in the S&P 500, so their gains were not enough to offset selling elsewhere.
The outperformance of the consumer staples sector was forged on the back of British American Tobacco's (BTI 113.10, -2.11) $49 billion offer to acquire the remaining 57.8% of Reynolds American (RAI 57.68, +1.71) that it does not already own, as well as a solid gain in sector heavyweights Walmart (WMT 68.42, +1.29, +1.9%), Procter & Gamble (PG 85.21, +1.20, +1.4%), and CVS Health (CVS 83.92, +1.94, +2.4%).
Reviewing today's lone economic report, the Empire Manufacturing Survey:
Wednesday's remaining economic reports will include the MBA Mortgage Index at 7:00 am ET, the NAHB Housing Market Index at 10:00 am ET, the Fed's Beige Book at 2:00 pm ET, and Net Long-Term TIC Flows at 4:00 pm ET.
Over the weekend, President-elect Trump may have instilled a sense of doubt about his administration's ability to smoothly implement the pro-growth policies that the stock market has rallied around. Mr. Trump's comments raised some concerns that he and the GOP could be on different pages regarding tax policy and the repeal and replacement of Obamacare.
The President-elect also restated his claim that drug companies will have to negotiate with the government on prices for drugs in Medicare and Medicaid. That view prompted a pullback in drug stocks, like Merck (MRK 61.48, -0.86, -1.4%) and Pfizer (PFE 32.06, -0.46, -1.4%), as well as many biotech issues, which could be seen in the underperformance of the iShares Nasdaq Biotechnology ETF (IBB 274.52, -5.49). The S&P 500 health care sector closed the day 0.5% lower.
On the other hand, the retail space received a nice bump after Mr. Trump voiced his thoughts on a potential border tax, stating that the current GOP plan is too complicated. Retailers, many of which source their goods overseas, pushed the SPDR 500 Retail ETF (XRT 44.36, +0.35) 0.8% higher on the hope that a punitive border tax on imported goods won't come to fruition as feared. Naturally, the consumer discretionary sector also benefited, posting a 0.2% gain for the day.
Energy was the only other cyclical sector to finish Tuesday's session in the green, adding 0.6% on the back of an uptick in crude oil. The commodity ended its trading day far below its session high at $52.46/bbl, an increase of 0.2%. The gain came amid a weakening U.S. dollar, which fell 1.2%.
In addition to strength in the eruo and the Japanese yen, the British Pound had a hand in pushing the greenback lower, rallying 3.0% after a Brexit speech from UK Prime Minister Theresa May and a Consumer Price Index report showing the highest year-over-year pace for inflation (+1.6%) for the UK since July 2014. Ms. May confirmed that Britain will leave the single market, but that it is aiming for a flexible and phased Brexit transition, which will be put to a parliamentary vote. For good measure, President-elect Trump also expressed his belief that the dollar is "too strong."
On the earnings front, Morgan Stanley (MS 42.15, -1.66) reported better-than-expected top and bottom line results today, but traded down with the entire financial sector (-2.3%) as the stock saw some profit-taking activity. The negative response to Morgan Stanley's otherwise good news triggered some broader profit-taking efforts in the space. That selling picked up in the afternoon trade and drove the indices to new session lows before some late buying interest helped pare today's losses.
Financials will also headline tomorrow's earnings reports. Both Goldman Sachs (GS 235.74, -8.56) and Citigroup (C 58.38, -1.25) are scheduled to report before the opening bell. Investors will be looking for numbers that validate the sector's huge post-election run, but certainly after today's action, they will be watching more intently to see if Goldman Sachs and Citigroup report better-than-expected results and still trade lower.
In addition to energy and consumer discretionary, only four other sectors finished in positive territory -- utilities (+1.1%), real estate (+0.8%), telecom services (+0.4%), and consumer staples (+1.4%). Those four sectors combined have a roughly 18% weight in the S&P 500, so their gains were not enough to offset selling elsewhere.
The outperformance of the consumer staples sector was forged on the back of British American Tobacco's (BTI 113.10, -2.11) $49 billion offer to acquire the remaining 57.8% of Reynolds American (RAI 57.68, +1.71) that it does not already own, as well as a solid gain in sector heavyweights Walmart (WMT 68.42, +1.29, +1.9%), Procter & Gamble (PG 85.21, +1.20, +1.4%), and CVS Health (CVS 83.92, +1.94, +2.4%).
Reviewing today's lone economic report, the Empire Manufacturing Survey:
- The Empire Manufacturing Survey for January fell to 6.5 from the prior month's reading of 9.0. The Briefing.com consensus estimate was pegged at 8.3.
Wednesday's remaining economic reports will include the MBA Mortgage Index at 7:00 am ET, the NAHB Housing Market Index at 10:00 am ET, the Fed's Beige Book at 2:00 pm ET, and Net Long-Term TIC Flows at 4:00 pm ET.
- Russell 2000 -0.3% YTD
- Dow Jones Industrial Average +0.3% YTD
- S&P 500 +1.3% YTD
- Nasdaq Composite +2.9% YTD
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Economic Data
from Briefing.com| 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 | -- |
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Technical Update
DOW JONES INDUSTRIAL AVERAGE19826.77 -58.96 (-0.30%)
Volume: 341.90 Mil above average of 212.38 Mil
Range: 19775.35 - 19882.99
S&P 500 INDEX
2267.89 -6.75 (-0.30%)
Volume: 2212.20 Mil above average of 1432.90 Mil
Range: 2262.81 - 2272.08
DOW JONES TRANSPORTATION AVERAGE
9099.58 -102.76 (-1.12%)
Volume: 61.29 Mil above average of 37.95 Mil
Range: 9079.57 - 9188.96
NASDAQ COMPOSITE
5538.72998 -35.39 (-0.63%)
Volume: 1757.03 Mil below average of 1890.38 Mil
Range: 5527.220215 - 5557.049805
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Market Internal
NYSE :Lower than average volume @ 887.2M vs 903.8M
Decliners outpaced Advancers(adv/dec): 1339M/1630M
New highs outpaced low(high/low): 86/10
NASDAQ :
Lower than average volume @ 1732.4M vs 1846.0M
Decliners outpaced Advancers(adv/dec): 844M/2041M
New highs outpaced low(high/low): 85/25
Decliners outpaced Advancers by 1.68 to 1 on lower volumes 2619.6 ( -4.73%) than avg 2750 (-0.37%)
VOLATILITY S&P500 (VIX) :
11.87 +0.64 (+5.70%)
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Bonds
from Briefing.comBonds
Market Moving Factors- January Empire Manufacturing: Actual 6.5, Briefing.com consensus 8.3, Prior 9.0
- New York Fed President Dudley (FOMC voter): Low risk that Fed will snuff out expansion is quite low because inflation is not a problem; dollar strength could put downward pressure on import prices; looser regulation on small U.S. banks would raise growth rate
- Fed Governor Brainard (FOMC voter): Fed likely to hike rates faster if fiscal policy quickly eliminates labor market slack; full employment within reach; gradual rate hike path appropriate as long as inflation remains tame but fiscal policy could change that
- San Francisco Fed President Williams (non-FOMC voter) (18:00 ET)
Treasuries Advance as Markets Go Risk-Off
- U.S. Treasuries logged sizable gains today as the Empire Manufacturing Index missed estimates and global equities traded lower. New York Fed President Dudley said this morning that recent strength in the U.S. dollar could help contain inflationary pressure in the U.S. but Fed Governor Brainard sounded slightly more hawkish than usual, saying that certain fiscal policy changes could cause a more-than-gradual pace of rate hikes. She also said that the U.S. is "within reach" of full employment. These remarks are quite in line with the thinking of many of her colleagues but she is known for being an uber-dove, probably forecasting only one rate hike in 2017 in December's dot plot. New York Fed presidents and Fed governors always vote on monetary policy decisions. Investors now look forward to Wednesday's release of December's CPI and industrial production data. The S&P 500 trades down 0.46% to 2,264.2 and the U.S. Dollar Index is down 0.80% to 100.37
- Yield Check:
- 2-yr: -4 bps to 1.15%
- 5-yr: -8 bps to 1.82%
- 10-yr: -7 bps to 2.32%
- 30-yr: -6 bps to 2.93%
- News:
- The Empire Manufacturing Index fell to 6.5 for January from 9.0 in December, missing the Briefing.com consensus of 8.3. Both prices paid and prices received rose markedly
- The new orders subindex fell seven points to 3.1
- Shipments were unchanged at 7.3
- New employees rose to -1.7
- Prices paid jumped by 14 points to 36.1, the highest level since 2014
- Prices received also rose by 14 points (to 17.6)
- The capital expenditures subindex rose by four points to 25.2
- New York Fed President William Dudley (FOMC voter) said this morning that the recent appreciation of the U.S. dollar would put downward pressure on imported prices and make it harder for domestic producers to get pricing power. He went on to say that "inflation is simply not a problem"
- Dudley said that the current expansion will continue in the next few years and that pressure on labor resources is increasing "quite slowly"
- Fed Governor Lael Brainard (FOMC voter) said this morning that full employment is "within reach," sounding a bit more hawkish than her usual self. She went on to say that a gradual rate hike path will be appropriate as long as inflation pressures remain tame and as long as fiscal policy changes don't juice the economy too much
- Brainard also said that a fiscally-driven growth acceleration could induce the Fed to end balance sheet reinvestment sooner
- The Empire Manufacturing Index fell to 6.5 for January from 9.0 in December, missing the Briefing.com consensus of 8.3. Both prices paid and prices received rose markedly
- Commodities:
- WTI crude: +0.17% to $52.46/bbl.
- Gold: +1.60% to $1,215.3/troy oz.
- Copper: -2.53% to $2.622/lb.
- Currencies:
- EUR/USD: +0.85% to 1.0705
- USD/JPY: -1.11% to 112.67
- Data out 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)
- January Fed Beige Book (14:00 ET)
- November Net Long-Term TIC Flows (16:00 ET)
- Fed Speakers:
- Minneapolis Fed President Kashkari (FOMC voter) (10:00 ET)
- Fed Chair Yellen (FOMC voter) (15:00 ET)
~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~
Preview: Wednesday, 18 January 2017
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| 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 |
Commentary
Mixed internals, volumes do not support the market direction, but the up tick in VIX and Trump's address seems to give the market a sense of doubt.
Direction for Wednesday, 18 January 2017: Down
Daily Accuracy: 5/8 63%
Direction for Wednesday, 18 January 2017: Down
Daily Accuracy: 5/8 63%
No comments:
Post a Comment