Market Summary
from Briefing.comIndustry Watch
Strong: Health Care, Consumer Staples, Utilities, Real Estate, Telecom Services
Weak: Technology, Financials, Consumer Discretionary, Industrials, Energy, Materials
- Nervousness surrounding the delay of the Trump administration's corporate tax reform and infrastructure spending plans.
- Mixed reactions to earnings reports from a host of high-profile companies like Exxon Mobil (XOM), Pfizer (PFE), MasterCard (MA), United Parcel Service (UPS), and Sprint (S), among others.
- President Trump restates his desire to decrease drug prices and increase domestic drug manufacturing. The President also wants to speed up the FDA approval process.
[BRIEFING.COM] Investors continued hedging their investment risk on Tuesday, choosing to play it safe in the wake of last week's record high levels and amid a week full of influential reports on both the earnings and economic fronts. However, an afternoon rally helped the major averages finish at their highest levels of the day. The S&P 500 shed 0.1% after being down more than 0.5% in the early going.
The health care sector assumed a leadership position in today's market, underpinned by the outperformance of the drug and biotech stocks. Those issues rallied on the other side of a meeting President Trump had with industry executives. While the president pressed his case for lowering drug prices, market participants were heartened by his added belief that regulations should be reduced and that the drug approval process should be sped up. Those declarations lent some relief to investors, who appeared heartened by the notion that the meeting with the president was better than feared.
A host of health care names kicked off today's trading session by reporting quarterly results before the opening bell including Pfizer (PFE 31.73, +0.42), Eli Lilly (LLY 77.03, +2.33), Thermo Fisher Scientific (TMO 152.39, +9.10), and Aetna (AET 118.61, +1.90). The results were mixed, but the four names added between 1.3% and 6.4% after President Trump met with CEOs from top U.S. drugmakers on Tuesday morning. Biotechnology stood out with the iShares Nasdaq Biotechnology ETF (IBB 278.07, +7.68) spiking 2.8%.
On the cyclical side, Exxon Mobil (XOM 83.89, -0.97) also reported earnings this morning. The reaction to the report was negative, pushing the company and the energy space lower by 1.1% and 0.1%, respectively. However, the energy sector's loss was capped by crude oil, which finished its trading day 0.3% higher at $52.81/bbl. The energy component's gain came amid a downtick in the U.S. Dollar Index (99.60, -0.82), which finished Tuesday 0.8% lower.
The remaining cyclical sectors fell as cautious sentiment lingered throughout the day. Industrials (-0.9%) closed at the bottom of the leaderboard following United Parcel Service's (UPS 109.13, -7.90) disappointing fourth quarter earnings report and relative weakness in airline names. The top-weighted technology sector also underperformed the benchmark index, thanks in part to a poor showing from chipmakers. The PHLX Semiconductor Index finished Tuesday lower by 1.3%. In the broader tech sector, Apple (AAPL 121.29, -0.34) shed 0.3% ahead of its earnings report.
Conversely, countercyclical spaces and Treasuries thrived on wary investors' actions; all five defensive spaces finished higher while the benchmark 10-yr yield closed five basis points lower at 2.44%. The utilities sector (+1.6%) was the day's top performer, while telecom services (+0.1%) eked out a small gain.
Today's economic data included fourth quarter Employment Cost Index, November Case-Shiller Home Price Index, January Chicago PMI, and January Consumer Confidence:
The health care sector assumed a leadership position in today's market, underpinned by the outperformance of the drug and biotech stocks. Those issues rallied on the other side of a meeting President Trump had with industry executives. While the president pressed his case for lowering drug prices, market participants were heartened by his added belief that regulations should be reduced and that the drug approval process should be sped up. Those declarations lent some relief to investors, who appeared heartened by the notion that the meeting with the president was better than feared.
A host of health care names kicked off today's trading session by reporting quarterly results before the opening bell including Pfizer (PFE 31.73, +0.42), Eli Lilly (LLY 77.03, +2.33), Thermo Fisher Scientific (TMO 152.39, +9.10), and Aetna (AET 118.61, +1.90). The results were mixed, but the four names added between 1.3% and 6.4% after President Trump met with CEOs from top U.S. drugmakers on Tuesday morning. Biotechnology stood out with the iShares Nasdaq Biotechnology ETF (IBB 278.07, +7.68) spiking 2.8%.
On the cyclical side, Exxon Mobil (XOM 83.89, -0.97) also reported earnings this morning. The reaction to the report was negative, pushing the company and the energy space lower by 1.1% and 0.1%, respectively. However, the energy sector's loss was capped by crude oil, which finished its trading day 0.3% higher at $52.81/bbl. The energy component's gain came amid a downtick in the U.S. Dollar Index (99.60, -0.82), which finished Tuesday 0.8% lower.
The remaining cyclical sectors fell as cautious sentiment lingered throughout the day. Industrials (-0.9%) closed at the bottom of the leaderboard following United Parcel Service's (UPS 109.13, -7.90) disappointing fourth quarter earnings report and relative weakness in airline names. The top-weighted technology sector also underperformed the benchmark index, thanks in part to a poor showing from chipmakers. The PHLX Semiconductor Index finished Tuesday lower by 1.3%. In the broader tech sector, Apple (AAPL 121.29, -0.34) shed 0.3% ahead of its earnings report.
Conversely, countercyclical spaces and Treasuries thrived on wary investors' actions; all five defensive spaces finished higher while the benchmark 10-yr yield closed five basis points lower at 2.44%. The utilities sector (+1.6%) was the day's top performer, while telecom services (+0.1%) eked out a small gain.
Today's economic data included fourth quarter Employment Cost Index, November Case-Shiller Home Price Index, January Chicago PMI, and January Consumer Confidence:
- The fourth quarter Employment Cost Index rose 0.5%, while the Briefing.com consensus expected an uptick of 0.6%.
- The key takeaway from the report is that compensation costs did move higher in 2016, which creates some profit margin constraints while at the same time lending employees some increased spending potential.
- The Case-Shiller 20-city Home Price Index for November rose 5.3%, which was above the Briefing.com consensus of 5.0%. This followed the previous month's unrevised reading of 5.1%.
- Chicago PMI for January decreased to 50.3 from 54.6 in December while the Briefing.com consensus expected a reading of 55.0.
- The key takeaway from this report is that it's a first quarter report, and with the pullback to a level that is just above a contraction reading, it will serve perhaps to temper some of the market's heightened optimism surrounding economic growth prospects.
- The consumer confidence reading for January declined to 111.8 from the prior month's revised reading of 113.3 (from 113.7). The Briefing.com consensus expected the survey to hit 112.5.
- The key takeaway from the report is that consumer confidence is still at relatively high levels, although consumers' outlook was reined in a bit following the post-election surge.
- Russell 2000 +0.3% YTD
- Dow Jones Industrial Average +0.5% YTD
- S&P 500 1.8% YTD
- Nasdaq Composite 4.3% 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 31 | 08:30 | Employment Cost Index | Q4 | 0.5% | 0.6% | 0.6% | 0.6% | -- |
| Jan 31 | 09:00 | S&P Case Shiller Home Price Index | Nov | 5.3% | 5.1% | 5.0% | 5.1% | |
| Jan 31 | 09:45 | Chicago PMI | Jan | 50.3 | 55.5 | 55.0 | 53.9 | 54.6 |
| Jan 31 | 10:00 | Consumer Confidence | Jan | 111.8 | 114.0 | 112.5 | 113.3 | 113.7 |
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Technical Update
DOW JONES INDUSTRIAL AVERAGE19864.09 -107.04 (-0.54%)
Volume: 373.75 Mil above average of 259.46 Mil
Range: 19784.77 - 19918.17
S&P 500 INDEX
2278.87 -2.03 (-0.09%)
Volume: 2555.32 Mil above average of 1721.99 Mil
Range: 2267.21 - 2279.09
DOW JONES TRANSPORTATION AVERAGE
9191.98 -137.36 (-1.47%)
Volume: 97.89 Mil above average of 51.20 Mil
Range: 9137.05 - 9277.32
NASDAQ COMPOSITE
5614.790039 +1.08 (+0.02%)
Volume: 2041.48 Mil above average of 1800.47 Mil
Range: 5576.089844 - 5615.149902
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Market Internal
NYSE :Higher than average volume @ 1115.5M vs 856.0M
Advancers outpaced Decliners(adv/dec): 1856M/1057M
New highs outpaced low(high/low): 69/19
NASDAQ :
Higher than average volume @ 2020.3M vs 1767.2M
Advancers outpaced Decliners(adv/dec): 1763M/1112M
New highs outpaced low(high/low): 83/51
Advancers outpaced Decliners by 1.67 to 1 on higher volumes 3135.8 (+19.54%) than avg 2623 (-0.58%)
VOLATILITY S&P500 (VIX) :
11.99 +0.11 (+0.93%)
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Bonds
from Briefing.comMarket Moving Factors
- Q4 Employment Cost Index: Actual 0.5%, Briefing.com consensus 0.6%, Prior 0.6%
- November S&P Case-Shiller Home Price Index: Actual 5.3%, Briefing.com consensus 5.0%, Prior 5.1%
- January Chicago PMI: Actual 50.3, Briefing.com consensus 55.0, Prior 54.6
- January Consumer Confidence: Actual 111.8, Briefing.com consensus 112.5, Prior 113.7
Treasuries Rally as Economic News Disappoints and Stocks Slump
- U.S. Treasuries pushed higher today as the S&P 500 lost 0.28% to 2,274.5 and the economic data releases came up light. The Chicago PMI unexpectedly fell to 50.3 for January (Briefing.com consensus 55.0) and the Conference Board's Consumer Confidence Index fell by almost two points to 111.8 (Briefing.com consensus 112.5). The U.S. Dollar Index is down 0.86% to 99.56 as the Trump Administration tried (successfully) to talk down the greenback. Wednesday's session will be very busy with the ADP Employment Change and ISM Manufacturing for January due out in the morning and the FOMC rate decision in the afternoon
- Yield Check:
- 2-yr: -3 bps to 1.19%
- 5-yr: -5 bps to 1.90%
- 10-yr: -5 bps to 2.44%
- 30-yr: -3 bps to 3.05%
- News:
- The U.S. Employment Cost Index rose just 0.5% q/q in the fourth quarter, missing the Briefing.com consensus of 0.6% and the Q3 reading of 0.6%
- The year-on-year rate fell to 2.2% from 2.3%
- The Case-Shiller 20-city index rose 5.3% y/y in November, beating the Briefing.com consensus for 5.0% growth. October's rate was 5.1%
- The Chicago Purchasing Managers' Index fell to 50.3 for January from 54.6 for November. The Briefing.com consensus was 55.0
- The miss on the Chicago PMI hints at downside risk for the ISM Manufacturing report, due out on Wednesday
- The Conference Board's Consumer Confidence Index fell to 111.8 for January from 113.7 in December. The Briefing.com consensus was 112.5
- The key takeaway from the report is that consumer confidence is still at relatively high levels, although consumers' outlook was reined in a bit following the post-election surge
- AT&T announced a debt offering with six tranches of 5, 7, 10, 20, 30, and 40 years. This comes on the back of $17 bln, seven-tranche deal from Microsoft on Monday
- The U.S. Employment Cost Index rose just 0.5% q/q in the fourth quarter, missing the Briefing.com consensus of 0.6% and the Q3 reading of 0.6%
- Commodities:
- WTI crude: +0.34% to $52.81/bbl.
- Gold: +1.57% to $1,214.8/troy oz.
- Copper: +2.67% to 2.726/lb.
- Currencies:
- EUR/USD: +0.92% to 1.0801
- USD/JPY: -0.77% to 112.80
- Data out Wednesday:
- MBA Mortgage Index for the week ending 1/28 (07:00 ET)
- January ADP Employment Change (08:15 ET)
- January ISM Manufacturing Index (10:00 ET)
- December Construction Spending (10:00 ET)
- Crude Inventories for the week ending 1/28 (10:30 ET)
- February FOMC Rate Decision (14:00 ET)
- January Auto and Truck Sales (14:00 ET)
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Preview: Wednesday, 1 February 2017
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| 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 |
Commentary
A rather interesting day, Bearish for most of the day till late afternoon, Internals are also more bullish. What caused the rally?
Direction for Wednesday, 1 February 2017: Up
Daily Accuracy: 11/18 61%
Direction for Wednesday, 1 February 2017: Up
Daily Accuracy: 11/18 61%
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