23 May 2013 AMC

23 May 2013 AMC

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Briefing's Commentaries 

Stock Market Update 16:15 ET Dow -12.67 at 15294.5, Nasdaq -3.88 at 3459.42, S&P -4.84 at 1650.51 :[BRIEFING.COM] The major averages ended modestly lower with the S&P 500 shedding 0.3%.  The benchmark average saw an opening loss of 1.2% after Japan's Nikkei tumbled 7.3%. Japanese stocks sold off amid continued volatility in Japanese Government Bond futures as the 10-yr yield spiked almost 16 basis points to 1.002 before the Bank of Japan's JPY2 trillion liquidity injection caused yields to retrace their gains.  Adding insult to injury was news out of China where the HSBC Flash Manufacturing PMI (49.6 actual, 50.5 consensus, 50.4 prior) fell below 50 for the first time in seven months.  All ten sectors began the session with sharp losses before the daylong rebound helped some groups return to yesterday's closing levels.  The utilities sector was the weakest performer, ending lower by 0.8% after a morning flash crash in American Electric Power (AEP 48.28, -0.31) and NextEra Energy (NEE 78.22, -0.94) briefly wiped out more than $33 billion in combined market capitalization.  Meanwhile, other defensively-oriented sectors outperformed the broader market with the telecom space registering a gain.  Cyclical groups were mixed throughout the day as technology and materials made a brief appearance in positive territory.  In the tech sector, major components like Apple (AAPL 442.14, +0.79), Oracle (ORCL 34.23, +0.11), and Cisco Systems (CSCO 23.51, +0.17) held up relatively well whileHewlett-Packard (HPQ 24.86, +3.63) surged 17.2% following its earnings beat on below-consensus revenue. In addition, the computer company guided third quarter earnings above analyst expectations and raised its dividend 10.0% to $0.1452.  Elsewhere, the relative strength in chemical producers overshadowed the weakness of steelmakers as the materials sector ended little changed. Gold miners also outperformed as the yellow metal rose 1.8% to $1391.30 per troy ounce. However, copper fell 1.9% to $3.318 per pound as disappointing Chinese data weighed.  While the Dow and Nasdaq made a couple intraday appearances in positive territory, the S&P was kept from seeing green by the weakness in banks. The financial sector settled lower by 0.6% as most majors registered losses. However, Dow component American Express (AXP 74.69, +0.25) outperformed its peers to end with a gain of 0.3%.  Today's opening losses caused the CBOE Volatility Index (VIX 14.12, +0.30) to spike to 15.11 before the near-term volatility measure returned near session lows as the broader market climbed off its worst levels of the day.  After a one-week shock, the initial claims level dropped back below 350,000. The initial claims level fell to 340,000 for the week ending May 18 from an upwardly revised 363,000 (from 360,000) for the week ending May 11. The Briefing.com consensus expected the initial claims level to fall to 348,000.  Separately, new home sales increased 2.3% to 454,000 in April after a sizable upward revision for March to 444,000 (from 417,000). The Briefing.com consensus pegged new home sales at 425,000.  Inventory levels remain depressed. There is only a 4.1-month supply at current sales rates. During a normal environment, homebuilders try to maintain a 6-month supply. That means construction growth should accelerate from current levels.  Tomorrow, April durable orders and durable orders ex-transportation will be reported at 8:30 ET. ..NYSE Adv/Dec 1251/1753. ..NASDAQ Adv/Dec 1294/1200.

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Jason's Commentaries


Last night was really a very volatile day. Futures were down 1.2% at the opening bell due to Asian's stunning day. Nikkei dropped 7.2% and caused the entire Asia market to wash out in red. However, market reversed at 10am ET following the New Home Sales. New Home sales increased 2.3% and the Unemployment Claims remain dovish. On top of that, the better than expected results of HP came as a important force to drag its Tech counterparts up higher. I believe the initial surge was due to a increased amount of short covering which subsequently led to a heavy buying later in the day. Volume came at 818m shares traded on the NYSE. The TRIN was consistently in the bullish region and VIX retraced from a high of 15 points to 14.3 points at the closing bell. However, the bears managed to outpace the bears due to the initial volumes. It seems to me there are more shorts in the market. However, I believe the strength of the bulls are likely to carry forward to today.

Market Call: Flat to upside

Date: 24 May 2013