5 June 2013 AMC

5 June 2013 AMC

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Briefing's Commentaries 

Stock Market Update 16:20 ET Dow -216.95 at 14960.59, Nasdaq -43.78 at 3401.48, S&P -22.48 at 1608.9 : [BRIEFING.COM] The S&P 500 settled lower by 1.4% after steady selling persisted throughout the session. Today's loss came on the heels of yesterday's weakness and the continued decline caused the benchmark average to slide more than 2.0% below Tuesday's high. All ten sectors ended in the red as declining issues outpaced advancers by a 4.4 to 1 ratio. Cyclical groups were among the main casualties of today's selloff as four of six growth-oriented sectors saw losses in excess of 1.6%. The materials space fell 2.1% amid sector-wide weakness. Only gold miners were able to escape the selling pressure as the Market Vectors Gold Miners ETF (GDX 29.93, +0.09) added 0.3%. While materials led to the downside, another commodity-related group, energy, finished among the leaders. Crude oil added 0.4% to $93.69 per barrel, which may have given a slight boost to the energy sector. Elsewhere, the industrial sector declined amid significant pressure in transportation-related names. The Dow Jones Transportation Average fell 1.9% as 18 of its 20 components lost at least 1.0% each. Also of note, homebuilders were among yesterday's biggest laggards and they remained weak today. The iShares Dow Jones US Home Construction ETF (ITB 23.06, -0.37) declined 1.6%. Although cyclical sectors faced the bulk of today's selling, defensively-oriented groups were not far behind. Consumer staples, utilities, and telecom services each lost between 0.9% and 1.2% while the health care sector slumped 1.4%. The weakness in equities has been closely correlated with the performance of the dollar/yen currency pair. Today, the yen continued strengthening, climbing to 99.20. In turn, the yen strength pressured Nikkei futures to a loss of 4.8%. Notable losses in stocks sent a wave of money into the bond market. Aggressive buying pressured the 10-yr yield, pushing it lower by seven basis points to 2.088%. Investors received a full slate of economic data today. The Federal Reserve's Beige Book for June did not contain any major surprises. General economic activity was described as having increased at a modest to moderate pace. Similarly, several districts reported a measured improvement in hiring trends while some regions indicated finding qualified workers has been a challenge. On a related note, little pressure was observed in general wages, but some districts did observe a modest rise for some occupations. Factory orders rose 1.0% in April after declining an upwardly revised 4.7% (from 4.9%) in March. The Briefing.com consensus expected orders to increase 1.6%. Overall, the report was not too different from expectations. Durable goods growth was strong on solid demand from just about every sector. Some of those gains, however, were offset by falling nondurable goods prices. While the manufacturing industry slipped into a contraction in May, the services sector managed its 41st consecutive monthly expansion. The ISM Non-manufacturing Index improved slightly in May, increasing from 53.1 in April to 53.7. The Briefing.com consensus expected the index to increase to 53.5. Nonfarm business productivity increased 0.5% in Q1 2012. That was down from an originally reported 0.7% gain and exactly in-line with the Briefing.com consensus. The big surprise was that unit labor costs now show a 4.3% decline in the first quarter after originally reporting a 0.5% increase. The consensus expected unit labor costs to be revised up to 0.6%. Firms not only stretched their workforce by increasing their hours in the first quarter (1.6%), but they cut their hourly pay by 3.8%. Essentially, firms were able to produce more, pay less, and reap higher profits. Tomorrow, May Challenger Job Cuts will be reported at 7:30 ET while weekly initial claims will be released at 8:30 ET. ..NYSE Adv/Dec 563/2478. ..NASDAQ Adv/Dec 570/1947.

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Jason's Commentaries

I just love it when market is so readable like now. 216 points drop on the Dow after ADP posted disappointing results and ISM barely made the mark. Market is now looking for a reason to sell off. Major market players are exiting the market and there might be a lack of buying power in the market now. Volumes were 740m shares traded on the NYSE and the bears totally ripped the bulls apart. All sectors were in the red, especially Materials.

On the technical side, we have the 10MA crossing the 20MA, completing the death cross, breaking the uptrend line. However, Dow and S&P500 are approaching the 50MA. S&P500 has found support on the 1600 level. Dow closed below 15000. This is no good sign. Treasuries rallied last night when Dow closed 200 points in the red. Nonetheless, thursday will be flat as all eyes will be on the NFP coming out on Friday. Unless the Unemployment claims report extreme results, that could give the market a reason to rally or to drop a lot more. 

Market Call: FLAT to upside

Date: 6 June 2013