2 Oct 2013 AMC - ADP Employment report misses expectation..
Market Summary
Before Market Opens
S&P futures vs fair value: -9.70. Nasdaq futures vs fair value: -19.00.
The major averages are set to begin today's session in negative territory, and index futures suggest the S&P 500 will surrender most of yesterday's gain at the open. Despite yesterday's late-afternoon speculation, lawmakers in Washington have not made much progress in their quest to reopen the government. As such, the shutdown is now in its second day.
Overseas, most European indices are on the defensive while Italy's MIB (+1.0%) outperforms after Silvio Berlusconi changed his tune and voiced support for Prime Minister Enrico Letta. It appears Mr. Berlusconi made the decision after seeing more than 20 PDL lawmakers ready to shun the party in order to preserve the current government.
In today's economic news, the weekly MBA Mortgage Index slipped 0.4% to follow the prior week's increase of 5.5%. Separately, the September ADP report showed that employment in the nonfarm private business sector rose 166K in September. This was a bit below the increase of 170K expected by the Briefing.com consensus. While the report indicated steady employment growth, the gains were not robust enough to speak in favor of tapering in the near term.
Market Internals
The Dow closed down 59 (-0.39%) at 15133, the Nasdaq closed down 3 (-0.08%) at 3815, and the S&P 500 closed down 1 (-0.07%) at 1694. Action came on mixed volume (NYSE 691 mln vs. avg. of 697; NASDAQ 1705 mln vs. avg. of 1590), with decliners outpacing advancers (NYSE 1339/1701, NASDAQ 997/1522) andnew highs outpacing new lows (NYSE 118/33, NASDAQ 167/24).
Relative Strength:
Volatility-VXX +3.17%, Silver-SLV +2.47%, Heating Oil-UHN +2.24%, Oil-USO +2.02%, Gold-GLD +1.98%, Italy-EWI +1.52%, Egypt-EGPT +1.42%, Middle East and Africa-GAF +1.23%, Malaysia-EWM +1.11%, South Africa-EZA +1.07%.
Relative Weakness:
Natural Gas-UNG -1.73%, Smart Grid Infrastructure-GRID -1.07%, Broker-Dealers-IAI -1.00%, Regional Banks-KRE -1.00%, Greece-GREK -0.96%, Sweden-EWD -0.72%, Banks-KBE -0.69%, Turkey-TUR -0.68%, Singapore-EWS -0.52%, Japan-EWJ -0.51%.
Leaders and Laggards
Technical Updates
Briefing's Commentaries
Closing Market Summary: Stocks Register Modest Losses as Government Shutdown Continues
The S&P 500 settled lower by 0.1% after spending most of the session in a steady climb off its opening low. Sellers were in control early on, but gave way to dip buyers after headlines indicated President Obama would meet with Congressional leaders at the White House early this evening in hopes of bridging some of the gaps that are preventing a budget agreement from being reached.
The Nasdaq (-0.1%) and the S&P were able to regain the bulk of their losses while the Dow (-0.4%) trailed throughout the session.
Six of ten sectors finished in the red with energy (+0.3%) ending in the lead as crude oil advanced 1.8% to $103.89 per barrel.
Another commodity-related sector, materials (+0.2%), also finished ahead of the broader market as steelmakers and miners contributed to the relative strength. The Market Vectors Steel ETF (SLX 45.51, +0.43) and Market Vectors Gold Miners ETF (GDX 24.49, +0.08) added 1.0% and 0.3% respectively. Underlying metals also registered gains as gold and copper futures advanced 2.4% and 1.2% to $1316.70 per troy ounce and $3.31 per pound, respectively.
The technology sector (+0.1%) was another notable outperformer with top components like Apple (AAPL 489.56, +1.60), Cisco Systems (CSCO 23.32, +0.08), and Microsoft (MSFT 33.92, +0.34) adding between 0.3% and 1.0%. The Nasdaq drew some of its strength from those names, but could not break into positive territory as biotechnology weighed. The iShares Nasdaq Biotechnology ETF (IBB 213.18, -0.60) shed 0.3%.
While most sectors were able to distance themselves from their opening lows, industrials (-0.4%) could not muster much strength as defense contractors lagged. The PHLX Defense Index tumbled 0.9% with names like Lockheed Martin (LMT 125.08, -2.42) and United Technologies (UTX 104.98, -2.40) falling 1.9% and 2.2%, respectively.
Treasuries settled near the middle of their range with the benchmark 10-yr yield down three basis points at 2.62%.
Trading volume was a bit below average as 691 million shares changed hands on the floor of the New York Stock Exchange.
In today's economic data, the ADP report indicated the addition of 166,000 new private jobs during September. That was up from August's downwardly revised 159,000 (from 176,000), but a bit below the Briefing.com consensus estimate, which expected the addition of 170,000 jobs.
The ADP report is designed to predict the final BLS private payroll levels. On that account, however, the ADP has not done a good job at predicting the initial payrolls numbers that are released in the Employment Situation Report. The fact that the ADP levels showed trends staying roughly the same over the last few months suggests that the official BLS payrolls will also continue on a flat trend line. The actual payroll gain in September is still unknown, but the ADP data do not suggest a big move up or down from last month's gain of 152,000 jobs.
Separately, the weekly MBA Mortgage Index slipped 0.4% to follow the prior week's increase of 5.5%.
In overseas news of note, Italian markets rallied after Silvio Berlusconi changed his tune and voiced support for Prime Minister Enrico Letta. It appears Mr. Berlusconi made his decision after seeing more than 20 PDL lawmakers ready to shun the party in order to preserve the current government.
Tomorrow, September Challenger Job Cuts will be released at 7:30 ET; weekly initial claims will be reported at 8:30 ET; and the September ISM Services report will cross the wires at 10:00 ET. The August factory orders report will not be released at its scheduled time due to the government shutdown.
Commodities
Closing
Commodities: Crude Oil Rises 2%, Closing Above $104/Barrel
·
Nov crude oil rose for the first time in four sessions following a
Bloomberg report that TransCanada (TRP) expects the expansion of its Keystone
Gulf Coast pipeline to be completed by the end of the month. The company
expects linefill to start shortly after completion
·
The move higher came despite weak inventory data that showed crude oil
inventories for the week ending Sep 27th had a build of 5.47 mln barrels when a
smaller build of 2.4 mln barrels was anticipated. The energy component lifted
off its session low of $101.51 per barrel and settled with a 2.0% gain at
$104.08 per barrel, slightly below its session high of $104.23 per barrel
·
Unlike crude oil, Nov natural gas trended lower after pulling back from
its session high of $3.64 per MMBtu set moments after pit trade opened. It
settled at its session low of $3.54 per MMBtu, or 1.9% lowerPrecious metals
traded higher today, gaining support from a drop in the dollar index and
weaker-than-anticipated ADP employment data. The ADP report showed 166,000 new
private jobs were added in September, while the Briefing.com consensus expected
the report to show the addition of 170,000 new jobs
·
Dec gold rose for the first time in three sessions, lifting from its
session high of $1297.30 per ounce. It settled 2.7% higher at $1320.70 per
ounce, just below its session high of $1324.20 per ounce
·
Dec silver brushed a session high of $22.04 per ounce in late morning
floor action and eventually settled with a 3.6% gain at $21.92 per ounce.
NYMEX
Energy Closing Prices
·
Nov crude oil rose $2.06 to
$104.08/barrel
o Crude oil rose for
the first time in four sessions following a Bloomberg report that TransCanada
(TRP) expects to complete the expansion of its Keystone Gulf Coast pipeline by
the end of the month; the company expects linefill to start shortly after the completion.
The advance came despite weak inventory data that showed crude oil inventories
had a build of 5.47 mln barrels when expectations called for a smaller build of
2.4 mln. The energy component came off its session low of $101.51 per barrel
set in early morning pit trade and trended higher as the session progressed. It
settled just below its session high of $104.23, booking a 2.0% gain.
·
Nov natural gas fell 7 cents to
$3.54/MMBtu
o Natural gas trended
lower after pulling back from its session high of $3.64 set moments after pit
trade opened. It settled with a 1.9% loss at its session low.
·
Nov heating oil rose 4 cents to
$2.99/gallon
Nov RBOB gasoline rose 2 cents to
$2.63/gallon
CBOT
Agriculture and Ethanol/ICE Sugar Closing Prices
·
Dec corn settled unchanged at
$4.39/bushel
·
Dec wheat rose 2 cents to
$6.86/bushel
·
Nov soybeans rose 6 cents to
$12.74/bushel
·
Nov ethanol fell 4 cents to
$1.63/gallon
·
Nov sugar (#16 (U.S.)) fell 0.09 of a penny
to 21.21 cents/lbs
COMEX Metals Closing
Prices
Dec gold rose $35.00 to
$1320.70/ounce
·
Gold rose for the first time in three sessions, gaining support from a
drop in the dollar index and weaker-than-anticipated ADP employment data. The
ADP report showed 166,000 new private jobs were added in September, while the
Briefing.com consensus expected the ADP report to show the addition of 170,000
new jobs. The yellow metal lifted from its session low of $1297.30 and settled
slightly below its session high of $1324.20, booking a gain of 2.7%.
Dec silver rose $0.76 to
$21.92/ounce
·
Silver also traded higher today. It brushed a session high of $22.04 in
late morning floor action and eventually settled with a solid 3.6% gain.
Dec
copper rose 4 cents to $3.32/lbs
Treasuries
Treasuries ended with modest gains as traders moved into the complex after this morning's ADP report (166K actual v. 170K expected) fell short of estimates. The complex saw a steady bid throughout the morning, only to top on reports President Obama has invited Congressional leaders to the White House for a 5:30 pm ET meeting to discuss the government shutdown and debt ceiling negotiations. Steady selling would persist throughout the remainder of the session, causing maturities to finish with only slight gains. Buying had the biggest impact on the belly of the curve as yields there slipped as much as 3 bps. The early bid dropped the 10-yr yield below 2.600% for the first time since the middle of August, but afternoon selling ran it back up to 2.626% by the cash close. Meanwhile, the wings of the curve lagged as both the 2- and 30-yr slipped close to 1 bp apiece to 0.325% and 3.710%, respectively. Curve flattening took hold with the 2-10-yr spread tightening to 229.5 bps. Elsewhere, precious metals booked solid gains as gold surged $32 to $1318 and silver jumped $0.60 to near $21.80. Data picks up on Thursday with Challenger Job Cuts (7:30), initial and continuing claims (8:30), factory orders (delayed), and ISM Services (10). SF's Williams will be in San Diego, CA to take part in a University of California San Diego roundtable discussion (11). Dallas' Fisher will be on his home turf discussing "Effects of Uncertainty on the Economic Recovery" (13:15) before traveling to Little Rock, AR to give an economic update at Stephens CEO Summit (17:30).
Next Day In View
Economic Commentary
On other news....
Summary of Weekly Petroleum Data for the
Week Ending Sep 27, 2013
Production: U.S. crude oil refinery inputs averaged about 15.4 mln barrels per day (bpd) during the week ending September 27, 2013, 146 thousand bpd lower than the previous week's average. Refineries operated at 89.0% of their operable capacity last week. Gasoline production fell from the previous week, averaging 8.9 mln bpd. Distillate fuel production increased last week to about 4.9 mln bpd.
Imports: U.S. crude oil imports averaged about 8.4 mln bpd last week, up by 438 thousand bpd from the previous week. Over the last four weeks, crude oil imports averaged just under 8.0 mln bpd, 6.5% below the same fourweek period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 559 thousand bpd. Distillate fuel imports averaged 85 thousand bpd last week.
Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.5 mln barrels from the previous week. At 363.7 mln barrels, U.S. crude oil inventories are toward the upper range for this time of year. Total motor gasoline inventories increased by 3.5 mln barrels last week and are at the top of the average range. Finished gasoline and gasoline blending component inventories both increased. Distillate fuel inventories decreased by 1.7 mln barrels last week and remain near the lower limit of the average range for this time of year.
Demand: Total products supplied over the last four-week period averaged 19.0 mln bpd, up by 3.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 8.8 mln bpd, up by 0.8% from the same period last year. Distillate fuel product supplied averaged 3.7 mln bpd over the last four weeks, up by 1.6% from the same period last year.
Production: U.S. crude oil refinery inputs averaged about 15.4 mln barrels per day (bpd) during the week ending September 27, 2013, 146 thousand bpd lower than the previous week's average. Refineries operated at 89.0% of their operable capacity last week. Gasoline production fell from the previous week, averaging 8.9 mln bpd. Distillate fuel production increased last week to about 4.9 mln bpd.
Imports: U.S. crude oil imports averaged about 8.4 mln bpd last week, up by 438 thousand bpd from the previous week. Over the last four weeks, crude oil imports averaged just under 8.0 mln bpd, 6.5% below the same fourweek period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 559 thousand bpd. Distillate fuel imports averaged 85 thousand bpd last week.
Inventory: U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.5 mln barrels from the previous week. At 363.7 mln barrels, U.S. crude oil inventories are toward the upper range for this time of year. Total motor gasoline inventories increased by 3.5 mln barrels last week and are at the top of the average range. Finished gasoline and gasoline blending component inventories both increased. Distillate fuel inventories decreased by 1.7 mln barrels last week and remain near the lower limit of the average range for this time of year.
Demand: Total products supplied over the last four-week period averaged 19.0 mln bpd, up by 3.8% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 8.8 mln bpd, up by 0.8% from the same period last year. Distillate fuel product supplied averaged 3.7 mln bpd over the last four weeks, up by 1.6% from the same period last year.
DoE
Inventory Data
Dept of Energy reports that for the week ending Sep 27:
Dept of Energy reports that for the week ending Sep 27:
·
Crude oil inventories had a build of 5.47 mln (consensus called for a
build of 2.4 mln)
·
Gasoline inventories had a build of 3.5 mln (consensus called for a draw
of 0.65 mln)
·
Distillate inventories had a draw of 1.68 mln (consensus called for a
draw of 0.9 mln)
Currencies
Dollar Breaks Below 80.00: 10-yr: +08/32..2.623%..USD/JPY: 97.42..EUR/USD: 1.3584
The Dollar Index dollar slumped for the fourth time in five days as early action pressured the Index down to 79.80. Currently, the Index is looking to retake the 80.00 level, but action looks as though it will post its worst close (79.90) in eight months. Click here to see a daily Dollar Index chart.
The Dollar Index dollar slumped for the fourth time in five days as early action pressured the Index down to 79.80. Currently, the Index is looking to retake the 80.00 level, but action looks as though it will post its worst close (79.90) in eight months. Click here to see a daily Dollar Index chart.
· EURUSD is +60 pips at 1.3580 with action holding at its best level since early February. The strength in the single currency comes following this morning's ECB rate decision which saw the central bank hold its key rate unchanged at 0.50%. At the accompanying press conference, ECB head Mario Draghi insisted rates would remain low for an extended period of time and that the ECB still has many tools at its disposal. Also aiding the advance was word Italian Prime Minister Letta survived a ‘no confidence' vote as Silvio Berlusconi's PDL party expressed their support. The 1.3600/1.3650 area should put a lid on any near-term upside. Eurozone data includes retail sales, as well as Spanish and Italian Services PMI. German banks are closed for Unity Day.
· GBPUSD is +20 pips at 1.6210 as trade ticks higher for a fourth consecutive session. However, gains over the past two days have been limited as data has begun to miss estimates. Key resistance rests at the 1.6300 level. Britain's Services PMI is due out tomorrow.
· USDCHF is -30 pips at .9025 as action readies for its lowest close in 19 months. Early weakness probed the .9000 area for a second straight session, but bulls were once again able to support the level.
· USDJPY is -60 pips at 97.40 as trade looks to post its worst close in a month. The 97.00 area should provide some support while additional help is likely to be provided by the 200-day moving average (96.50).
· AUDUSD is -30 pips at .9365 as sellers are in control for the first time in three days following the disappointing building approvals and trade data. Participants continue to watch the .9300 support level, which also should see some help from the 100-day moving average (.9280). Chinese banks remain closed for Golden Week, but that will not prevent Non-Manufacturing PMI from crossing the wires.
· USDCAD is flat at 1.0330 amid a rather uneventful session. The pair saw an early test of 1.0350 resistance fail as sellers stepped in to defend the 50- and 100-day moving averages. That level remains under careful scrutiny as a breakout sets up the potential for a move into the 1.0500 region.
Jason's Commentaries
Last night we indeed having very flat and volatile session..The market started in a very bearish fashion with the futures down more than 0.5% at open, which subsequently fought itself back up to the neutral zone. Last night, the ADP employment report missed very slightly and the market was anticipating Ben Bernanke's talk at 330pm ET, which provide some sort of dovish sentiment to the market. Volumes were at 688m shares traded on the NYSE, pretty decent for a day like this.. It seems that the market is waiting for something to happen.. Perhaps the market is waiting for the debt ceiling talk to settle. If the US gov started defaulting on their debts, it would mean a higher borrowing cost for them in the future. The US gov is running a $750b budget deficit in 2013, if the deficit remains, US will have to default sooner or later. Nasdaq was providing strength in the market last night and other sectors remained weak. We're likely to have more sideways and volatile period to come. But in approx 1mth's perspective, I'm actually pretty bullish in the market. We're not going to have the non farm payrolls coming out this coming Friday. However, that depends on whether the US gov is able to resolve their differences and resume the full government operations.
Market Call: FLAT
Date: 3 Oct 2013
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