18 Nov 2013 AMC- Market showing mixed signals as Nasdaq lagged ahead of FOMC minutes
Market Summary
European markets are now closed; stock markets
across Europe performed as follows:
·
UK's FTSE: + 0.5%
·
Germany's DAX: + 0.6%
·
France's CAC: + 0.7%
·
Spain's IBEX: + 0.9%
·
Portugal's PSI: + 0.7%
·
Italy's MIB Index: + 2.2%
·
Irish Ovrl Index: -0.6%
·
Greece ATHEX Composite: + 0.7%
S&P
futures vs fair value: +1.70. Nasdaq futures vs fair value: -0.30.
The S&P 500 futures trade higher by 0.2%.
Asian markets posted gains with indices in Hong Kong (+2.7%) and China (+2.9%) pacing the advance as participants continued reacting to reform plans announced late last week. In addition, Moody's commented on Chinese reform, saying the current direction is a positive for the country's sovereign rating. Elsewhere, Japan's Nikkei settled flat after gaining more than 1,000 points over six sessions. Regional economic data was limited as China's house prices rose 9.6% month-over-month (9.1% prior) and Hong Kong's unemployment rate held steady at 3.3%, as expected. Lastly, South Korea's PPI slipped 0.4% month-over-month (-0.1% last) while the year-over-year reading fell 1.4% (-1.8% previous).
The S&P 500 futures trade higher by 0.2%.
Asian markets posted gains with indices in Hong Kong (+2.7%) and China (+2.9%) pacing the advance as participants continued reacting to reform plans announced late last week. In addition, Moody's commented on Chinese reform, saying the current direction is a positive for the country's sovereign rating. Elsewhere, Japan's Nikkei settled flat after gaining more than 1,000 points over six sessions. Regional economic data was limited as China's house prices rose 9.6% month-over-month (9.1% prior) and Hong Kong's unemployment rate held steady at 3.3%, as expected. Lastly, South Korea's PPI slipped 0.4% month-over-month (-0.1% last) while the year-over-year reading fell 1.4% (-1.8% previous).
·
Japan's Nikkei closed flat. Technology
companies outperformed as Minebea and Yahoo Japan gained 4.9% and 4.3%,
respectively. Energy names lagged as Show Shell Sekiyu lost 2.8%.
·
In Hong Kong, the Hang Seng advanced 2.7% as all
but one component registered gains. Insurance names led the way as Ping An and
China Life Insurance rose 9.5% and 8.7%, respectively. Sun Hung Properties was
the lone decliner, falling 1.5%.
·
China's Shanghai Composite rose 2.9% with
financials providing support. CITIC Securities surged the limit, 10.0%.
Major
European indices trade higher across the board with peripheral indices in the
lead. Italy's MIB (+2.0%) outperforms after Prime Minister Enrico Letta said
the country is on the right track for a return to growth next year, but youth
unemployment remains a pressing issue. Mr. Letta said he expects 2014 GDP
growth of 1.4%. Economic data was limited to a handful of releases. Eurozone
trade surplus expanded to EUR14.3 billion from EUR12.3 billion (EUR14.2 billion
expected) while the current account surplus narrowed to EUR13.7 billion from
EUR17.9 billion (EUR19.0 billion forecast). Elsewhere, Germany's House Price
Index rose 0.8% month-over-month (-0.9% prior).
·
Great Britain's FTSE is higher by
0.4% as Aberdeen Asset Management leads with a gain of 13.9% after agreeing to
buy the asset management arm of Lloyds Banking Group for just over $1 billion.
Petrofac is the weakest performer, down 15.6% after the company issued
disappointing guidance.
·
In Germany, the DAX trades up 0.6% with utilities
E.ON and RWE in the lead. The two stocks trade higher by 4.0% and 6.9%,
respectively. Bayer lags, trading lower by 0.6%.
·
France's CAC holds a gain of 0.7%. EADS
outperforms with a gain of 3.4% while producers of basic materials lag. Cie de
St-Gobain and Vallourec are both down near 1.2%.
·
In Italy, the MIB sports an advance of 2.0% as
39 of 40 components register gains. Banco Popolare and UniCredit are higher by
4.5% and 2.9%, respectively.
In domestic economic news, the September net
long-term TIC flows report indicated an $25.5 billion inflow of foreign capital
from U.S. denominated assets. This follows the prior month's $9.8 billion
outflow.
Market Internals
Market Internals -Technical-
The Dow closed up 14 (+0.09%) at 15976, the S&P 500 closed down 7 (-0.37%) at 1792, and the Nasdaq closed down 37 (-0.93%) at 3949. Action came on slightly below average volume (NYSE 656 mln vs. avg. of 731; NASDAQ 1772 mln vs. avg. of 1781), with decliners outpacing advancers (NYSE 1202/1892, NASDAQ 940/1635) and new highs outpacing new lows (NYSE 278/19, NASDAQ 222/30).
Relative Strength:
China 25 Index-FXI +3.59%, Poland-EPOL +2.25%, Brazilian Real-BZF +1.79%, Cocoa-NIB +1.79%, Hong Kong-EWH +1.77%, BRICs-EEB +1.66%, 20+ Year Treasuries-TLT +0.6%, Sugar-SGG +0.59%, Coffee-JO +0.47%, Bank and Brokerage-RKH +0.45%.
Relative Weakness:
Oil and Gas Exploration-XOP -2.9%, Biotechnology-XBI -2.46%, Social Media-SOCL -2.46%, Junior Gold Miners-GDXJ -2.17%, Cloud Computing-SKYY -2.16%, New Zealand-ENZL -1.16%, Peru-EPU -1.16%, Indonesia-IDX -0.89%, Thailand-THD -0.67%, Australia-EWA -0.57%.
Leaders and Laggards
Technical Updates
Briefing's Commentaries
Closing
Market Summary: Key Indices End Mixed
The major averages ended the first session of the week on a mixed note as the S&P 500 lost 0.4% while the Dow added 0.1%. The Nasdaq underperformed with a loss of 0.9% as momentum names lagged once again.
Not counting the first 30 minutes or the final hour, the S&P 500 spent the session inside of a two-point range just above its flat line. The benchmark index made a couple appearances above the 1,800 level, but was unable to end above that mark. Meanwhile, the Dow spent the bulk of the session north of 16,000, but settled almost 15 points below that level.
Stocks tumbled to fresh lows during the last hour of action amid comments from activist investor Carl Icahn who said he is ‘very cautious' with regard to equities and could see a ‘big drop.' Mr. Icahn cited earnings driven by low interest rates as the reason for his views.
The Dow ended just above its flat line after outperforming throughout the session. Boeing (BA 138.36, +2.28) provided support after the company received orders for new jets. In addition, Goldman Sachs (GS 165.68, +1.28) and JPMorgan Chase (JPM 55.74, +0.87) also underpinned the index. In turn, the outperformance of these names translated into relative strength for their respective sectors as financials (-0.1%) and industrials (+0.2%) were the only two cyclical groups to end ahead of the S&P.
On the flip side, energy (-0.7%) and materials (-0.7%) were pressured by the underlying commodities. Crude oil tumbled 0.9% to $93.02/bbl after surrendering its slim morning advance. Meanwhile, gold (-1.2%, $1272.50/ozt) and copper (-0.7%, $3.149/lb) futures also ended on their lows.
Elsewhere, the Nasdaq was pressured by several momentum names as Facebook (FB 45.83, -3.18), LinkedIn (LNKD 222.07, -8.99), Priceline.com (PCLN 1127.93, -11.60), and Tesla (TSLA 121.58, -13.87) lost between 1.0% and 10.2%. A handful of top components also weighed as Apple (AAPL 518.63, -6.36) lost 1.2% and Microsoft (MSFT 37.20, -0.64) fell 1.7% after receiving a downgrade from Bank of America/Merrill Lynch.
Treasuries settled on their highs with the 10-yr yield down four basis points at 2.66%.
Today's participation was well below average as just over 650 million shares changed hands on the floor of the NYSE.
On the Fedspeak circuit, Philadelphia Fed President Charles Plosser said the FOMC missed an ‘excellent opportunity' to begin the tapering process by not reducing the size of its asset purchases in September. Mr. Plosser went on to say he would have preferred a fixed amount for quantitative easing instead of an open-ended program. While Mr. Plosser does not have a vote on the board this year, he will be a voting member in 2014.
Today's economic data was limited to just two items. The September net long-term TIC flows report indicated an $8.9 billion outflow of foreign capital from U.S. denominated assets. This followed the prior month's $8.9 billion outflow.
Separately, the November NAHB Housing Market Index checked in at 54, which was below the Briefing.com consensus estimate of 55 and unchanged from the downwardly revised (from 55) October reading.
Tomorrow, the third quarter employment cost index will be reported at 8:30 ET.
The major averages ended the first session of the week on a mixed note as the S&P 500 lost 0.4% while the Dow added 0.1%. The Nasdaq underperformed with a loss of 0.9% as momentum names lagged once again.
Not counting the first 30 minutes or the final hour, the S&P 500 spent the session inside of a two-point range just above its flat line. The benchmark index made a couple appearances above the 1,800 level, but was unable to end above that mark. Meanwhile, the Dow spent the bulk of the session north of 16,000, but settled almost 15 points below that level.
Stocks tumbled to fresh lows during the last hour of action amid comments from activist investor Carl Icahn who said he is ‘very cautious' with regard to equities and could see a ‘big drop.' Mr. Icahn cited earnings driven by low interest rates as the reason for his views.
The Dow ended just above its flat line after outperforming throughout the session. Boeing (BA 138.36, +2.28) provided support after the company received orders for new jets. In addition, Goldman Sachs (GS 165.68, +1.28) and JPMorgan Chase (JPM 55.74, +0.87) also underpinned the index. In turn, the outperformance of these names translated into relative strength for their respective sectors as financials (-0.1%) and industrials (+0.2%) were the only two cyclical groups to end ahead of the S&P.
On the flip side, energy (-0.7%) and materials (-0.7%) were pressured by the underlying commodities. Crude oil tumbled 0.9% to $93.02/bbl after surrendering its slim morning advance. Meanwhile, gold (-1.2%, $1272.50/ozt) and copper (-0.7%, $3.149/lb) futures also ended on their lows.
Elsewhere, the Nasdaq was pressured by several momentum names as Facebook (FB 45.83, -3.18), LinkedIn (LNKD 222.07, -8.99), Priceline.com (PCLN 1127.93, -11.60), and Tesla (TSLA 121.58, -13.87) lost between 1.0% and 10.2%. A handful of top components also weighed as Apple (AAPL 518.63, -6.36) lost 1.2% and Microsoft (MSFT 37.20, -0.64) fell 1.7% after receiving a downgrade from Bank of America/Merrill Lynch.
Treasuries settled on their highs with the 10-yr yield down four basis points at 2.66%.
Today's participation was well below average as just over 650 million shares changed hands on the floor of the NYSE.
On the Fedspeak circuit, Philadelphia Fed President Charles Plosser said the FOMC missed an ‘excellent opportunity' to begin the tapering process by not reducing the size of its asset purchases in September. Mr. Plosser went on to say he would have preferred a fixed amount for quantitative easing instead of an open-ended program. While Mr. Plosser does not have a vote on the board this year, he will be a voting member in 2014.
Today's economic data was limited to just two items. The September net long-term TIC flows report indicated an $8.9 billion outflow of foreign capital from U.S. denominated assets. This followed the prior month's $8.9 billion outflow.
Separately, the November NAHB Housing Market Index checked in at 54, which was below the Briefing.com consensus estimate of 55 and unchanged from the downwardly revised (from 55) October reading.
Tomorrow, the third quarter employment cost index will be reported at 8:30 ET.
·
Nasdaq +30.8% YTD
·
Russell 2000 +30.4% YTD
·
S&P 500 +25.6% YTD
·
DJIA +21.9% YTD
Commodities
Closing
Commodities: Commodities Mostly Lower, Crude Oil Drops 0.9%
Dec crude oil erased earlier gains as it fell
into negative territory after slipping from its session high of $94.29 per
barrel. It brushed a session low of $92.72 per barrels and settled with a 0.9%
loss at $93.02 per barrel.
Dec natural gas chopped around slightly above
the unchanged line for most of today's session after pulling back from its
session high of $3.70 per MMBtu set in morning pit trade. However, it slid into
negative territory in the last half hour of floor trade and settled 1.1% lower
at $3.62 per MMBtu
Precious metals traded in negative territory
despite a weaker dollar index.
Dec gold fell for the first time in three
sessions, pulling back from its session high of $1284.60 per ounce. It
eventually settled at $1272.40 per ounce, or 1.2% lower.
Dec
silver dipped to a session low of $20.29 per ounce after trading as high as
$20.68 per ounce earlier in the session. Unable to gain much momentum, it
settled with a 1.9% loss at $20.35 per ounce.
NYMEX
Energy Closing Prices
Dec crude oil fell $0.80 to
$93.02/barrel
·
Crude oil erased earlier gains as it fell into negative territory after
slipping from its session high of $94.29. It brushed a session low of $92.72
and settled slightly above that level, booking a 0.9% loss.
Dec natural gas fell 4 cents to
$3.62/MMBtu
·
Natural gas pulled back from a session high of $3.70 set in morning pit
trade and chopped around slightly above the unchanged line for most of the
session. It slid into negative territory in the last half hour of floor trade
and settled with a 1.1% loss.
Dec heating oil fell 2 cents to
$2.92/gallon
Dec
RBOB gasoline fell 2 cents to $2.64/gallon
CBOT
Agriculture and Ethanol/ICE Sugar Closing Prices
·
Dec corn fell 10 cents to $4.10/bushel
·
Dec wheat fell 2 cents to $6.42/bushel
·
Jan soybeans rose 8 cents to
$12.88/bushel
·
Dec ethanol rose 3 cents to $1.80/gallon
·
Jan sugar (#16 (U.S.)) fell 0.04 of a penny
to 20.85 cents/lbs
COMEX
Metals Closing Prices
Dec gold fell $15.10 to
$1272.40/ounce
·
Gold fell for the first time in three sessions despite a weaker dollar
index. The yellow metal slipped further into negative territory after pulling
back from its session high of $1284.60. It eventually settled with a 1.2%
loss.
Dec silver fell $0.39 to
$20.35/ounce
·
Silver also spent today's floor trade in the red. Prices dipped to a
session low of $20.29 after trading as high as $20.68 earlier in morning pit
action. Unable to gain much momentum, silver settled with a 1.9% loss.
Dec
copper fell 2 cents to $3.15/lb
Treasuries
Resistance
for Stocks, Gains for Treasuries
The Treasury market started slow today, and while it didn't finish strong, it did at least finish higher. Buying interest was concentrated in longer-dated maturities, with yields on instruments spanning from the 5-yr note to the 30-yr bond all dropping by three basis points.
There wasn't a lot of news driving the Treasury market. The economic data was limited and the Fed speak was pretty much in-line with what the market knew to expect from the respective speakers.
The Treasury market started slow today, and while it didn't finish strong, it did at least finish higher. Buying interest was concentrated in longer-dated maturities, with yields on instruments spanning from the 5-yr note to the 30-yr bond all dropping by three basis points.
There wasn't a lot of news driving the Treasury market. The economic data was limited and the Fed speak was pretty much in-line with what the market knew to expect from the respective speakers.
·
New York Fed President Dudley (dove) said he thinks a good case can be
made that the pace of growth will pick up in 2014 and then somewhat more in
2015, but concluded by noting the idea the economy will grow more swiftly still
remains a forecast rather than a reality
·
Philadelphia Fed President Plosser (hawk) is looking for about 3% growth
in 2014 and reiterated his belief that the time has come to phase out the
purchase program and that the FOMC missed a good opportunity to begin that
process in September
Their remarks made headline waves on an
otherwise slow news day, yet they didn't have any noticeable impact on the
Treasury market as they hit the wires.Longer-dated Treasuries clung to modest gains throughout most of today's trading. They drew some early support from a ho-hum NAHB Housing Market Index report for November, which checked in at 54 and was flat from a downwardly revised October reading (from 55). A number above 50 reflects positive confidence. The lack of improvement month-over-month was pinned largely on the kick-the-can policy approach in Congress that is impeding both builder confidence and home buying interest.
From our vantage point, the stronger layer of support today originated from a sense that the six-week rally in the stock market is looking long in the tooth and could spark some participants to take some money (and risk) off the table in the near term.
Stocks held up relatively well for most of the day, but the S&P 500 found it challenging on several occasions to clear the 1800 level with ease. The resistance at that point was a deterrent for buyers. Additionally, selling interest in many of the momentum stocks following a Barron's feature story that suggested many were overvalued also acted as a headwind. Selling activity accelerated in the afternoon following reports that Carl Icahn said he is cautious on equities.
The net result is that the Treasury market provided some shelter and benefited from some safe-haven buying interest.
Tomorrow's data is limited to the Q3 Employment Cost Index, which isn't expected to be much of a market mover. Instead, Treasury market participants will be keying off the performance of equities and looking ahead to the speech Fed Chairman Bernanke is slated to give before the National Economists Club dinner in Washington.
Next Day In View
Economic Commentary
Economic
Summary: NAHB Housing Market Index a tick below expectations; Bernanke to speak
tomorrow at 19:00
Economic Data Summary:
Economic Data Summary:
·
September Net Long Term TIC Flows $25.5 bln vs Briefing.com consensus of
; August was revised to -$9.8 bln from -$8.9 mln
·
November NAHB Housing Market Index 54 vs
Briefing.com consensus of 55; October was revised to 54 from 55
Fed/Treasury
Events Summary:
·
NY Fed President Bill Dudley (voting FOMC member, typically dovish) spoke
today and indicated he is still optimistic about growth next year.
Upcoming
Economic Data:
·
Third Quarter Employment Cost Index due out Tuesday at 8:30
(Briefing.com consensus of +0.5%; Second Quarter was 0.5%)
Upcoming
Fed/Treasury Events:
·
Philadelphia Fed President Charles Plosser (2014 voter, hawkish) to
speak today at 13:30
·
Minneapolis Fed President Narayana Kocherlakota (2014 voter,
dovish) to speak tonight at 19:45
·
Chicago Fed President Charlie Evans (2013 voter, dovish) to speak tomorrow
at 14:15
·
Fed Chairman Ben Bernanke to speak tomorrow at
19:00
On other news....
Currencies
Jason's Commentaries
Market finally took a turn last night and starting to reverse as FOMC minutes is nearing again. I'm expecting the FOMC minutes to be a non event as the market will be expecting Yellen to maintain her stance on the QE. Dow was the only leader in the market as names like Goldman Sachs, JP Morgan and Boeing held the Dow up. However, Nasdaq has been dragged down by Apple and Microsoft. On the internals side, volumes continued to be weak and internals were pointing towards the bearish side. On the technicals, we have an bearish engulfing on the Nasdaq and a bearish harami on the S&P500. I reckon, the market is likely to start flat for Tuesday.
Market Call: FLAT
Date: 18 Nov 2013
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