17 Aug 2014 AMC - Nasdaq breaks into new high as market priced in
Market Summary
European markets are now closed; stock markets across Europe performed as follows:
- UK's FTSE: + 0.6%
- Germany's DAX: + 1.0%
- France's CAC: + 0.6%
- Spain's IBEX: + 0.4%
- Portugal's PSI: + 0.8%
- Italy's MIB Index: + 0.0%
- Irish Ovrl Index: -0.1%
- Greece ASE General Index: + 2.1%
Before Market Opens
S&P futures vs fair value: +4.30. Nasdaq futures vs fair value: +7.00.
The S&P 500 futures trade four points above fair value.
It was a sea of green across Asia as all of the major bourses finished in positive territory. The latest Reserve Bank of Australia minutes warned of ‘significant' uncertainty ahead, but maintained that rates are likely to remain stable.
U.S. Equities
Asia
The S&P 500 futures trade four points above fair value.
It was a sea of green across Asia as all of the major bourses finished in positive territory. The latest Reserve Bank of Australia minutes warned of ‘significant' uncertainty ahead, but maintained that rates are likely to remain stable.
- In economic data:
- South Korea's PPI ticked up 0.1% month-over-month (previous 0.0%), while the year-over-year reading increased 0.2%, as expected (prior 0.1%)
- New Zealand's Inflation Expectations slipped to 2.2% from 2.4% quarter-over-quarter. Separately, Input PPI fell 1.0% quarter-over-quarter (expected 0.7%; previous 1.0%) and Output PPI declined 0.5% (consensus 0.8%; prior 0.9%)
- Japan's Nikkei rose 0.8%, gaining for a seventh consecutive day. Heavyweight Softbank provided support, adding 2.1%.
- Hong Kong's Hang Seng added 0.7%, climbing to its best levels since May 2008. Real estate developer China Resources Land jumped 7.6% following reports the company agreed to buy property in Shenzhen. Terms were not disclosed.
- China's Shanghai Composite rose 0.3%, finishing at an eight and a half-month high. Media names like People.cn and Shanghai Xinhua Media finished limit up, 10%, on news Beijing is looking to reform the sector.
- Economic data was limited:
- Eurozone Current Account surplus narrowed to EUR13.10 billion from EUR19.80 billion (expected surplus of EUR19.00 billion)
- Great Britain's CPI fell 0.3% month-over-month (expected -0.2%; prior 0.2%), while the year-over-year reading increased 1.6% (consensus 1.8%; previous 1.9%). Separately, Input PPI fell 1.6% month-over-month (expected -1.1%; prior -0.9%) and Output PPI slipped 0.1% month-over-month (consensus 0.1%; previous -0.1%)
- CPI spent its fifth consecutive month below the Bank of England's 2.00% target as clothing retailers used discounts to lure in shoppers
- In France, the CAC is higher by 0.4%. Automotive-related stocks outperform with Renault and Valeo up 0.9% and 3.4%, respectively. Electricite de France is the weakest performer, down 1.1%.
- Great Britain's FTSE trades up 0.5% with financials showing strength. Aberdeen Asset Management has added 1.5% and Royal Bank of Scotland is higher by 2.7%. BHP Billiton underperforms with a loss of 4.6%. Earlier, the miner said it will spin off its nickel, aluminum, and other assets.
- Germany's DAX has added 1.0% with help from exporters. Volkswagen and Daimler hold respective gains of 1.8% and 0.7%. On the downside, Deutsche Telekom is lower by 0.9%.
- In Italy, the MIB is lower by 0.4%. Financials lag with Banco Popolare down 1.2% and UBI Banca lower by 1.1%.
U.S. Equities
- Futures point to small gains at the open
- The Nasdaq finished yesterday's session at its best level since April 2000
- The VIX (12.32) is at a three-week low
- CPI (+0.1% actual v. +0.1% expected)
- Core CPI (+0.1% actual v. +0.1% expected)
- Housing Starts (1093K actual v. 964K expected)
- Building Permits (1052K actual v. 1001K expected)
- S&P Futures +5 @ 1972
- Dow Futures +50 @ 16,843
- Nasdaq Futures +10 @ 4023
- It was a sea of green across Asia as all of the major bourses finished in positive territory
- The latest Reserve Bank of Australia minutes warned of ‘significant' uncertainty ahead, but maintained the view rates are likely to remain stable
- Japan's Nikkei (+0.8%) gained for a seventh straight day
- Hong Kong's Hang Seng (+0.7%) climbed to its best levels since May 2008
- China's Shanghai Composite (+0.3%) finished at an eight and a half-month high
- India's Sensex (+0.1%) ticked into record territory
- Australia's ASX (+0.7%) ended just shy of six-year highs
Market Internals
Market Internals -Technical-
The S&P 500 closed up 10 (+0.50%) at 1982, the Dow closed up 81 (+0.48%) at 16920, and the Nasdaq closed up 19 (+0.43%) at 4528. Action came on below average volume (NYSE 544 mln vs. avg. of 659; NASDAQ 1441 mln vs. avg. of 1672), with advancers outpacing decliners (NYSE 1990/1137, NASDAQ 1459/1240) and new highs outpacing new lows (NYSE 183/18, NASDAQ 101/33).
Relative Strength:
U.S. Home Construction-ITB +2.39%, Natural Gas-UNG +2.16%, Turkey-TUR +2.06%, Homebuilders-XHB +2.02%, Hong Kong-EWH +1.58%, Retail-RTH +1.52%, Taiwan-EWT +1.32%, Retail-XRT +1.29%, BRICs-EEB +1.1%, Russia-RSX +1.04%.
Relative Weakness:
Coffee-JO -3.51%, Silver Miners-SIL -1.64%, Cocoa-NIB -1.61%, Junior Gold Miners-GDXJ -1.28%, Sugar-SGG -1.23%, Columbia Index-GXG -1.08%, Peru-EPU -0.73%, British Pound-FXB -0.67%, Chile-ECH -0.64%, Italy-EWI -0.58%
.
Leaders and Laggards
Technical Updates
Briefing's Commentaries
Closing Market Summary: Discretionary Sector Leads Stocks Higher
The stock market continued its strong start to the week with a broad-based Tuesday rally that sent the S&P 500 higher by 0.5%. Nine of ten sectors registered gains while the benchmark index extended its week-to-date advance to 1.4%.
Equities received an opening boost from a pair of economic data points that crossed the wires this morning. An in-line CPI report suggested inflationary pressures remain contained, while a better than expected Housing Starts report underpinned homebuilders and the discretionary sector.
Fittingly, the consumer discretionary space (+0.8%) surged out of the gate and spent the entire session among the leaders. Homebuilders rallied following the upbeat data and better than expected earnings from Home Depot (HD 88.23, +4.64). The Dow component jumped 5.6%, while the iShares Dow Jones US Home Construction ETF (ITB 23.99, +0.56) advanced 2.4%.
Retail stocks also played a part in the outperformance of the discretionary sector after Dick's Sporting Goods (DKS 44.21, +0.70) and Urban Outfitters (URBN 38.59, +1.67) beat their earnings estimates. The SPDR S&P Retail ETF (XRT 87.05, +1.11) rose 1.3%.
While the influential discretionary sector displayed broad strength, other heavily-weighted groups were a bit more mixed. Technology (+0.7%) outperformed, while financials (+0.2%) and industrials (+0.2%) lagged.
The top-weighted sector—technology—received support from chipmakers. The PHLX Semiconductor Index recaptured its 50-day moving average and added 0.6% with all but five components posting gains. Meanwhile, most large cap tech components were limited to modest gains, but shares of Apple (AAPL 100.53, +1.37) climbed to a fresh all-time high.
Elsewhere, the top-weighted countercyclical sector—health care (+0.7%)—trailed the broader market for the majority of the session, but spiked during afternoon action in reaction to reports from the Wall Street Journal, indicating Salix Pharmaceuticals (SLXP 160.80, +21.63) was approached by Allergan (AGN 161.82, +6.21) about a potential acquisition. Shares of SLXP ended higher by 15.5%, while the iShares Nasdaq Biotechnology ETF (IBB 267.23, +1.02) tacked on 0.4% after showing intraday weakness.
Similar to health care, the utilities sector (+1.2%) outperformed, while the remaining two defensively-oriented groups—consumer staples (+0.2%) and telecom services (-0.3%)—lagged.
Treasuries began the day with solid gains, but spent the session in a steady retreat. The 10-yr note shed one tick with its yield ending at 2.40%.
Participation was well below average with fewer than 550 million shares changing hands at the NYSE.
Economic data was limited to CPI, and Housing Starts/Building Permits:
The stock market continued its strong start to the week with a broad-based Tuesday rally that sent the S&P 500 higher by 0.5%. Nine of ten sectors registered gains while the benchmark index extended its week-to-date advance to 1.4%.
Equities received an opening boost from a pair of economic data points that crossed the wires this morning. An in-line CPI report suggested inflationary pressures remain contained, while a better than expected Housing Starts report underpinned homebuilders and the discretionary sector.
Fittingly, the consumer discretionary space (+0.8%) surged out of the gate and spent the entire session among the leaders. Homebuilders rallied following the upbeat data and better than expected earnings from Home Depot (HD 88.23, +4.64). The Dow component jumped 5.6%, while the iShares Dow Jones US Home Construction ETF (ITB 23.99, +0.56) advanced 2.4%.
Retail stocks also played a part in the outperformance of the discretionary sector after Dick's Sporting Goods (DKS 44.21, +0.70) and Urban Outfitters (URBN 38.59, +1.67) beat their earnings estimates. The SPDR S&P Retail ETF (XRT 87.05, +1.11) rose 1.3%.
While the influential discretionary sector displayed broad strength, other heavily-weighted groups were a bit more mixed. Technology (+0.7%) outperformed, while financials (+0.2%) and industrials (+0.2%) lagged.
The top-weighted sector—technology—received support from chipmakers. The PHLX Semiconductor Index recaptured its 50-day moving average and added 0.6% with all but five components posting gains. Meanwhile, most large cap tech components were limited to modest gains, but shares of Apple (AAPL 100.53, +1.37) climbed to a fresh all-time high.
Elsewhere, the top-weighted countercyclical sector—health care (+0.7%)—trailed the broader market for the majority of the session, but spiked during afternoon action in reaction to reports from the Wall Street Journal, indicating Salix Pharmaceuticals (SLXP 160.80, +21.63) was approached by Allergan (AGN 161.82, +6.21) about a potential acquisition. Shares of SLXP ended higher by 15.5%, while the iShares Nasdaq Biotechnology ETF (IBB 267.23, +1.02) tacked on 0.4% after showing intraday weakness.
Similar to health care, the utilities sector (+1.2%) outperformed, while the remaining two defensively-oriented groups—consumer staples (+0.2%) and telecom services (-0.3%)—lagged.
Treasuries began the day with solid gains, but spent the session in a steady retreat. The 10-yr note shed one tick with its yield ending at 2.40%.
Participation was well below average with fewer than 550 million shares changing hands at the NYSE.
Economic data was limited to CPI, and Housing Starts/Building Permits:
- Consumer prices increased 0.1% in July following a 0.3% increase in June, which matched the Briefing.com consensus
- As expected from the July PPI report, energy prices fell 0.3% in July after increasing 1.6% in June
- Food prices accelerated, up 0.4% in July from a 0.1% increase in June
- Food at home prices, typically from grocery stores, increased 0.7%, which was the largest increase since August 2011
- Excluding food and energy, core CPI increased 0.1% for a second consecutive month in July, which is what the consensus expected
- Housing starts increased 15.7% in July to 1.093 million from an upwardly revised 945,000 (from 893,000) in June, while the Briefing.com consensus expected an increase to 964,000
- The big news out of the housing data was an 8.3% increase (to 656,0000) in single-family construction after declines were observed in May and June
- Building permits rose to a seasonally adjusted annualized rate of 1.052 million in July versus a revised 973K for June, while the Briefing.com consensus expected an increase to 1.001 million
- Nasdaq Composite +8.4% YTD
- S&P 500 +7.2% YTD
- Dow Jones Industrial Average +2.1% YTD
- Russell 2000 -0.1% YTD
Commodities
Closing Commodities: Commodities decline, dollar index ends at HoD
CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
NYMEX Energy Closing Prices
Treasuries
Treasuries See Second Day of Selling: 10-yr: -02/32..2.402%..USD/JPY: 102.90..EUR/USD: 1.3317
Currencies
Dollar Readies for Best Close in 11 Months: 10-yr: unch..2.398%..USD/JPY: 102.87..EUR/USD: 1.3317
Next Week In View
Economic Commentaries
Economic Summary: CPI in line with estimates; Housing Starts top expectations
Economic Data Summary:
Jason's Commentaries
One day ahead of the FOMC minutes, market is taking precaution not to let the gain in stock prices go down as much while Yellen might make some changes to her plans in monetary policies. Although there is drop in the unemployment rate(U3), the U6 did not indicate a drop. U6 was at a staggering 12.2%, twice of what the U3 standard is, which means that 6.2% of the population was actually having part time employment. This is definitely not how the normal economic market is like. With such employment situation, Yellen might have her hands forced to delay the full taper of the QE. Ahead of that, the defensive sectors are moving higher. On the technicals side, the S&P500 is approaching its all time high and there is a good chance that S&P500 is likely to drag the rest of the indices down.
Market Call: ABSTAIN
- The dollar index continued to hold gains, which helped weigh on commodities today
- Commodities such as crude oil, gold, silver and copper all sold off today and ended the on today's lows
- Sept crude oil fell as low as $94.26 and ended today floor trading session $2.97 lower at $94.34/barrel
- Dec gold lost $2.40 to $1296.80/oz, Sept silver fell $0.22 to $19.42/oz and Sept copper fell 2 cents to $3.09
- Natural gas futures rallied today and finished 2.4% higher at $3.88/MMBtu
- Sept corn recovered and gained 3 cents to $3.63/bushel.
- Dec gold fell $2.4 to $1296.80/oz
- Sep silver fell $0.22 to $19.42/oz
- Sep copper fell 2 cents to $3.09/lbEuropean Markets Closing Prices
CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
- Sep corn rose 3 cents to $3.63/bushel
- Sep wheat rose 4 cents to $5.47/bushel
- Nov soybeans fell 3 cents to $10.53/bushel
- Sep ethanol fell 1 cent to $2.12/gallon
- Nov sugar (#16 (U.S.)) fell $0.05 to 25.70 cents/lb
NYMEX Energy Closing Prices
- Sep crude oil fell $2.97 to $94.34/barrel
- Sep natural gas rose 9 cents to $3.88/MMBtu
- Sep heating oil closed unchanged at $2.81/gallon
- Sep RBOB rose 3 cents to $2.69/gallon
Treasuries
Treasuries See Second Day of Selling: 10-yr: -02/32..2.402%..USD/JPY: 102.90..EUR/USD: 1.3317
- Treasuries finished on their lows as sellers remained in control for a second session. Click here to see an intraday yields chart.
- The complex held small gains into the cash open, and put in its best levels of the day shortly before the in-line CPI (+0.1%) and better than expected housing starts (1093K actual v. 964K expected) and building permits (1052K actual v. 1001K expected)data crossed the wires.
- Selling over the remainder of the session would erase the early gains and push maturities into negative territory.
- Light selling up front saw the 2y tack on +1.3bps to 0.435%. Participants will be watching resistance in the 0.450% region over the coming days.
- The 5y climbed +1.3bps to 1.580% after surviving an early test of support near 1.540%. Many traders are keeping a close eye on the 1.600% level as resistance there is guarded by the 200 dma.
- The 10y added +1.8bps to 2.405%. The benchmark yield settled on minor resistance in the 2.400%2.425% region.
- The 30y lagged, rallying +2.7bps to 3.221%. The yield on the long bond finished near a one-week high as action finished on resistance near 3.225%/3.250%.
- A slightly steeper curve took hold as the 2-10-yr spread widened to 197bps.
- Precious metals went off on their lows with gold -$3 @ $1296 and silver -$0.25 @ $19.39.
- Data: MBA Mortgage Index (7) and the latest FOMC minutes (14).
On other news....
Currencies
Dollar Readies for Best Close in 11 Months: 10-yr: unch..2.398%..USD/JPY: 102.87..EUR/USD: 1.3317
- The Dollar Index trades near 81.90 as action looks likely to close at an 11-month high. Click here to see a weekly Dollar Index chart.
- The greenback is higher against all of its major counterparts.
- EURUSD is -45 pips @ 1.3315 as trade readies for its lowest close since September. Fears of a Japan-like stagnation have weighed on the single currency in recent days with traders now shifting their focus to ECB head Mario Draghi's speech on Friday at the Jackson Hole Symposium.
- GBPUSD is -115 pips @ 1.6610 as trade flushes to its lowest level in more than four months. Today's cooler than expected CPI data has pushed back Bank of England rate hike expectations with many now not expecting action until sometime next year. Today's session will see sterling close below its 200 dma for the first time since August 2013. Tomorrow, the latest Bank of England Monetary Policy Committee votes accompany CBI Industrial Order Expectations.
- USDCHF is +25 pips @ .9090 as action contends with its best levels of 2014. Today's bid is correlated with the weakness in the euro and has action testing the key .9100 area.
- USDJPY is +30 pips @ 102.85 as trade flirts with its best close in four and a half months. A move through 103.00 puts the 104.00 area and the 2014 highs in focus. Japanese data due out tonight is limited to the trade balance.
- AUDUSD is -15 pips @ .9305 as sellers take control for the first time in five days. The hard currency saw some early buying develop after the Reserve Bank of Australia minutes warned of ‘significant' uncertainty ahead while maintaining its view rates are likely to remain stable; however, trade was rejected at .9340 resistance and the 100 dma and is now contending with its lowest close in a week. RBA Governor Glenn Stevens will testify tonight before the House of Representatives' Standing Committee on Economics.
- USDCAD is +60 pips @ 1.0945 as buyers take charge for the first time in seven days. Canada's wholesale sales will be released tomorrow.
Next Week In View
Economic Commentaries
Economic Data Summary:
- July CPI 0.1% vs Briefing.com consensus of 0.1%; June was 0.3%
- July Core CPI 0.1% vs Briefing.com consensus of 0.1%; June was 0.1%
- Scheduled to appear: As expected from the July PPI report, energy prices fell 0.3% in July after increasing 1.6% in June. Gasoline prices also fell 0.3% in July after increasing 3.0% in June. Food prices accelerated, up 0.4% in July from a 0.1% increase in June. Food at home prices, typically from grocery stores, increased 0.7%, which was the largest increase since August 2011. Fruits and vegetable prices, which were flat in July, was the only component of the grocery store index that did not report positive price growth.
- July Housing Starts 1.093 M vs Briefing.com consensus of 964K; June was revised to 945K from 893K
- July Building Permits 1.052 M vs Briefing.com consensus of 1001K ; June was revised to 973K from 963K
- Scheduled to appear: The big news out of the housing data was an 8.3% increase, to 656,0000, in single-family construction. New single-family construction levels declined in both May and June after reaching roughly 650,000 in April. Since single family construction trends are typically stable, the two month decline suggested that housing construction may have peaked. While it is possible that the July gain could be a one-off rebound, it gives hope that the overall housing outlook may be on stronger footing then once thought.
- Weekly MBA Mortgage Applications due out Wednesday at 7:00 (Briefing.com consensus of ; Last Week was -2.7%)
- FOMC Minutes tomorrow at 14:00
- Jackson Hole Fed Conference to be held Thursday August 21st-25th. Fed Chair Janet Yellen to speak Friday August 22nd at 10:00 and ECB President Mario Draghi to speak Friday August 22nd at 14:30
- Great Britain's CPI fell 0.3% month-over-month (expected -0.2%; prior 0.2%), while the year-over-year reading increased 1.6% (consensus 1.8%; previous 1.9%). Separately, Input PPI fell 1.6% month-over-month (expected -1.1%; prior -0.9%) and Output PPI slipped 0.1% month-over-month (consensus 0.1%; previous -0.1%)
Jason's Commentaries
One day ahead of the FOMC minutes, market is taking precaution not to let the gain in stock prices go down as much while Yellen might make some changes to her plans in monetary policies. Although there is drop in the unemployment rate(U3), the U6 did not indicate a drop. U6 was at a staggering 12.2%, twice of what the U3 standard is, which means that 6.2% of the population was actually having part time employment. This is definitely not how the normal economic market is like. With such employment situation, Yellen might have her hands forced to delay the full taper of the QE. Ahead of that, the defensive sectors are moving higher. On the technicals side, the S&P500 is approaching its all time high and there is a good chance that S&P500 is likely to drag the rest of the indices down.
Market Call: ABSTAIN
Date: 18 Aug 2014
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