10 June 2013 AMC

10 June 2013 AMC

Market Summary 

Market Internals

Leaders and Laggards

Technical Updates

Briefing's Commentaries 

Stock Market Update 16:20 ET Dow -9.53 at 15238.59, Nasdaq +4.55 at 3473.76, S&P -0.57 at 1642.81 :[BRIEFING.COM] Unlike Friday, the stock market didn't provide a lot of trading excitement today.  The major indices spent time on either side of the unchanged mark, but were never able to achieve a good deal of separation either way as buyers and sellers alike lacked conviction. There was some initial excitement when it was announced before the open that Standard & Poor's raised its US outlook to Stable from Negative, citing a lessening of downside risks to its AA+ rating for US sovereign debt.  That positive-sounding headline helped stocks get off to a decent start, yet buying efforts soon tapered off as a concurrent rise in long-term interest rates seemed to limit the stock market's enthusiasm for the outlook change. The yield on the 10-year note moved up to 2.23%, or roughly six basis points higher than where it settled on Friday.  The move was striking considering the switch by Standard & Poor's should have been construed as a good thing for the Treasury market.  The ensuing weakness, though, seemed to fit with the sense that an improving economic outlook would lessen the safety premium in Treasuries and encourage a rotation into stocks.  Nonetheless, not all participants are convinced that the economy will gain steam in coming months; hence, there were some underlying concerns that the jump in rates could retard the recovery as they interfere with the rebound in the housing market.  To that end, the SPDR S&P Homebuilders ETF (XHB 30.26, -0.25) dropped 0.8% today. The S&P Utilities sector, which is another rate-sensitive area, slipped 0.2% and was a relative laggard in the sector rankings.  Indicative of today's lackluster trading action, there wasn't a single sector that moved up, or down, more than 1.0%.  The big winner was telecom services, which gained 0.8%, while the energy, industrial, and consumer discretionary sectors all tied on the losing end of things with a 0.3% decline. Apple (AAPL 438.89, -2.92) was the story stock of the day as attention turned to the company's Worldwide Developers Conference.  Shares of AAPL traded higher for most of the session, but rolled over late as the announcement of iOS 7 and iRadio were greeted in a ho-hum manner. Dow component McDonald's (MCD 99.51, +1.23) enjoyed a better fate, having started strong and remaining strong on news its global comparable-store sales increased a better-than-expected 2.6% in May.  The gains in McDonald's, though, weren't enough to keep the Dow from incurring a small loss as a drop in higher-priced IBM (IBM 205.02, -1.33) and 3M (MMM 110.81, -0.30) were offsetting influences. There wasn't any economic data out of the US today, but St. Louis Fed President Bullard did address economic conditions in a speech on the global economy.  Mr. Bullard is a voting FOMC member and he walked the party line of providing a little something for everyone in the tapering debate.  To wit, he suggested the low rate of inflation could be justification for the Fed to maintain its aggressive asset buying over a longer time frame and then added that an improved labor market could mean the Fed might slow the pace of its asset purchases. The Wholesale Inventories report for April (Briefing.com consensus +0.2%; prior +0.4%) is the only piece of US data slated for release on Tuesday.  It won't be a market mover, so the direction of currencies and interest rates could be dictating factors along with any new insight from Germany's Constitutional Court on the legality of the eurozone's crisis-management measures. Today's volume was light with just 595 mln shares changing hands at the NYSE. ..NYSE Adv/Dec 1333/1679. ..NASDAQ Adv/Dec 1593/895.

Commodities

Treasuries

Next Day In View 

IN OTHER NEWS ...

S&P upgrades U.S. outlook to 'Stable' from 'Negative' 
Of course it is important to note that the S&P already stripped the U.S. of it's AAA rating. So a Fitch and Moody's downgrade is still on the table. But the S&P upgrade is a positive as it provides some stabilization to the rating as the agency is unlikely to change it for at least three years. The comment from S&P is very complimentary to the Fed's policy and sees some reduced risk to the government ability to compromise on the fiscal side. Some comments of note:

• 'Our sovereign credit ratings on the U.S. primarily reflect our view of the strengths of the U.S. economy and monetary system, as well as the U.S. dollar's status as the world's key reserve currency. The ratings also take into account the high level of U.S. external indebtedness; our view of the effectiveness, stability, and predictability of U.S. policymaking and political institutions; and the U.S. fiscal performance'.
• 'The stable outlook indicates our appraisal that some of the downside risks to our 'AA+' rating on the U.S. have receded to the point that the likelihood that we will lower the rating in the near term is less than one in three. We do not see material risks to our favorable view of the flexibility and efficacy of U.S. monetary policy'.
• 'We believe that our current 'AA+' rating already factors in a lesser ability of U.S. elected officials to react swiftly and effectively to public finance pressures over the longer term in comparison with officials of some more highly rated sovereigns and we expect repeated divisive debates over raising the debt ceiling'.

United Tech (UTX) awarded ~$648.8 mln Navy contract modification 
Co was awarded a $648,769,404 modification to a previously awarded cost-plus-incentive-fee contract to extend the F135 System Development and Demonstration contract period of performance. In addition this modification is for the procurement of the technical baseline review design, verification, validation and qualification tasks; two spare flight test engines, and additional spare parts to support the F-35 Flight Test Program. Work is expected to be completed in December 2016.

European Markets Update
Major European bourses trade mixed in with Britain's FTSE (+1.0%) leading the way. In regional economic data, eurozone Sentix Investor Confidence climbed to -11.6 (-10.0 expected, -15.6 prior). Meanwhile, French industrial production posted a 2.2% month-over-month gain (0.3% forecast, -0.6% prior) while Italian industrial production slipped 0.3% month-over-month (+0.1% expected, -0.9% previous).

• Britain's FTSE was higher before closing down 0.2%. Miners were lagging as Anglo American and Lonmin are both down at least 3.0%.
• France's CAC was flat as transports lead and financials lag. The CAC closed down 0.2. Safran S.A. is the top perfromer, up 2.6%, while automaker Renault holds a 1.5% gain. Meanwhile, Societe Generale weighs with a loss of 0.7%.
• Germany's DAX is up 0.6% as the majority of names trade in positive territory. Deutsche Post and Deutsche Lufthansa lead as both trade higher by close to 2.0%. Steel names are weak with ThyssenKrupp down 0.5% and Salzgitter lower by 1.1%.

European Markets Closing Prices
UK's FTSE: -0.2%
Germany's DAX: + 0.6%
France's CAC: -0.2%
Spain's IBEX: -0.5%
Portugal's PSI: -0.7%
Italy's MIB Index: -0.8%
Irish Ovrl Index: + 0.1%
Greece ASE General Index: -4.7%

Jason's Commentaries


It was a very flat day on Monday as expected. Market was rather volatile and ended flat by the closing bell. Seems that the technicals worked its magic. Volumes were much weaker than expected at 595.3m shares traded on the NYSE, bulls and bears were on par. Materials was the biggest gainer(0.47%) led by Monsanto, being upgraded, which caused me to lose money on that trade. The Industrials and Consumer Disc were the biggest losers with a -0.3% loss. Treasuries rallied last night. Commodities were not affected much. What a boring Monday. Since we do not have much data coming out, I reckon that we're likely to go down today. Have fun!

Market Call: DOWN

Date: 11 June 2013