5 Apr 2013 AMC
Market Summary
Market Internals
Leaders and Laggards
Technical Updates
Commentaries
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| Stock Market Update |
16:25 ET Dow -40.86 at 14565.25, Nasdaq -21.12 at 3203.86, S&P -6.70 at 1553.28 :[BRIEFING.COM] The major averages ended today's session with modest losses. The S&P 500 shed 0.4% while the tech-heavy Nasdaq lost 0.7%.
The bulk of today's selling occurred at the open as three points of concern sent investors in search of safety. Headlines from Asia indicated North Korea has not toned down its war rhetoric and South Korean officials confirmed that the North has moved a pair of mid-range missiles to its east coast.
In addition to the Korean concerns pressuring the broader market, disappointing second quarter guidance from F5 Networks (FFIV 73.21, -17.21) contributed to the relative weakness of the tech sector, which ended as the day's biggest laggard.
While the two items pressured index futures in pre-market trade, a disappointing March nonfarm payrolls report ensured a sharply lower start to the cash session.
Nonfarm payrolls added just 88,000 new jobs in March. That was down from an upwardly revised 268,000 (from 236,000) additions in February and was the smallest increase in jobs since June 2012. The Briefing.com consensus expected payrolls to add 192,000 jobs.
Although the three headwinds caused the S&P 500 to start lower by 1.3%, the benchmark average notched its lows during the opening minute before spending the remainder of the day in a steady climb.
The morning developments sparked a safety bid across the Treasury complex. As a result, the 10-yr yield fell to its lows before recovering three basis points into the close. However, Treasuries ended near their best levels of the week with the 10-yr yield down 17 basis points at 1.70%.
The technology sector felt the brunt of today's selling pressure as F5 Networks' cautious guidance weighed on other networking companies. In addition, large cap tech names saw outsized losses as well. The largest tech component, Apple (AAPL 423.20, -4.52), lost 1.1%, and settled near its 52-week low. Notably, chipmakers underperformed in early trade, but finished the day ahead of the tech sector. The PHLX Semiconductor Index shed 0.5%.
Although growth-oriented sectors were among the biggest decliners in early trade, those groups were able to climb off their lows. Financials, industrials, and materials outperformed the defensively-minded consumer staples and health care sectors.
It should be noted that health care and consumer staples are the top performing sectors year-to-date, therefore some profit taking may have played a part in their underperformance today.
On the upside, telecoms and utilities settled in the black. The SPDR Utilities Select Sector ETF (XLU 39.57, +0.17) added 0.4%, and was the top performing sector ETF as investors sought higher-yielding equities.
While the broader market finished well off its lows, the Dow Jones Transportation Average was able to stage a stunning reversal. The bellwether complex was down as much as 2.2% at the start of the session before ending with a gain of 0.5%. Truckers were among the top index performers as Con-way (CNW 34.01, +0.96) advanced 2.9%.
Looking back at the day's final sector performance, technology (-1.0%), consumer staples (-0.7%), and health care (-0.6%) were among the biggest laggards. Meanwhile, utilities (+0.4%), telecom (+0.4%), energy (UNCH), and industrials (-0.2%) outperformed.
Reviewing today's remaining economic data, private nonfarm payrolls rose 95,000, but that was still well below consensus forecasts (210,000), and what was added in February (254,000).
The unemployment rate dipped to 7.6% in March from 7.7% in February. The decline in the unemployment rate, however, was not due to job growth. The labor force participation rate dropped to levels not seen since the late 1970s and caused the unemployment rate to decline. If the labor force participation rate had remained at February levels, the unemployment rate would have increased to 7.9%.
The U.S. trade deficit narrowed in February, dropping from $44.5 billion in January to $43.0 billion. The Briefing.com consensus expected the deficit to increase slightly to $44.7 billion.
Consumer credit increased by $18.1 billion in February after increasing a downwardly revised $12.7 billion (from $16.2 billion) in January. The Briefing.com consensus expected consumer credit to increase by $14.0 billion.
There is no economic news of note scheduled for a Monday release.
On Tuesday, February wholesale inventories will be reported at 10:00 ET. |
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Commodities
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Weekly Analysis
Week 38
Technical Updates
Briefing's Commentaries
Week in Review: S&P 500 Alternates Between Gains and Losses
On Monday, stocks saw little change at the start of the session with European markets shuttered for Easter Monday. However, that changed quickly once the March ISM Index was reported below expectations. The Index was reported at 51.3, which was its lowest reading since December, and it sent the major averages to their lows with cyclical sectors pacing the decline. The SPDR Industrial Select Sector ETF (XLI 40.97, -0.08) fell 1.2%. Transportation-related stocks did their part in pressuring the space as the Dow Jones Transportation Average ended lower by 1.5%. All 20 stocks comprising the Transportation Average settled in the red, and truckers were among the weakest performers. Ryder System (R 57.83, +0.33) and Landstar (LSTR 55.55, +1.24) saw respective losses of 1.8% and 2.4%. Equities spent the bulk of Tuesday's session near their highs before a late afternoon stumble dropped the S&P 500 back near the middle of its range. As a result, the benchmark average finished higher by 0.5%. Notably, the Russell 2000, which tracks small cap stocks, ended lower by 0.5% after losing more than 1.0% on Monday. The health care sector showed strength out of the gate with managed care stocks jumping after the Centers for Medicare and Medicaid Services said 2014 Medicaid Advantage and prescription drug benefit rates will increase by 3.3%. Dow component UnitedHealth Group (UNH 62.10, +0.07) gained 4.7%. Wednesday saw a steady decline and the S&P 500 settled lower by 1.1%. Notably, small cap stocks extended their recent weakness as indicated by a 1.7% decline in the Russell 2000. The Dow Jones Transportation Average finished lower by 1.3% with airlines leading the decline. Delta Air Lines (DAL 14.39, -0.36) and United Continental (UAL 29.27, -0.03) both lost 2.5%. Notably, Wednesday marked the third consecutive session which saw the bellwether complex end with a loss of at least 1.0%. On Thursday, equities began the day on a mixed note. The S&P 500 climbed higher out of the gate while Nasdaq slipped into the red, where it spent the majority of the session. After the prior day's selloff caused the benchmark average to slide 1.1%, a handful of Wednesday's underperformers began among the leaders. However, the early leadership did not hold into the afternoon as some defensive sectors began appearing atop the leaderboard. Counter-cyclical telecoms and utilities climbed throughout the day, and saw the largest gains. ..NYSE Adv/Dec 1437/1568. ..NASDAQ Adv/Dec 992/1447.
Next Week In View
Jason's Commentaries
Here's the extract of the NFP's numbers.
March nonfarm payrolls: 88K actual, 192K Briefing.com consensus, prior revised up to 268K
March nonfarm private payrolls: 95K actual, 210K Briefing.com consensus
Unemployment rate: 7.6% actual, 7.7% Briefing.com consensus, 7.7% prior
Coupled with the NFP, we also have news coming out from North Korea,
having no intention to tone down on it's war-hunger. Like the saying
goes, a hungry man is an angry man. So is Kim Jung Un. No country will
support a military conflict. In this case, who on earth are willing to
take in millions of refugees? Look at Russia, China and South Korea.
None of the countries are able to provide for these North Koreans if
there is a war. Unless the US are willing to shoulder the
responsibility, else this 'war' will end pretty miserably.
Jacobs Technology, Inc., Tullahoma, Tenn., is being awarded a $128,450,000 indefinite- delivery/indefinite-quantity contract modification (FA9200-12-D-0085). The total estimated cumulative face value of the contract is $263,950,000. This modification provides for the exercise of an option for additional diverse engineering, technical and acquisition support services being provided under the basic contract. Work will be performed at Eglin Air Force Base, Fla., with an expected completion date of April 19, 2014. This is an IDIQ contract with multiple funding appropriations at the task order level; the contract is not multiyear. Type of appropriation is fiscal 2012 and 2013. The contracting activity is AFTC/PZZ, Eglin Air Force Base, Fla. This contract involves foreign military sales.
Friday was really one hell of a ride. Non-farm payrolls came in way under expectation and caused the market to start with a -1% loss. Futures sunk tremendously before market open. However, that was way oversold. If the market would have chill for a moment, and open the market low, but not so low, we wouldn't have seen such a huge rebound. Most stocks opened near a 1% loss as well, with Techology and Consumer being the biggest laggards. While energy and utilities managed to close with a gain. I would say it was more of a bullish day than bearish day. If we were to discount the first candle, we're actually up. Nasdaq composite managed to fought back a huge portion of its losses and Dow managed to end flat for Friday.
While looking back at the internals, we're actually having a flat Friday, and I did mention it's gonna be a roller coaster ride and I'm right on that. Dow found a support at the 14450 level and bouncing of that level all the way till market close. I believe those who went long on Friday will likely start taking profit off ahead of the earnings season. While there are many notable movement in the commodities market. Gold made a 1.89% and Silver made a 1.92% gain ending Friday's trading session. Also take note on the movement on the 30y, having to gained a 1% on Friday is not a very bullish thing to happen.
As we're looking in the longer term, I'm expecting the market to be sideways to the downside ahead of the earnings seasons and the market is starting to be defensive. The momentum and volatility will likely to kick in on the second week of earnings seasons. If the first 2 week suck... We're gonna start May early. Happy shorting guys =D
Market Call: Down
Date: 8 Apr 2013
