Dow -5.43 at 17875.42, Nasdaq -7.08 at 4910.24, S&P -4.29 at 2076.34
First I have to apologise for the irregular update in my DMA. Tuesday' session was showing the lack in depth for the rally from Monday. It can be seen that the market opened with a gain but eventually reached a top and thereafter profit taking took the market down. The last hour selling might be due to the release of FOMC minutes in tomorrow session.
Market Summary
Industry Watch
Strong: Energy, Health Care
Weak: Consumer Discretionary, Financials, Utilities, Telecom Services
Other Market Moving Factor:
- Dollar Index extends yesterday's advance
- FedEx (FDX) underpins Dow Jones Transportation Average after agreeing to acquire TNT Express (TNTEY) for $4.8 billion
[BRIEFING.COM] Equity indices halted their two-day win streak on Tuesday with the S&P 500 shedding 0.2%. The benchmark index surrendered its modest intraday gain during the final hour while the Nasdaq Composite (-0.1%) settled just ahead.
The major averages climbed out of the gate and hit their session highs during the initial 90 minutes; however, relative weakness among influential sectors like consumer discretionary (-0.5%), financials (-0.4%), and consumer staples (-0.4%) prevented the market from eclipsing the early high. Instead, equities spent the afternoon in a sideways drift and slid into negative territory shortly ahead of the close.
Only two sectors finished the day in the green with health care (+0.3%) holding the lead into the afternoon. The countercyclical group underperformed yesterday, but today's strength was fueled by biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 341.92, +3.07) jumped 0.9% and helped the Nasdaq Composite display relative strength throughout the day.
In addition to receiving support from biotechnology, the tech-heavy Nasdaq benefited from strength among chipmakers. That being said, the PHLX Semiconductor Index ended just above its flat line after being up more than 0.8%. Similarly, the broader technology sector (-0.15%) settled just ahead of the broader market while its largest component—Apple (AAPL 126.01, -1.34)—lost 1.1%.
Elsewhere among cyclical sectors, energy (+0.3%) outperformed, narrowing its 2015 decline to 1.2% as crude oil soared 3.5% to $53.89/bbl. Strikingly, oil spent the day in a steady climb even as the Dollar Index (97.95, +1.18) jumped 1.2%. Most notably, the greenback rallied 1.1% against the euro, sending the single currency to 1.0815.
Also of note, the industrial sector (-0.1%) could not stay out of the red, but that masked relative strength among transport stocks after FedEx (FDX 171.16, +4.49) announced it will acquire TNT Express (TNTEY 8.26, +1.71) for $4.8 billion. The Dow Jones Transportation Average gained 0.5% while FedEx spiked 2.7%, helping the Dow Jones Industrial Average (-0.03%) finish ahead of other indices.
On the downside, the consumer discretionary sector (-0.5%) was the weakest performer among cyclical groups. Homebuilders struggled throughout the day while retail names slumped during the afternoon. The iShares Dow Jones US Home Construction ETF (ITB 28.01, -0.50) lost 1.8% while SPDR S&P Retail ETF (XRT 100.63, -0.88) settled lower by 0.9%.
Treasuries retreated throughout the morning, but backtracked from their lows throughout the afternoon. The benchmark 10-yr yield ticked down one basis point to 1.89%.
Today's participation was well below average with fewer than 650 million shares changing hands at the NYSE floor.
Economic data was limited to the Job Openings and Labor Turnover Survey and Consumer Credit:
- The February Job Openings and Labor Turnover Survey showed that job openings increased to 5.133 million from a revised rate of 4.965 million (from 4.998 million)
- The Consumer Credit report for February was showed an increase of $15.50 billion while the Briefing.com consensus expected a reading of $12.50 billion
- The prior month's credit growth was revised to $10.80 billion from $11.60 billion
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei +1.3%; Hong Kong’s Hang Seng closed for holiday; China’s Shanghai Composite +2.5%
Following in the wake of Wall Street’s turnaround on Monday, markets in the Asia-Pacific region were up pretty much across-the-board on Tuesday, paced by a 2.5% surge in China’s Shanghai Composite.
Economic data
- Australia
- Reserve Bank of Australia holds main borrowing rate steady at 2.25% (expected 2.25%)
- February Retail Sales +0.7% month-over-month (expected +0.4%; prior +0.5%)
- March AIG Services Index 50.2 (prior 51.7)
- India
- Reserve Bank of India keeps main repo rate unchanged at 7.50% (expected 7.50%)
Equity Markets
- Japan’s Nikkei increased 1.3% with gains registered by all sectors. Influential leaders included the basic materials (+2.4%), financial (+2.0%), industrial (+1.5%), and consumer non-cyclical (+1.4%) sectors. Nippon Light Metals Holding Co (+6.3%), Tokyo Fudosan Holdings (+5.9%), and Nisshin Steel Co (+5.7%) were the best-performing stocks. Out of the 225 index members, 205 ended higher, only 17 finished lower, and 8 were unchanged.
- Hong Kong’s Hang Seng was closed for a holiday.
- China’s Shanghai Composite surged 2.5%, ending at its high for the session and at a new seven-year high. The advance was broad-based and was paced by gains in the financial sector. The Shanghai Composite is up 22.5% year-to-date and nearly 100% over the last year.
- India’s Sensex ended its session flat thanks to a closing push that negated modest losses following the Reserve Bank of India’s expected decision to hold its main repo rate unchanged at 7.50%. Gains in the energy (+0.6%) and industrial (+0.5%) sectors were offset by losses in the financial (-0.5%) and consumer non-cyclical (-0.2%) sectors. Tata Steel (+5.1%) led individual gainers while Axis Bank Ltd (-1.8%) paced the decliners.
- Australia’s S&P/ASX 200 increased 0.5%, but saw larger gains pared after the Reserve Bank of Australia elected to keep its main borrowing rate unchanged at 2.25%. Strength in the gold (+1.3%) and energy (+1.2%) sectors helped lead the index higher.
- Regional advancers: Taiwan +0.4%, South Korea +0.03%, Singapore +0.4%, Malaysia +0.7%, Thailand +0.9%, Indonesia +0.8%, Philippines +0.6%, Vietnam +1.0%
- Regional decliners: None
FX
- USD/CNY +0.02% at 6.1982
- USD/INR +0.1% at 62.316
- USD/JPY +0.3% at 119.92
EUROPE
Major European indices trade higher across the board with France’s CAC (+1.6%) and UK’s FTSE (+1.5%) jockeying for the lead. In news, Germany’s finance ministry has once again pushed back against Greece’s demands for World War II reparations after a Greek official claimed his country is owed EUR279 billion.
- Eurozone February PPI +0.5% month-over-month (expected 0.1%; prior -1.1%); -2.8% year-over-year (consensus -3.0%; previous -3.5%). Separately, Services PMI ticked down to 54.2 from 54.3 (expected 54.3)
- Germany’s Services PMI ticked up to 55.4 from 55.3 (consensus 55.3)
- UK’s Services PMI jumped to 58.9 from 56.7 (consensus 57.0)
- France’s Services PMI fell to 52.4 from 52.8 (expected 52.8)
- Italy’s Services PMI improved to 51.6 from 50.0 (expected 51.1)
Closing Prices
- UK’s FTSE: + 1.9%
- Germany’s DAX: + 1.3%
- France’s CAC: + 1.5%
- Spain’s IBEX: + 0.7%
- Portugal’s PSI: + 1.0%
- Italy’s MIB Index: + 1.7%
- Irish Ovrl Index: + 1.7%
- Greece ASE General Index: + 0.8%
Macroeconomic Data
Economic Data
from Briefing.com
- JOLTS - Job Openings : 5.133M (Prior 4.965M - Down)
- Consumer Credit : $15.5B vs $12.5B (Prior $10.8B - Down)
CONSUMER CREDIT
Highlights
- Consumer credit increased by $15.5 bln in February after increasing by a downwardly revised $10.8 bln (from $11.6 bln) in January. The Briefing.com Consensus expected consumer credit to increase by $12.5 bln.
Key Factors
- Typically, consumer credit goes through sizable revisions before the final numbers are released. Any future revision, however, is unlikely to alter the current trends.
- Revolving credit declined by $3.7 bln, from $888.5 bln in January to $884.8 bln in February. That was the second consecutive monthly decline.
- Nonrevolving credit increased to $2,458.6 bln in February from $2,439.4 bln in January, a gain of $19.2 bln. That was the largest increase in nonrevolving credit since February 2012 when it increased by $24.7 bln.
Big Picture
- Consumer credit has increased by an average of $17.8 bln each month over the past 12 months.
Market Internals
NYSE:
Lower Volumes than the day before – 663.0M vs 861.1M
Decliners outpaced Advancers (adv/dec): 1359 / 1711
New Highs outpaced New Lows (highs/lows): 92 / 6
NASDAQ:
Lower Volumes than the day before – 1569.9M vs 1662.0M
Decliners outpaced Advancers (adv/dec): 1290 / 1475
New Highs outpaced New Lows (highs/lows): 85 / 30
VOLATILITY S&P500 (VIX)
14.78 +0.04 (+0.27%)
Volume is significantly weaker and that might be saying the lack of activity from the big boys. Internals are still showing some bearishness and that is not justifying the uprise in the market. So I am feeling divergence here. VIX is showing the lack in confidence despite it is still below 15.00 range but I think it is not staying under for long.
Technical Updates
17,875.42 -5.43 (-0.03%)
Volume: 72,145,067 (below average of 99,459,281)
Range: 17,871.21 - 17,983.12
4,910.23 -7.09 (-0.14%)
Volume: 374.1M (below average of 454,491,850)
Range: 4,909.77 - 4,948.88
Range: 4,909.77 - 4,948.88
S&P 500 INDEX (SPX: CBOE)
2,076.33 -4.29 (-0.21%)
Volume: 436.5M (below average of 551,268,400)
Range: 2,076.10 - 2,089.81
The indices are forming a reversal pattern and that might means we are likely to see the market to slide lower soon. Also the 20 and 50 MAs have converged in DOW and S&P while it is narrowing in NASDAQ case. Certainly the bears are fighting back stronger.
Commodities
Closing Commodities: WTI Rallies Above $54/Barrel
- Oil futures extended gains to above $54/barrel in afternoon trading activity
- May crude ultimately closed $1.85 higher at $53.96/barrel.
- may natural gas gained $0.03 to $2.68/MMBtu today.
- Strength in the dollar index continued to weigh on select commodities such as gold and silver
- June gold finished today’s session -$8.10 to $1210.60/oz, while May silver closed $0.27 at $16.84/oz
Energy
- May crude oil futures rose $1.85/barrel (or +3.5%) to $53.96/barrel
- May natural gas closed $0.03 lower at $2.68/MMBtu
- RBOB Gasoline closed $0.02 higher at $1.86/gallon
- Heating oil closed $0.10 higher (or +5.9%) at $1.78/gallon
Agriculture
- May corn closed $0.02 lower at $3.83/bushel
- May wheat closed $0.01 lower at $5.27/bushel
- May soybeans closed $0.07 lower at $9.72/bushel
- Ethanol closed $0.01 lower at $1.61/gallon
- Sugar #11 closed 0.23 cents higher at 12.77 cents/lb
Metals
- June gold ended today’s session $8.10 lower at $1210.60/oz
- May silver closed $0.27 lower at $16.84/oz
- May copper closed $0.04 higher at $2.76/lb
Currencies
- The U.S. dollar rallied today against all of the majors but the Australian dollar as investors rethought their initial reactions to Friday's release of the U.S. March employment report
- The Intercontinental Exchange's Dollar Index rallied 1.07% to 97.81
- EUR/USD declined 0.90% to $1.0839, although the eurozone service PMI data exceeded expectations (54.2 in March versus 53.7 for February)
- The yield on the Greek 10-year note also declined 40 basis points to 11.48%, suggesting that the market sees the talks between Yanis Varoufakis, Greek finance minister, and Christine Lagarde, managing director of the IMF, in Washington, D.C. as positive for Greece's solvency
- The Greek finance ministry said today that Lagarde told Varoufakis that "the [IMF] is willing to show utmost flexibility in the way in which the government's reforms and fiscal proposals will be evaluated."
- The Aussie rallied 0.53% to $0.7637 following the Reserve Bank of Australia's decision to keep its policy rate at 2.25%
- The market had priced in 3-to-1 odds in favor of a cut recently, as benchmark iron-ore prices have slid below $50/metric ton
- USD/JPY rallied 0.78% to 120.41 ahead of tonight's BoJ rate decision. The pair's move was probably more related to general dollar strength than any developments in Japan
- The loonie and Kiwi both declined as collateral damage in the dollar rally
- USD/CAD: +0.24% to 1.2504
- NZD/USD: -0.63% to $0.7494
- The pound sterling fell 0.43% to $1.4829
- The services PMI beat expectations, rising to 58.9 in March versus 56.7 in Feburary
- The composite (services, manufacturing, and construction) rose to 58.8 from 56.7
- An unusual degree of uncertainty over the result of the upcoming national elections may be unsettling investors
- Cable has some technical challenges, as it continues to fail below the $1.50 level
Bonds
Long End Recovers in Late Trading
- The Treasury complex lost ground early today, but 10's and 30's made back the losses late in the session
- Yield check:
- 2-yr: +2 bps to 0.52%
- 5-yr: +2 bps to 1.32%
- 10-yr: -2 bps to
- 30-yr: -4 bps to 2.52%
- News:
- Minneapolis Fed President Kocherlakota gave a speech in Bismarck, ND this morning
- He is not an FOMC voter and he will be resigning in 2016
- Kocherlakota
- said that a rate hike would not be necessary until the second half of 2016
- February JOLTS came out at 4.965M, versus a prior reading of 4.965M (revised down from 4.998M)
- The 3-year note auction was met with average demand
- High yield: 0.865%
- Bid-to-cover ratio: 3.25
- Indirect bid: 49.4%
- February Consumer Credit was $15.5B versus the Briefing.com Consensus of $12.5B and $10.8B for January
- Minneapolis Fed President Kocherlakota gave a speech in Bismarck, ND this morning
- Commodities:
- WTI Crude rallied 3.05% to $53.73/bbl
- Gold fell 0.71% to $1,209.90/troy oz.
- Copper rose 1.36% to $2.7535/lb.
- Currencies:
- EUR/USD: -1.07% to $1.0820
- USD/JPY: +0.71% to 120.33
- Data Out Wednesday:
- MBA Mortgage Index for the week of 04/04 (08:00 ET)
- Crude Inventories for the week of 04/04 (10:30 ET)
- FOMC Minutes (14:00 ET)
- New Supply:
- 10-Year Note Auction (Reopening) (Results at 1:00 ET)
- 2 Year Note 0.52% +0.01
- 5 Year Note 1.32% +0.01
- 10 Year Note 1.89% -0.03
- 30 Year Bond 2.52% -0.05
2/30 Spread: 200 bps ( -6 ) … 2/10 Spread: 137 bps ( -4 )
Preview for Wednesday 8 Apr, 2015
Wednesday (8 Apr) :
- MBA Mortgage Index : (Prior 4.6%)
- Crude Inventories : (Prior 4.766M)
- FOMC Minutes
Earnings Highlights
Wednesday (8 Apr) :
BMO - FDO GPN MSM OMN RAD RPM
AMC - AA APOG BBBY DDC MG PIR RECN WDFC
BMO - FDO GPN MSM OMN RAD RPM
AMC - AA APOG BBBY DDC MG PIR RECN WDFC
Summary
Tomorrow is also the start of Q2 earnings season. Looking at the market performance, I think the big boys are staying out and it is likely the market is going to take a turn soon.
We are also expecting the release of FOMC minutes that might give the market some adrenaline in Wednesday session. However I feel market is likely to remain sideway still yet downside remains imminent.
We are also expecting the release of FOMC minutes that might give the market some adrenaline in Wednesday session. However I feel market is likely to remain sideway still yet downside remains imminent.
Direction for Tuesday 7 Apr, 2015; Down
2015 Daily Directional Accuracy: 24/48 (50.00%)
2015 Weekly Directional Accuracy: 6/10 (60.00%)
2015 Weekly Directional Accuracy: 6/10 (60.00%)
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