Dow +75.91 at 18112.61, Nasdaq +33.73 at 5011.02, S&P +10.79 at 2106.62
Market is fuelled by the better than expected earnings released recently but there was some profit taking before the market closed. Surprisingly the US market is still unaffected by the situation in Greece and the latest GDP number from China recording the lowest growth in the recent years. Crude oil remains strong in its rally due to the underlying rising in demand along with the fall in production. Speculation on the cut in production among OPEC also pushed the oil prices higher.
Market Summary
Industry Watch
Strong: Energy, Materials, Technology, Utilities
Weak: Consumer Discretionary, Health Care, Industrials, Telecom Services
Other Market Moving Factor:
- Dollar Index trims overnight gain
- Intel (INTC) reports in-line results
Equity indices rallied out of the gate, all but ignoring news that China's GDP growth (+7.0% year-over-year) has slowed to a six-year low. The news was followed by a small uptick in the greenback, but the Dollar Index (98.36, -0.37) surrendered its overnight advance, posting its second consecutive decline.
In turn, the dollar weakness provided a measure of support to crude oil, helping the energy component jump 5.6% to $56.25/bbl. Understandably, the big spike in oil boosted the energy sector (+2.3%), placing the cyclical group in the lead. Thanks to the gain, the energy space is now up 6.8% since the end of March.
Meanwhile, the remaining cyclical groups settled a bit closer to the broader market. Technology (+0.9%) endured a slight struggle early, but the sector ended among the leaders with help from chipmakers after Linear Technology (LLTC 46.17, +0.75) reported better than expected results and Intel (INTC 32.83, +1.34) delivered an in-line report. The two names spiked 1.6% and 4.3%, respectively, while the PHLX Semiconductor Index gained 1.6%.
Staying on the earnings theme, Bank of America (BAC 15.64, -0.18) lost 1.1% after missing bottom-line estimates, but the financial sector (+0.4%) still finished near the broader market.
Also of note, industrials (+0.1%) displayed early strength, but the sector finished among the laggards following an intraday pullback in transport stocks. Delta Air Lines (DAL 44.20, +1.12) surged 2.6% after reporting a one-cent beat while CSX (CSX 32.86, -0.35) lost 1.1% after its own one-cent beat and lowered guidance. For its part, the Dow Jones Transportation Average narrowed its gain to 0.1% by the close.
Moving to the countercyclical side, the consumer staples sector (-0.3%) spent the bulk of the session in negative territory while the remaining defensively-oriented groups posted gains. The health care sector (+0.3%) endured an intraday pullback in large insurer names like Aetna (AET 106.08, -1.80), Cigna (CI 130.22, -2.68), and UnitedHealth (UNH 117.32, -2.60), but biotech names outperformed with theiShares Nasdaq Biotechnology ETF (IBB 360.94, +3.73) climbing 1.0%.
Treasuries ended the day with slim gains, pressuring the 10-yr yield to 1.89% (-1 bp).
Today's participation was ahead of recent averages with more than 850 million shares changing hands at the NYSE floor.
Economic data included Industrial Production, Empire Manufacturing, MBA Mortgage Index, and NAHB Housing Market Index:
- Industrial production declined 0.6% in March after increasing an unrevised 0.1% in February while the Briefing.com consensus expected a decline of 0.3%
- Over the entire first quarter, industrial production declined 1.0%, which was the first quarterly decline since the Great Recession ended
- Nearly the entire decline resulted from warmer temperatures, which reduced utilities usage by 5.9% after extreme cold boosted production by 5.7% in February. Mining production (-0.7%) also contributed to the pullback as relatively low oil prices continue to constrain the industry
- The Empire Manufacturing Survey for April registered a reading of -1.2, which was below the prior month's reading of 6.9
- The Briefing.com consensus expected an improvement to 7.3
- The weekly MBA Mortgage Index fell 2.3% to follow last week's 0.4% uptick
- The NAHB Housing Market Index for April rose to 56 from a revised 52 (from 53) while the Briefing.com consensus expected an increase to 55
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei -0.2%; Hong Kong’s Hang Seng +0.2%; China’s Shanghai Composite -1.2%
Wednesday’s spotlight was on China, which reported its lowest rate of GDP growth year-over-year (7.0%) since the first quarter of 2009 alongside a batch of mostly disappointing economic data for retail sales, industrial production, and fixed asset investment for March. That reporting cast a pall on buying interest as markets in the Asia-Pacific region were either mixed or lower for the day.
Economic data
- China
- Q1 GDP +7.0% year-over-year (expected +7.0%; prior +7.3%); +1.3% quarter-over-quarter (expected +1.4%; prior +1.5%)
- March Fixed Asset Investment +13.5% year-over-year (expected +13.8%; prior +13.9%)
- March Industrial Production +5.6% year-over-year (expected +6.9%; prior +6.8%)
- March Retail Sales +10.2% year-over-year (expected +10.9%; prior +10.7%)
- Japan
- February Industrial Production -3.1% month-over-month (expected -3.1%; prior -3.4%)
- February Capacity Utilization -3.2% month-over-month (prior +3.6%)
- India
- March WPI Inflation -2.33% (expected -1.95%; prior -2.06%)
- WPI Food +6.31% year-over-year (prior +7.70%)
- WPI Fuel -12.56% year-over-year (prior -14.70%)
- WPI Manufacturing Inflation -0.19% year-over-year (prior +0.33%)
- South Korea
- March Unemployment Rate 3.7% (expected 3.7%; prior 3.9%)
- Australia
- April Westpac Consumer Sentiment -3.2% (prior -1.2%)
- Singapore
- February Retail Sales -3.3% month-over-month (expected -3.3%; prior +4.8%); +15.8% year-over-year (expected -0.5%; prior -5.0%)
Equity Markets
- Japan’s Nikkei declined 0.2% with weakness in the consumer non-cyclical (-1.2%) and basic materials (-0.5%) sectors weighing on things. Individual winners included Toho Co Ltd (+8.8%), Nippon Electric Glass Co (+6.1%), and Shimizu Corp (-4.2%). JGC Corp (-6.6%), MEIJI Holdings (-3.5%), and Chugai Pharmaceutical (-3.0%) led declining issues. Out of the 225 index members, 91 ended higher, 127 finished lower, and 7 were unchanged.
- Hong Kong’s Hang Seng rebounded from Tuesday’s sell-off and ended 0.2% higher thanks to a burst of buying interest in the final hour of trading. The technology (+1.7%), industrial (+0.8%) and energy (+0.5%) sectors provided some needed support. Industrial & Commercial bank of China (+4.9%), China Construction Bank (+4.4%), Bank of Communications (+4.3%), CNOOC (+3.9%) and Bank of China (+3.6%) topped the winners list. Out of the 50 index members, 22 ended higher, 27 finished lower, and 1 was unchanged.
- China’s Shanghai Composite had a seesaw session following the release of its Q1 GDP report, which showed the lowest rate of growth since the first quarter of 2009. Retail sales, fixed asset investment, and industrial production data for March were all weaker than expected. The market was higher going into the final hour of trading, but selling interest picked up noticeably late in the session, leaving the Composite down 1.2% for the day with weakness seen across all sectors.
- India’s Sensex declined 0.8%, driven lower by weakness in the consumer non-cyclical (-1.5%), technology (-1.3%), industrial (-1.3%), and consumer cyclical (-1.1%) sectors. Bharat Heavy Electricals (-4.2%), Mahindra & Mahindra Ltd (-3.1%), Sun Pharmaceutical (-2.9%), Tata Motors (-2.8%), and Wipro (-2.8%) paced declining issues.
- Australia’s S&P/ASX 200 declined 0.6% and closed near its lows for the session. The index was held back by losses in the information technology (-1.7%), consumer discretionary (-1.6%), and telecom services (-1.4%) sectors.
- Regional advancers: South Korea +0.4%, Singapore +0.5%, Malaysia +0.03%, Vietnam +1.0%
- Regional decliners: Taiwan -1.1%, Indonesia -0.1%, Philippines -1.9% · Closed for holiday: Thailand (Songkran Festival)
FX
- USD/CNY -0.01% at 6.2037
- USD/INR +0.3% at 62.436
- USD/JPY +0.1% at 119.47
EUROPE
Major European indices trade higher across the board with Italy’s MIB (+1.2%) in the lead.
Eurozone trade surplus expanded to EUR20.30 billion from EUR7.60 billion (expected surplus of EUR21.10 billion)
- Germany’s March CPI +0.5% month-over-month; +0.3% year-over-year. Both figures matched expectations
- French March CPI +0.7% month-over-month, as expected
Closing Prices
- UK’s FTSE: + 0.3%
- Germany’s DAX: + 0.0%
- France’s CAC: + 0.7%
- Spain’s IBEX: + 0.6%
- Portugal’s PSI: + 0.9%
- Italy’s MIB Index: + 1.2%
- Irish Ovrl Index: + 1.0%
- Greece ASE General Index: -1.9%
Macroeconomic Data
Economic Data
from Briefing.com
- MBA Mortgage Index : -2.3% (Prior 0.4%)
- Empire Manufacturing : -1.2 vs 7.3 (Prior 6.9)
- Industrial Production : -0.6% vs -0.3% (Prior 0.1)
- Capacity Utilization : 78.4% vs 78.7% (Prior 79.0% - Up)
- NAHB Housing Market Index : 56 vs 55 (Prior 52 - Down)
- Crude Inventories : 1.294M (Prior 10.949M)
- Fed's Beige Book
- Net Long-Term TIC Flows : $9.8B (Prior -$27.4B - Down)
INDUSTRIAL PRODUCTION
Highlights
- Industrial production declined 0.6% in March after increasing an unrevised 0.1% in February. The Briefing.com Consensus expected industrial production to decline 0.3%.
Key Factors
- Nearly the entire decline was the result of warmer temperatures, which reduced utilities usage by 5.9% after extreme cold boosted production by 5.7% in February. Mining production (-0.7%) also contributed to the pullback as relatively low oil prices continue to constrain the industry.
- Manufacturing production shook off the weaknesses associated with the contracting regional manufacturing surveys by increasing 0.1% in March after declining 0.2% in February. That was the first monthly increase in manufacturing production since November 2014.
- Normally, that would be a good sign for future economic gains. However, the entire increase in manufacturing production came from the motor vehicle industry. Motor vehicle and parts production increased 3.2% in March after declining 3.6% in February. Excluding motor vehicle production, manufacturing production declined 0.1% and total industrial production declined by an even worse 0.8%.
- Motor vehicle assemblies increased to 11.74 mln SAAR in March from 10.98 mln SAAR in February. Auto assemblies increased to 4.28 mln SAAR from 3.83 mln SAAR and truck assemblies increased to 7.45 mln SAAR from 6.83 mln SAAR. Those assembly numbers are near relative peaks and are unlikely to expand too much further without a bigger jolt in motor vehicle sales
Big Picture
- Over the entire first quarter, industrial production declined 1.0%. That was the first quarterly decline since the Great Recession ended.
Market Internals
NYSE:
Higher Volumes than the day before – 877.0M vs 691.3M
Advancers outpaced Decliners (adv/dec): 2061 / 1010
New Highs outpaced New Lows (highs/lows): 118 / 9
NASDAQ:
Higher Volumes than the day before – 1781.2M vs 1499.5M
Advancers outpaced Decliners (adv/dec): 1839 / 942
New Highs outpaced New Lows (highs/lows): 128 / 19
VOLATILITY S&P500 (VIX)
12.84 -0.83 (-6.07%)
Volume seems to pick up and the internals are turning bullish. New Highs vs New Lows is also similarly bullish. VIX has went down again to test its support level and the double bottom looks like its failing too.
Technical Updates
18,112.61 +75.91 (+0.42%)
Volume: 113,613,947 (above average of 99,400,122)
Range: 18,045.71 - 18,160.52
Range: 18,045.71 - 18,160.52
5,011.02 +33.73 (+0.68%)
Volume: 426.2M (above average of 441,969,595)
Volume: 426.2M (above average of 441,969,595)
Range: 4,989.24 - 5,021.19
S&P 500 INDEX (SPX: CBOE)
2,106.63 +10.79 (+0.51%)
Volume: 561.6M (above average of 543,016,292)
Range: 2,097.82 - 2,111.91
Market went back to test its resistance level and looking at the candlestick pattern, maybe we might see a correction here or we will see a breakout there. From what I see from the technicals, market is consolidating and if there is no breakout, the volatility should still keep the market in sideway trend.
Commodities
Closing Commodities: WTI Oil Rallies 6%, Ends Above $56/Barrel
- WTI oil prices rallied today following the weekly EIA storage data.
- Gains extended in afternoon trading, and May crude oil ultimately ended closing $6% higher at $56.25/barrel
- May natural gas gained $0.08 today at $2.61/MMBtu
- Metals also ended the day with gains, with June, silver and copper finished higher
Energy
- May crude oil futures rose $2.94/barrel (+5.6%) to $56.25/barrel
- May natural gas rose $0.08 to $2.61/MMBtu
- RBOB Gasoline closed $0.09 higher at $1.93/gallon
- Heating oil closed $0.09 higher at $1.89/gallon
Highlights:
- Crude Oil: The EIA released its weekly petroleum inventory data for the week of Apr. 10, showing crude oil inventories with a build of 1.294 mln barrels vs. a 4 mln barrel build consensus
Agriculture
- May corn closed $0.03 higher at $3.76/bushel
- May wheat closed $0.06 lower at $4.91/bushel
- May soybeans closed $0.05 higher at $9.65/bushel
- Ethanol closed $0.03 higher at $1.59/gallon
- Sugar #11 closed 0.19 cents lower at 13.00 cents/lb
Metals
- June gold ended today’s session $8.70 higher at $1201.30/oz
- May silver closed $0.13 higher at $16.30/oz
- May copper closed $0.02 higher at $2.72/lb
Currencies
- The U.S. Dollar Index lost ground against all of the majors today, down 0.29% to 98.45
- One wave of dollar selling was set off by the weak Empire State Manufacturing Index report at 08:30 ET, but another wave of selling began around 11:00 ET and this one has not yet been retraced
- The Bank of Canada met and held its main policy rate at 0.75% for a second straight meeting
- The central bank also said that the worst effects of collapsing oil prices may already be over for Canada
- USD/CAD: -1.43% to 1.2310
- The ECB met today and left rates and its asset purchase program unchanged. After the press conference was interrupted by a protester, ECB President Draghi said that he was surprised people were already talking about the ECB's exit strategy. He showed no sign of complacency over eurozone recovery
- European sovereign yields declined sharply today
- EUR/USD: +0.23% to $1.0672
- Koichi Hamada, a key adviser to Japanese Prime Minister Shinzo Abe, retracted his remarks from Monday, which seemed to imply that a $/yen rate of 105 was acceptable
- He said in an interview, "120 yen per dollar is acceptable"
- USD/JPY: -0.42% to 118.95
- Other Rates:
- AUD/USD: +0.80% to $0.7679
- NZD/USD: +0.95% to $0.7585
- USD/CHF: -0.84% to 0.9645
Bonds
Curve is Steeper After Volatile Trade
- After a sell-off this morning, the Treasury complex reversed higher following the weak Empire State Manufacturing data. At 12:30 ET, higher crude and a declining dollar eventually pushed 5's, 10's, and bonds down, with the bond even nearing its morning low
- Yield check:
- 2-yr: -1 bp to 0.50%
- 5-yr: -2 bps to 1.32%
- 10-yr: unch at 1.89%
- 30-yr: +1 bp to 2.55%
- News:
- At 07:00 ET, the MBA Mortgage Index was released and declined 2.3% versus the prior week's rise of 0.4%
- April's Empire State Manufacturing survey came in at -1.2 versus the Briefing.com consensus of +7.3. This was a bad miss, and much worse than March's reading of 6.9
- St. Louis Fed President Bullard, who does not vote on the FOMC, spoke at Bard College in New York. He said that low rates jeopardize financial stability and that rates should go higher. He went on to say that even after a few rate hikes, monetary policy would remain "exceptionally accommodative. Bullard is a known inflation hawk
- March Industrial Production fell short of expectations, declining 0.6% versus the Briefing.com consensus of -0.3%. February's number was +0.1%
- Most of the decline was attributable to warmer weather, which reduced utilities usage by 5.9% after very cold temps boosted production by 5.7% in February
- March Capacity Utilization missed estimates as well at 78.4 versus the Briefing.com consensus of 78.7. The prior number was 79.0
- The National Association of Home Builders' Housing Market Index was at 56 in April, higher than the Briefing.com consensus of 55 and March's 53
- The Fed's Beige Book said the following:
- There were layoffs in "multiple" regions of the U.S. resulting from lower energy prices
- Economy expanded at a modest to moderate pace from mid-Feb through March
- There is modest upward pressure on wages and prices
- Commodities:
- WTI Crude rose 4.79% to $55.84/bbl after trading as high as $56.69/bbl
- The weekly supply number did not give the bears what they sought, and longs pushed the market to a high for 2015
- Gold rose 0.82% to $1202.40/troy oz. on a weaker dollar
- Copper: +0.87% to $2.7235/lb.
- WTI Crude rose 4.79% to $55.84/bbl after trading as high as $56.69/bbl
- Currencies:
- EUR/USD: +0.28% to $1.0678
- USD/JPY: -0.25% to 119.15
- Data Out Thursday:
- Initial Jobless Claims for the week ending 4/11 and Continuing Jobless Claims for the
week ending 4/4 (08:30 ET) - March Housing Starts (08:30 ET)
- March Building Permits (08:30)
- April Philadelphia Fed (10:00 ET)
- Natural Gas Inventories for the week ending 4/11 (10:30 ET)
- Initial Jobless Claims for the week ending 4/11 and Continuing Jobless Claims for the
- Fed Speak:
- Atlanta Fed President Lockhart (FOMC voter) speaks in Palm Beach, FL (13:00 ET)
- Cleveland Fed President Mester (non-FOMC voter) speaks in New York, NY (13:10 ET)
- Boston Fed President Rosengren (non-FOMC voter) speaks in London (13:30 ET)
- Fed Vice Chair Fischer (FOMC voter) participates in panel at IMF/World Bank meetings (15:00 ET)
Treasury Yields:
- 2 Year Note 0.51% -0.02
- 5 Year Note 1.33% -0.01
- 10 Year Note 1.91% -0.01
- 30 Year Bond 2.55% +0.01
2/30 Spread: 204 bps ( +3 ) … 2/10 Spread: 140 bps ( +3 )
Preview for Thursday 16 Apr, 2015
Economic Data
Thursday (16 Apr) :
- Initial Claims : 280K (Prior 281K)
- Continuing Claims : 2325K (Prior 2304K)
- Housing Starts : 1045K (Prior 897K)
- Building Permits : 1081K (Prior 1092K)
- Philadelphia Fed : 7.2 (Prior 5.0)
- Natural Gas Inventories : (Prior 15 bcf)
Earnings Highlights
Thursday (16 Apr) :
BMO - ADS BLK BX C CY FCS FCFS FRC GS HOMB IIIN KEY NORD PBCT PM PPG PVTB SASR SHW SON TSM TZOO UNH GWW WBS
AMC - ACTG AMD AXP ASB CE COBZ CCK CYT EGP FFIN MAT NSR SLB NOW
Summary
We are going to see earnings reports from Citigroup and Goldman Sachs. That would give the market a little push to breakout. There are some macroeconomic data out which can be the catalyst as well. The internals are showing the big boys are getting back in play and that will give the market some leadership.
I think tomorrow we should see more intense bulls vs bears fight and the market can possibly ended flat. It is better to be cautious that to be greedy at this point in time.
I think tomorrow we should see more intense bulls vs bears fight and the market can possibly ended flat. It is better to be cautious that to be greedy at this point in time.
Direction for Thursday 16 Apr, 2015; Down
2015 Daily Directional Accuracy: 25/52 (48.08%)
2015 Weekly Directional Accuracy: 7/12 (58.33%)
2015 Weekly Directional Accuracy: 7/12 (58.33%)
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