Dow -11.76 at 16643.01, Nasdaq +15.62 at 4828.33, S&P +1.21 at 1988.87
One word for Friday session - sideway. Basically market remained flat throughout the whole session. We had seen the market rallied for the past 2 sessions after picking up from the bottom on Monday. Somehow Friday felt like the pullback is running out of steam. Could this means the market is going back down soon?
Crude oil surged on Friday as well, broke above its resistance around $42.50/barrel to close to $46.00/barrel. It was a nice pullback but it remains a question mark on whether we would see the oil price returns to $50 range. I reckon we should see more consolidation between $40 to $55 area.
Green flags are returning to the global markets as we saw both Asia and Europe markets mostly were up on Friday despite they are still in red in terms of weekly data.
Market Summary
Industry Watch
Strong: Energy, Materials
Weak: Health Care, Financials, Industrials, Technology
Other Market Moving Factor:
- Crude oil extends Thursday's 10% surge
- S&P 500 enters Friday +0.8% week-to-date
- Asian markets register losses for the week: Nikkei -1.5%, Shanghai Composite -7.8%, Hang Seng -3.6%
[BRIEFING.COM] After enduring a whirlwind week, the major averages ranged near their flat lines throughout the Friday session, ending little changed. The S&P 500 (+0.1%) and Nasdaq Composite (+0.3%) eked out slim gains while the Dow Jones Industrial Average (-0.1%) underperformed throughout the day. Despite the sideways action on Friday, the rally on Wednesday and Thursday allowed the S&P 500 to end the week higher by 0.9% while the Nasdaq jumped 2.5% for the week.
With one more session remaining in August, the S&P 500 is on track to lose 5.8% for the month while the Nasdaq is down 6.2% since the end of July.
Equities began today's affair with losses in most sectors, but the energy space (+2.3%) was an early standout following yesterday's 10.0% spike in crude oil. The energy component wasn't done there, rallying 6.3% today to end the pit session at $45.22/bbl. For the week, WTI crude gained 10.6% after dipping below $38.00/bbl on Monday.
The early strength in the energy sector served as an encouraging factor and other sectors began climbing in sympathy shortly after the start. The advance briefly placed the S&P 500 above its flat line, but the index slid back into the red after Federal Reserve vice chair Stanley Fischer appeared on CNBC.
Mr. Fischer's appearance did not provide that much fresh insight as he indicated that a September rate hike remains a possibility and that it's still too early to make the call right now; however, that was enough for the jittery market to slide back into negative territory. That move coincided with a jump in the Dollar Index (96.12, +0.37) while Treasuries surrendered their intraday gains, ending the day unchanged with the 10-yr yield at 2.18%.
The slide from highs was fairly broad-based and it pulled the energy sector from its high. Still the group ended with a solid gain while other sectors joined energy in the green during the final hour thanks to a broad surge that lifted the market back into positive territory. For the week, the energy sector jumped 3.7%, ending ahead of the technology sector, which spiked 2.9% for the week. The top-weighted group saw a stunning reversal after being down 6.9% at its lowest point on Monday.
Although the volatility appeared to have subsided on Friday, the CBOE Volatility Index (VIX 26.16, +0.06) was up almost three points before a late unwind saw the gauge surrender its entire increase. That being said, the VIX remains elevated at 26.00%, indicating that investors remain on the lookout for large swings.
With the broad market stumbling about like an overserved sailor, stock-specific news had been largely ignored this week. However, investors did receive a few earnings reports since Thursday's closing bell. Retail names posted mixed results with Aeropostale (ARO 0.92, -0.34) and bebe stores (BEBE 1.35, -0.52) missing bottom-line estimates while Big Lots (BIG 48.58, +6.58), Gamestop (GME 42.49, -3.71), and Ulta Salon (ULTA 159.00, -1.24) reported bottom-line beats.
Once again, participation was well above average with more than a billion shares changing hands at the NYSE floor.
Economic data was limited to Personal Income/Spending data and Michigan Sentiment:
- Personal income increased 0.4% for a fourth consecutive month in July while the Briefing.com Consensus expected an increase of 0.4%
- Wages and salaries increased 0.5% in July after increasing 0.2% in June, which was slightly weaker than what was implied in the July employment report
- Personal spending increased 0.3% for a second consecutive month in July, following an upward revision to June spending (from 0.2% to 0.3%) while the consensus expected an increase of 0.4%
- Core PCE prices increased 0.1% for a fourth consecutive month in July
- The University of Michigan Consumer Sentiment Index was revised down to 91.9 in the final July reading from a preliminary reading of 92.9 while the Briefing.com consensus expected a revision up to 93.0
- The move in consumer sentiment was opposite of the trend in the Conference Board's Consumer Confidence Index, which spiked to 101.5, its highest level since January
Monday's data will be limited to the 9:45 ET release of the Chicago PMI for August (Briefing.com consensus 54.7).
- Nasdaq Composite +1.9% YTD
- S&P 500 -3.5% YTD
- Russell 2000 -3.6% YTD
- Dow Jones Industrial Average -7.1% YTD
Week in Review: Volatility Rears Ugly Head
Global equity markets began the last full week of August with a broad-based tumble that began overnight in Asia and continued into the U.S. session. When the dust settled, the S&P 500 was down 3.9% after opening with a 5.3% loss while the Nasdaq Composite lost 3.8% after starting the day with an 8.8% decline. The Monday retreat began unfolding shortly after Asian markets opened for action with continued concerns about global economic growth weighing on investor sentiment. China's Shanghai Composite paced the overseas weakness, plunging 8.5%, after the weekend went by without direct policy intervention from the People's Bank of China. Instead, pension funds managed by local governments were allowed to invest in the stock market, but that development was all but ignored. There was no respite during the European session as equity indices across the old continent faced daylong pressure with France's CAC, Germany's DAX, and UK's FTSE losing between 4.7% and 5.4%. Notably, an extension of recent selling in the DAX resulted in the index widening its slide from record highs to 22.0%, representing bear market territory. Once the U.S. session got going, a chaotic first hour ensued, featuring wide spreads, low liquidity, and a mad dash for volatility protection. In fact, the CBOE Volatility Index (VIX 40.03, +12.00) did not produce any quotes during the first 30 minutes of the session, but once quotes resumed, the index soared past levels seen during the May 2010 flash crash. The VIX notched its high just below 53.50%, but retreated into the 40.00% area by the close. The selling was far-reaching with just 136 NYSE listings ending in the green. Given that dynamic, it wasn't surprising to see all ten sectors end the day in negative territory with losses ranging from 3.1% (telecom services) to 5.2% (energy). The energy sector finished the day behind other groups, widening its Q3 decline to 20.5% as crude oil contributed to the persistent weakness. The energy component was clipped by the overarching global macro concerns, tumbling 5.4% to $38.25/bbl.
Equity indices ended the Tuesday session on a lower note despite starting the day with a sharp spike. The S&P 500 lost 1.4% after being up 2.9% while the Nasdaq Composite surrendered 0.4% after being up 3.6%. The market began the day with a broad-based spike after most global stock markets rebounded during overnight action. Interestingly, the rebound did not include China's Shanghai Composite as the index lost 7.6%. After the close, the People's Bank of China cut its main lending rate 25 basis points to 4.6% and lowered its reserve requirement ratio 50 basis points to 18.0%. The PBoC rate-cut announcement took place well after Asian markets ended for the day, but the news was met with a spike in S&P futures. Once the trading day began, the S&P 500 rallied through the first two hours of action, but returned into the middle of its trading range during the afternoon, and fell to lows during the final 60 minutes of the session. In some ways, the selling during the final hour resembled action observed on Monday morning as liquidity dried up notably and bid-ask spreads widened past typical levels. The S&P 500 surrendered nearly 40 points during the final hour, pulling all sectors into the red. Interestingly, the utilities sector (-3.2%) ended at the bottom of the leaderboard as the rate-sensitive group suffered from higher yields intraday and extended its losses during afternoon selling. More notably, heavily-weighted sectors like financials (-1.7%), industrials (-1.6%), and health care (-1.4%) underperformed throughout the day while consumer discretionary (-0.4%) and technology (-1.2%) surrendered their gains after being up more than 3.0% apiece.
The stock market rebounded from six days of consecutive losses on Wednesday with the S&P 500 spiking 3.9%. The benchmark index narrowed its weekly loss to 1.5% while the Nasdaq gained 4.2%, trimming this week's decline to 0.2%. Equity indices began the day on a higher note after index futures rallied during overnight action. That advance occurred even as China's Shanghai Composite lost 1.3%, seeing little response to Tuesday's rate cut from the People's Bank of China. Once the trading day begun, the key indices spent the first three hours of action in a slow slide from their highs. The market saw little immediate reaction to comments from FOMC vice chair William Dudley, who said that a case for a rate hike in September seems less compelling than it was a few weeks ago. Despite the comments from Mr. Dudley, the market continued dripping from highs, but the S&P 500 was able to reverse course upon hitting the 1,880 level. Although there was nothing special about that mark, it is worth noting that the turn occurred as the dollar began rallying against the euro and yen, suggesting the return of carry flows. The greenback continued climbing alongside equities into the late afternoon, pushing the Dollar Index higher by 0.7%.
The market registered its second consecutive advance on Thursday with the S&P 500 jumping 2.4% while the Nasdaq Composite (+2.5%) outperformed slightly.The market endured a late afternoon swoon, but was able to return to its high by the close. Equities began the trading day on an upbeat note after the overnight session featured a rally across major global equity markets. China's Shanghai Composite took part in that move, soaring 5.3%, but the spike was reportedly aided by an intervention from the People's Bank of China. Once the U.S. session got going, stocks followed the lead from Asia, rallying across the board with the energy sector pacing the advance. The growth-sensitive sector surged 5.0% while crude oil settled on its high, spiking 10.3% to $42.53/bbl., which represented the largest gain since 2009. Similar to energy, the remaining nine sectors posted solid gains. Meanwhile, the S&P 500 surrendered 30 points in just an hour but reclaimed all 30 of those points during the next 30 minutes or so, highlighting the elevated volatility that has been in place as of late. To that point, at their Monday lows, the Dow, Nasdaq, and S&P 500 were down 6.6%, 8.8%, and 5.3%, respectively. At their highs on Thursday, they were up 8.4%, 12.3%, and 6.6% from those lows, respectively.
Global Market
ASIA
Asian Markets Close: Japan’s Nikkei +3.0%; Hong Kong’s Hang Seng -1.0%; China’s Shanghai Composite +4.8%
Markets in the Asia-Pacific region ended Friday mostly higher, following a familiar script from the day before that saw them advance on the heels of a strong showing from Wall Street and a late spike in China’s market that was helped along by speculation the government was in the market buying stocks.
Economic data
- China
- July Industrial profits -2.9% year-over-year (prior -0.3%)
- Japan
- July Household Spending +0.6% month-over-month (expected +2.2%; prior -3.0%); -0.2% year-over-year (expected +1.3%; prior -2.0%)
- July Retail Sales +1.6% year-over-year (expected +1.1%; prior +0.9%)
- July Jobs/Applications Ratio 1.21 (expected 1.19; prior 1.19)
- July National CPI +0.2% year-over-year (expected +0.2%; prior +0.4%); National Core CPI 0.0% year-over-year (expected -0.2%; prior +0.1%)
- August Tokyo CPI +0.1% year-over-year (expected +0.1%; prior +0.2%); Tokyo Core CPI -0.1% year-over-year (expected -0.2%; prior -0.1%)
- July Unemployment Rate 3.3% (expected 3.4%; prior 3.4%)
Equity Markets
- Japan’s Nikkei increased 3.0% and finished near its highs for the session following a batch of economic data that featured weaker than expected household spending, stronger than expected retail sales, and higher than expected core CPI data. Gains were led by the industrials (+4.1%), materials (+3.9%), and technology (+3.3%) sectors. Furukawa (+11.9%), Sumitomo Metal Mining (+9.3%), and Sharp Corp (+8.9%) topped the list of winners. Ana Holdings (-1.1%) and NTT Docomo (-0.7%) were the only two stocks to lose ground. Out of the 225 index members, 222 ended higher, 2 finished lower, and 1 was unchanged. For the week, the Nikkei declined 1.5%.
- Hong Kong’s Hang Seng declined 1.0% after falling 1.7% in the final hour of trading, failing to follow suit with the mainland market. Bank of Communications (-4.7%), Industrial & Commercial Bank of China (-4.1%), and China Construction Bank (-3.8%) were the worst-performing issues. Lenovo Group (+6.7%), Kunlun Energy (+3.2%), and China Shenhua Energy (-2.9%) were the biggest losers. Out of the 50 index members, 12 ended higher and 38 finished lower. For the week, the Hang Seng declined 3.6%.
- China’s Shanghai Composite increased 4.8%, aided by another late surge of buying interest that saw the Composite jump as much as 3.4% in the final 90 minutes of trading. Once again, it was believed that government buying played a large part in things. There was a separate report, too, that pension funds are getting ready to deploy over $300 billion in stocks and other assets. Friday’s advance came despite a report that showed industrial profits declined 2.9% year-over-year in July. For the week, the Shanghai Composite declined 7.8%.
- India’s Sensex increased 0.6% but ended the day in a pullback mode that resulted in the Sensex coughing up a good portion of an early 1.7% gain. The utilities (+2.6%), materials (+2.2%), and consumer discretionary (+1.2%) sectors provided underlying support. Vedanta (+5.9%), Oil & Natural Gas Co (+5.8%), and Bharti Airtel (+4.4%) were upside leaders. Lupin (-2.1%), Sun Pharmaceutical (-1.7%), and Coal India (-1.2%) were the biggest laggards. Out of the 30 index members, 21 ended higher and 9 finished lower. For the week, the Sensex declined 3.6%.
- Australia’s S&P/ASX 200 increased 0.6%, supported by big gains in the metals & mining (+5.0%), resources (+4.7%), and materials (+3.7%) sectors. Out of the 200 index members, 105 ended higher, 86 finished lower, and 9 were unchanged. For the week, the S&P/ASX 200 declined 7.6%.
- Regional advancers: South Korea +1.6%, Taiwan +2.5%, Malaysia +0.7%, Indonesia +0.4%, Singapore +0.4%, Thailand +0.9%, Vietnam +2.7%, Philippines +1.1%
- Regional decliners: None
FX
- USD/CNY -0.3% at 6.3896
- USD/INR +0.1% at 66.1200
- USD/JPY -0.1% at 120.88
EUROPE
Major European indices trade lower across the board with Italy’s MIB (-1.3%) showing the largest decline. On a separate note, a caretaker government has been appointed in Greece ahead of the snap election on September 20 with Vassiliki Thanou assuming the duties of prime minister. Ms. Thanou previously served as president of Greece’s Supreme Court.
- Eurozone August Business and Consumer Survey ticked up to 104.2 from 104.0 (expected 103.8)
- UK’s preliminary Q2 GDP +0.7% quarter-over-quarter; +2.6% year-over-year, as expected. Separately, preliminary Q2 Business Investment +2.9% quarter-over-quarter (expected 1.7%; last 2.0%)
- France’s July PPI -0.1% month-over-month (prior -0.2%)
- Italy’s July Wage Inflation +0.1% month-over-month (prior 0.1%); +1.2% year-over-year (prior 1.1%). Separately, August Consumer Confidence rose to 109.0 from 106.7 (consensus 107.5) while Business Confidence ticked down to 102.5 from 103.5 (expected 103.7)
- Spain’s July Retail Sales +4.1% year-over-year (consensus 0.9%; prior 2.4%) while August CPI -0.3% month-over-month (prior -0.9%); -0.4% year-over-year (consensus -0.1%; last 0.1%)
- Swiss Q2 GDP +0.2% quarter-over-quarter (expected -0.1%; prior -0.2%); +1.2% year-over-year (consensus 0.9%; last 1.2%)
Closing Prices
- UK’s FTSE: + 0.9%
- Germany’s DAX: -0.2%
- France’s CAC: + 0.4%
- Spain’s IBEX: + 0.6%
- Portugal’s PSI: -0.4%
- Italy’s MIB Index: -0.9%
- Irish Ovrl Index: -0.2%
- Greece ASE General Index: + 1.1%
Macroeconomic Data
Economic Data
from Briefing.com
- Personal Income : 0.4% vs 0.4% (Prior 0.4%)
- Personal Spending : 0.3% vs 0.3% (Prior 0.3% - Up)
- PCE Prices - Core : 0.1% vs 0.1% (Prior 0.1%)
- Michigan Sentiment - Final : 91.9 vs 93.0 (Prior 92.9)
PERSONAL INCOME & SPENDING
Highlights
- Personal income increased 0.4% for a fourth consecutive month in July. There were no revisions to the June income data. The Briefing.com Consensus expected personal income to increase 0.4%.
- Personal spending increased 0.3% for a second consecutive month in July, following an upward revision to June spending (from 0.2% to 0.3%). The consensus expected personal spending to increase 0.4%.
Key Factors
- Wages and salaries increased 0.5% in July after increasing 0.2% in June. That was slightly weaker than what was implied in the July employment report. That data showed aggregate earnings up 0.7% in July.
- Income on asset receipts was flat after increasing 0.9% in June.
- The personal saving rate increased for a second consecutive month, from 4.7% in June to 4.9% in July. Trends, however, look pretty stable since the harsh winter weather temporarily boosted savings levels in January and February.
- Goods spending increased 0.5% in July after reporting no change in June.
- Durable goods spending increased 1.1% in July after declining by 1.1% in June. Nondurable goods spending increased 0.2% in July, down from a 0.5% increase in June.
- Services spending increased 0.2%, down from a 0.4% increase in June.
- Core PCE prices increased 0.1% for a fourth consecutive month in July. Year-over-year, core prices increased only 1.2% in July, down from a 1.3% y/y gain in June. Current trends are not helpful for the Fed meeting its implied 2.0% inflation target in the near-term.
Big Picture
- Personal income and spending hardly moved from June trends.
MICHIGAN SENTIMENT
- The University of Michigan Consumer Sentiment Index was revised down to 91.9 in the final July reading from a preliminary reading of 92.9. The index is down from 93.1 in June. The Briefing.com Consensus expected the Consumer Sentiment Index to be revised up to 93.0.
Key Factors
- The move in consumer sentiment was opposite of the trend in the Conference Board’s Consumer Confidence Index. That index spiked to 101.5, its highest level since January, from 91.0 in July.
- It is not unusual for the two sentiment indices to show differing trends. In this case, the Consumer Sentiment Index was likely impacted more by recent down trends in the equity market than the Consumer Confidence Index.
- Lower gasoline price and improvements in labor market conditions likely offset some weakness from equity.
- The Current Conditions Index was revised down to 105.1 from 107.1 in the preliminary release.
- The Expectations Index was revised down to 83.4 from 83.8.
- The drop in consumer sentiment is unlikely to have much of an impact on consumption trends. Consumption relies on income growth. As long as the labor market continues to strengthen, consumption growth should naturally follow.
Big Picture
- Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.
Market Internals
NYSE:
Lower Volumes than the day before – 997.2M vs 1256.0M
Advancers outpaced Decliners (adv/dec): 2044 / 1065
New Lows outpaced New Highs (highs/lows): 7 / 21
NASDAQ:
Lower Volumes than the day before – 1907.6M vs 2339.6M
Advancers outpaced Decliners (adv/dec): 1892 / 948
New Lows outpaced New Highs (highs/lows): 25 / 28
VOLATILITY S&P500 (VIX)
26.05 -0.05 (-0.19%)
Technical Updates
16,643.01 -11.76 (-0.07%)
Volume: 131,789,104 (above average of 105,205,892)
Range: 16,535.18 - 16,669.97
Range: 16,535.18 - 16,669.97
4,828.33 +15.62 (+0.32%)
Volume: 509,589,378 (above average of 460,751,233)
Volume: 509,589,378 (above average of 460,751,233)
Range: 4,788.38 - 4,836.78
1,988.87 +1.21 (+0.06%)
Volume: 723,484,000 (above average of 588,759,477)
Range: 1,975.19 - 1,993.48
DOW seems to face a strong resistance around 16,650 to 16,750 area. With the lack in volume supporting, it would be hard for DOW to overcome the resistance level. NASDAQ barely closed above its resistance around 4,820 while next resistance at 4,850 would really test the strength of the index. S&P also struggled to break above its resistance at 1,990 and formed sort of a long-legged doji candlestick pattern. Likewise for the Dow Jones Index. This might indicates a possibility an end to the pullback.
Commodities
- Oil is the big story… again. Crude extended yesterday’s huge rally by surging again today.
- In today’s floor session, Oct crude finished the day +6.4% at $45.20/barrel, rallying a total of 17% in the past two sessions.
- In other energy, Sept nat gas rose 2% to finish at $2.74/MMBtu.
- Sept silver lost some steam today, falling -0.8% in pit trading to end at $14.53/oz.
- Meanwhile, Dec gold rallied +2% to $1133.60/oz, while Sept copper rose as well, climbing a modest +0.4% to $2.34/lb.
Energy
- October crude oil futures rose $2.73 (+6.4%) to $45.20/barrel
- September natural gas closed $0.05 higher (+1.9%) at $2.71/MMBtu
- RBOB Gasoline closed $0.08 higher at $1.40/gallon
- Heating oil futures closed $0.08 higher at $1.59/gallon
Agriculture
- December corn closed $0.01 lower at $3.74/bushel
- December wheat closed $0.13 lower at $4.76/bushel
- November soybeans closed $0.07 higher to $8.85/bushel
- Sugar #11 closed $0.09 cents lower at 10.97 cents/lb
Metals
- December gold ended today’s session $21.10 higher (+1.9%) at $1133.60/oz
- September silver closed today’s session $0.12 higher (-0.8%) at $14.53/oz
- September copper closed $0.01 higher (+0.4%) at $2.34/lb
Currencies
Dollar and Swissy Rally
- The U.S. Dollar Index added 0.51% to 96.12 today after trading as low as 92.52 on Monday
- The economic data from the U.S. was mixed with Personal Income meeting the Briefing.com consensus at 0.4% m/m growth, while Personal Spending growth was only 0.3% in July, short of the Briefing.com consensus of 0.4%
- Many FOMC members spoke in Jackson Hole, Wyoming at the annual symposium run by the Kansas City Fed
- Stanley Fischer, the Vice Chair of the Fed, made market waves with some hawkish remarks
- EUR/USD: -0.52% to $1.1183
- Spain's Consumer Price Index fell 0.4% y/y in August, more than expected. Consumer prices increased by 0.1% in July
- Germany's Consumer Price Index was flat month-on-month in August. Forecasters had been looking for a decline and the CPI rose 0.2% in July
- GBP/USD: -0.13% to $1.5289
- In the U.K., GDP grew 0.7% q/q in the second quarter (and 2.6% y/y), as expected
- Business Investment jumped a better-than-expected 2.9% q/q in Q2 versus 2.0% growth in Q1
- USD/JPY: +0.18% to 121.34
- In Japan, Household Spending grew 0.6% m/m in July, much worse than expected but better than the -3.0% from June
- The National Core Consumer Price Index was flat y/y in July, better than expected but worse than the 0.1% rise in June
- Tokyo's Core CPI fell 0.1% in July, better than expected and the same decline as was seen in June
- Japanese Retail Sales grew a better-than-expected 1.6% y/y in July versus 0.9% growth in June
- USD/CHF: -0.34% to 0.9630
- Switzerland's GDP climbed 0.2% q/q in Q2 2015, better than estimates and the 0.2% decline from Q1
- USD/CAD: +0.18% to 1.3220
- Canada's Raw Materials Price Index fell 5.9% m/m in July, worse than expected and the change in June of +0.2%
- AUD/USD: -0.15% to $0.7163
- NZD/USD: -0.22% to $0.6464
Bonds
Yield Curve Flattens on Fischer Remarks
- U.S. government debt securities finished today's session mixed, as investors sold 2 and 5-year notes on higher expectations for a September or October rate hike. The Personal Income and Spending data was mixed, while the Treasury market is still trying to handicap the possibility of further sales by the Chinese government to finance its support for the yuan. WTI Crude completed its best two-day rally since 2011. The front-month contract gained 6.51% on the session to $45.33/bbl.
- Yield Check:
- 2-yr: +3 bps to 0.72%
- 5-yr: +2 bps to 1.52%
- 10-yr: unch at 2.18%
- 30-yr: -1 bp to 2.91%
- News:
- Personal Income grew 0.4% m/m in July, in line with the Briefing.com consensus and the reading from June
- Personal Spending grew 0.3%, short of the 0.4% Briefing.com consensus but the June number was revised up from 0.2% to 0.3%
- Core Personal Consumption Expenditure (PCE) Prices climbed 0.1%, in line with the prior reading and the Briefing.com consensus
- The University of Michigan Consumer Sentiment Index was revised down to 91.9 in the final July reading from a preliminary reading of 92.9. The index is down from 93.1 in June. The Briefing.com consensus was for an upward revision to 93.0
- The decline in Consumer Sentiment contradicted the spike in the Conference Board's Consumer Confidence Index, which jumped to 101.5 in August, a 6-month high
- The divergence was likely the result of recent equity market volatility adversely affecting Consumer Sentiment
- Stanley Fischer, the Vice Chair of the Fed and an FOMC voter, said that "there was a pretty strong case" for September liftoff
- Commodities:
- WTI Crude: +6.51% to $45.33/bbl.
- Gold: +1.02% to $1,134/troy oz.
- Copper: +0.62% to $2.343/lb.
- Currencies:
- EUR/USD: -0.52% to $1.1184
- USD/JPY: +0.20% to 121.36
- Data Out Next Week:
- Monday: August Chicago PMI (09:45 ET)
- Tuesday: August ISM Index (10:00 ET); July Construction Spending (10:00 ET); Boston Fed President Rosengren (FOMC non-voter) (13:10 ET); August Auto and Truck Sales (17:00 ET)
- Wednesday: MBA Mortgage Index for the week ended 8/29 (07:00 ET); August ADP Employment Change (08:15 ET); Q2 Productivity and Unit Labor Costs – Rev. (08:30 ET); July Factory Orders (10:00 ET); Crude Inventories for the week ended 8/29 (10:30 ET); September Fed Beige Book (14:00 ET)
- Thursday: August Challenger Job Cuts (07:30 ET); Initial Jobless Claims for the week ended 8/29 and Continuing Jobless Claims for the week ended 8/22 (08:30 ET); July Trade Balance (08:30 ET); August ISM Services (10:00 ET); Natural Gas Inventories for the week ended 8/29 (10:30 ET); Minneapolis Fed President Kocherlakota (non-FOMC voter) (21:00 ET)
- Friday: Richmond Fed President Lacker (FOMC voter) speaks on “The Case Against Further Delay” (08:10 ET); August Employment Situation Report (08:30 ET)
- Monday: August Chicago PMI (09:45 ET)
Treasury Yields:
- 2 Year Note 0.72% +0.04
- 5 Year Note 1.52% +0.03
- 10 Year Note 2.19% +0.01
- 30 Year Bond 2.92% -0.01
2/30 Spread: 220 bps ( -5 ) … 2/10 Spread: 147 bps ( -3 )
Preview for the week Monday 31 Aug to Friday 4 Sept, 2015
Economic Data
Monday (31 Aug) :
- Chicago PMI : 54.7 (Prior 54.7)
- ISM Index : 52.6 (Prior 52.7)
- Construction Spending : 0.6% (Prior 0.1%)
- Auto Sales : (Prior 5.8M)
- Truck Sales : (Prior 8.4M)
- MBA Mortgage Index : (Prior 0.2%)
- ADP Employment Change : 201K (Prior 185K)
- Productivity - Rev : 2.7% (Prior 1.3%)
- Unit Labor Costs - Rev : -0.8% (Prior 0.5%)
- Factory Orders : 0.9% (Prior 1.8%)
- Crude Inventories : (Prior -5.452M)
- Fed's Beige Book
- Challenger Job Cuts :
- Initial Claims : 273K (Prior 271K)
- Continuing Claims : 2261K (Prior 2269K)
- Trade Balance : -$43.1B (Prior -$43.8B)
- ISM Services : 58.4 (Prior 60.3)
- Natural Gas Inventories : (Prior 69 bcf)
- Nonfarm Payrolls : 217K (Prior 215K)
- Nonfarm Private Payrolls : 212K (Prior 210K)
- Unemployment Rate : 5.2% (Prior 5.3%)
- Hourly Earnings : 0.2% (Prior 0.2%)
- Average Workweek : 34.6 (Prior 34.6)
Earnings Highlights
Monday (31 Aug) :
BMO - None
AMC - ADEP BV MTRX
BMO - None
AMC - ADEP BV MTRX
Tuesday (1 Sept) :
BMO - DLTR DCI QIWI SAIC
AMC - AVAV AMBA BOBE EXA GWRE HRB PRGN QIHU SCVL
Wednesday (2 Sept) :
BMO - WMS DANG GIII ISLE LITB NAV VRA
AMC - ABM AGTC CTLT FIVE GLPW GLYC HGR NCS OOMA NXM SEAC STB VRNT
Thursday (3 Sept) :
BMO - CPB CIEN GCO GEF HOFT JOY LE MFRM MDT MEI XCRA
AMC - COO ESL BLOX MRVL UTIW PAY VNCE ZUMZ
Friday (4 Sept) :
BMO - VPG
AMC - None
Summary
This 2 weeks has been erratic. First we saw the market sell-off last week and then a bounce back this week from the bottom. Sort of like a V shape. However this is going to be a nice pullback if we continue to see the market heading lower. Right now the market is approaching a neutral level but I think we should see the market returns to the downside as the recovery was showing some slack.
Next week is loaded with some market movers economic data. I reckon market is still going to be volatile and maybe we might see another big move. Who knows?
Direction for Monday 31 Aug, 2015: Down
Direction for the week Monday 31 Aug to Friday 4 Sept, 2015: Down
2015 Daily Directional Accuracy: 86/137 (62.77%)
2015 Weekly Directional Accuracy: 19/32 (59.38%)
