Dow -530.94 at 16459.75, Nasdaq -171.45 at 4706.04, S&P -64.84 at 1970.89
Holy cow! Market felt exactly like a free fall. I was still assuming some short covering on Friday but the shit just got much worse. Maybe many have been waiting for this day to come and the selling keeps getting stronger. This is definitely one of the worst days we have not seen awhile.
On top of that, we were seeing all red throughout markets around the world. Last question, any bulls around here?
Market Summary
Industry Watch
Strong: Utilities
Weak: Consumer Discretionary, Energy, Financials, Industrials, Technology
Other Market Moving Factor:
- Global equities remain pressured: Shanghai Composite slides 4.3%, losing 11.2% for the week
- Options expiration expected to boost trading volume
[BRIEFING.COM] The stock market wrapped up a defensive week with a Friday plunge that sent the S&P 500 (-3.2%) lower by 65 points to levels not seen since late October. For the week, the S&P 500 lost 5.8% while the Nasdaq Composite underperformed, diving 3.5% today to extend its weekly decline to 6.8%.
Equities stumbled out of the gate as investor sentiment continued deteriorating after the overnight session included more selling in China with the Shanghai Composite falling 4.3% to extend its weekly decline to 11.2%. Continued concerns about the country's economy fueled today's dive after the preliminary Caixin Manufacturing PMI (47.1; consensus 47.7) dropped near 6.5-year lows while the output component dropped to 46.6, its lowest level in four years.
The selling pressure persisted through European trade and remained heavy during the New York session. The daylong retreat began with an opening dive that sent the S&P 500 lower by almost 20 points. The index followed that with an eight-point uptick, but that was met with a 30-point slide. Another rebound ensued, but the move was limited to 14 points, and followed by 17-point retreat. The index then strung a 12-point advance, but once again, that was retraced by a 35-point slide to a fresh low into the close.
All ten sectors registered losses with five groups losing 3.0% or more. Top-weighted sectors like technology (-3.8%), consumer discretionary (-3.2%), and health care (-3.0%) paced the daylong tumble while other heavily-weighted groups also contributed to the market-wide pressure.
The technology sector suffered from losses among large cap components with the likes of Apple (AAPL 106.05, -6.60), Google (GOOGL 644.03, -35.45), Facebook (FB 86.06, -4.50), Intel (INTC 26.58, -0.95), and Microsoft (MSFT 43.07, -2.59) diving between 3.5% and 5.9%. Unlike Intel, high-beta chipmakers held slimmer losses than the broader market during the day, but the PHLX Semiconductor Index ended lower by 2.7% due to heavy selling in the afternoon.
Elsewhere, the discretionary sector was broadsided by retailers while recent high-flyers like Amazon (AMZN 494.50, -21.28) and Netflix (NFLX 103.96, -8.53) lost 4.1% and 7.6%, respectively. The two listings contributed to the relative weakness in the Nasdaq while biotech names also retreated, but iShares Nasdaq Biotechnology ETF (IBB 339.84, -10.98) ended ahead of the Nasdaq with a 3.1% decline.
Also of note, the energy sector (-3.6%) finished near the bottom of the barrel as crude oil registered its eight consecutive weekly decline. The energy component fell 2.1%, settling at $40.45/bbl after briefly dipping below the $40.00/bbl mark. For the week, crude oil sank 6.2%.
The Friday drop caught many participants by surprise, evidenced by a daylong rally in the CBOE Volatility Index (VIX 28.17, +9.03), which rocketed higher by nine points to levels last seen in mid-October as investors showed relentless demand for downside protection.
Interestingly, the considerable weakness in equities was not met by significant strength in the Treasury market. To be sure, Treasuries did advance, but the 10-yr note notched its high well before the low in stocks. As a result, the benchmark 10-yr yield fell two basis points to 2.05%.
Today's participation was well above average as more than 1.3 billion shares changed hands at the NYSE floor. It is worth noting that the total was boosted in part by flows related to August options expiration.
Investors did not receive any economic data today and Monday's session will also be quiet on the economic front.
- Nasdaq Composite -0.6% YTD
- S&P 500 -4.3% YTD
- Russell 2000 -3.9% YTD
- Dow Jones Industrial Average -7.7% YTD
Week in Review: China Returns to Headlines
The stock market began the trading week on an upbeat, albeit quiet, note with the S&P 500 climbing 0.5%. The benchmark index turned an opening ten-point loss into an eleven-point gain while the Nasdaq Composite (+0.9%) displayed relative strength throughout the session. Equity indices faced some short-lived weakness at the start of the session after the August Empire Manufacturing survey came in well below expectations (-14.9; Briefing.com consensus 5.0). The report was met with a rally in the Treasury market while equity futures slipped, leading to the lower open. Despite the early pressure, the major averages were back in the green just 90 minutes after the opening bell and they continued inching higher during afternoon action. The health care sector (+1.0%) was among the early pockets of relative strength as biotechnology rallied throughout the day. The iShares Nasdaq Biotechnology ETF (IBB 371.67, +7.61) climbed 2.1%, contributing to the outperformance of the Nasdaq.
After enjoying a broad-based spike on Monday, the market surrendered more than half of that gain on Tuesday. The S&P 500 lost 0.3%, narrowing its weekly advance to 0.3%, while the Nasdaq Composite (-0.6%) underperformed. Although the Tuesday session produced a different outcome than Monday's affair, investor participation remained below-average with fewer than 700 million shares changing hands at the NYSE floor. Equities began the day with modest losses after the overnight session featured a resumption of heavy selling in China that sent the Shanghai Composite lower by 6.2%. There was no clear-cut reason for the plunge, but some pointed to a better than feared Housing Starts report, which could keep the People's Bank of China from implementing additional stimulus measures. The overnight weakness was followed by a shaky session in Europe while U.S. indices made a brief appearance in the green before revisiting their morning lows. The S&P 500 slid below its 100-day moving average (2,098) during midday action and hit its session low just a point below the 50-day average (2,095) before settling just above that level.
The stock market ended the Wednesday session on a lower note after enduring a volatile day that included opening weakness, an afternoon rebound, and a slide from rebound highs. When the dust settled, the S&P 500 ended lower by 0.8%, turning a slim weekly gain into a 0.6% week-to-date loss. Stocks stumbled at the start after the overnight session featured more uninspiring action in China. Specifically, the Shanghai Composite climbed 1.2%, but not before being down more than 5.0% in the early going. The wild turnaround was followed by a retreat across European markets while U.S. equities opened in the red and continued their slide with the energy sector (-2.8%) pacing the move. The growth-sensitive group extended its weekly loss to 3.2% while crude oil fell to a new low for the year, ending the pit session lower by 4.3% at $40.80/bbl. Similarly, the other commodity-related sector—materials (-1.2%)—ended at the bottom of the leaderboard amid weakness in steelmakers. The Market Vectors Steel ETF (SLX 25.63, -0.75) lost 2.8%. That being said, mining shares represented a pocket of strength, evidenced by a 2.9% spike in Market Vectors Gold Miners ETF (GDX 15.20, +0.43). On a related note, gold futures climbed 1.2% to $1130.70/ozt. The early selling pressured the S&P 500 below its 200-day moving average (2,078), but the benchmark index crawled back above that mark during afternoon action and charged to an intraday high after the minutes from the July FOMC meeting crossed the wires about 20 minutes ahead of the scheduled release time. Overall, the minutes appeared to be quite dovish with members "generally agreeing" that more information is needed before hiking rates. Furthermore, most members believed that "conditions for policy firming had not yet been achieved," but they agreed that conditions were nearing that point.
The market registered its third consecutive decline on Thursday with the S&P 500 (-2.1%) slashing below its 200-day moving average (2,078). The benchmark index slid to levels not seen since early February while the Nasdaq Composite (-2.8%) displayed relative weakness throughout the day. The daylong selloff was brought on by a heightened sense of uncertainty among investors, pulling the S&P 500 into the red for 2015 (-1.1%). To be sure, some of the uncertainty (rate-hike speculation, concerns about the global economy, plunging commodity prices) had been brewing for a while, whereas today's session reminded investors about ongoing concerns related to China and Greece. Overnight, China's Shanghai Composite tumbled 3.4% amid reports the country's official GDP target could be lowered to 6.5% from 7.0%. Sellers maintained control despite a CNY120 billion injection from the People's Bank of China into capital markets. As for Greece, Prime Minister Alexis Tsipras resigned from his post and called for a snap election, set for September 20, just three days after the FOMC concludes its September meeting. It is worth noting that there are indications Greece's minority parties could try to form a coalition government, which would block the September 20 vote.
Global Market
Asian Markets Close: Japan’s Nikkei -3.0%; Hong Kong’s Hang Seng -1.5%; China’s Shanghai Composite -4.3%
Markets in the Asia-Pacific region followed Wall Street’s lead and ended sharply lower on Friday. Selling interest was fueled by economic growth concerns that were compounded by a weaker than expected preliminary manufacturing PMI report out of China. China’s Shanghai Composite led the broad-based retreat with a 4.3% decline that left it down more than 11% for the week.
Economic Data
- China
- August Caixin Preliminary Manufacturing PMI 47.1 (expected 47.7; prior 47.8)
- Japan
- August Preliminary Manufacturing PMI 51.9 (expected 52.1; prior 51.2)
Equity Markets
- Japan’s Nikkei slumped 3.0% and ended at its lows for the day. It was hurt by weakness in exporters, which fell as the yen strengthened, and plagued by a particularly weak showing from the financial (-4.6%), technology (-3.4%), and consumer discretionary (-3.3%) sectors. Alps Electric (-7.1%), Unitika (-6.9%), and Fujikura (-6.7%) topped a very long list of losers. In fact, only one of the 225 index members — Hokuetsu Kishu Paper Co (+1.0%) — ended the day higher. For the week, the Nikkei declined 5.3%.
- Hong Kong’s Hang Seng declined 1.5%, feeling the drag of weakness in the mainland market and concerns about growth in the region. Galaxy Entertainment Group (-4.4%), China Resources Power Holdings (-3.8%), and Cheung Kong Property Holdings (-3.6%) were the worst-performing issues. Henderson Land Development (+5.5%), China Unicom Hong Kong (+3.2%), and Li & Fung (+2.7%) topped a short list of winners. Out of the 50 index members, 6 ended higher, 43 finished lower, and 1 was unchanged. For the week, the Hang Seng declined 6.6%.
- China’s Shanghai Composite fell 4.3%, closing out a tough week on a tough note. The selling on Friday followed a weaker than expected reading from the preliminary Caixin Manufacturing PMI for August. The latter dipped to 47.1 from 47.8, which is its lowest level in more than six years and a reflection of a manufacturing sector in contraction. For the week, the Shanghai Composite plunged 11.2%.
- India’s Sensex declined 0.9%, pulled lower by weakness in the industrials (-2.3%), consumer discretionary (-2.2%), and materials (-1.7%) sectors. Vedanta (-4.1%), Bajaj Auto (-3.4%), and Tata Motors (-2.9%) were the weakest links. Hindustan Unilever (+1.4%), Infosys (+1.4%), and Cipla Ltd (+0.8%) topped the list of winners. Out of the 30 index members, 7 ended higher and 23 finished lower. For the week, the Sensex declined 2.5%.
- Australia’s S&P/ASX 200 declined 1.4%, weighed down primarily by weakness in the financial (-2.0%), REIT (-1.9%), and Health Care (-1.8%) sectors. The S&P/ASX 200 is at its lowest level since December. Out of the 200 index members, 49 ended higher, 135 finished lower, and 16 were unchanged. For the week, the S&P/ASX 200 declined 2.7%.
- Regional advancers: None
- Regional decliners: South Korea -2.0%, Taiwan -3.0%, Malaysia -0.2%, Indonesia -2.4%, Singapore -1.3%, Thailand -0.4%, Vietnam -1.8% Closed for holiday: Philippines (Ninoy Aquino Day)
FX
- USD/CNY unch at 6.3889
- USD/INR +0.4% at 65.8325
- USD/JPY -0.6% at 122.70
EUROPE
Major European indices trade lower across the board with Germany’s DAX, UK’s FTSE, and France’s CAC all down near 1.4%. Meanwhile, the euro has climbed to a two-month high against the dollar with the pair testing the 1.1300 level.
- Eurozone preliminary August Manufacturing PMI 52.4 (expected 52.2; prior 52.4) while preliminary August Services PMI 54.3 (expected 54.0; last 54.0)
- Germany’s preliminary August Manufacturing PMI 53.2 (expected 51.7; last 51.8) while preliminary August Services PMI 53.6 (consensus 53.9; prior 53.8). Separately, September GfK Consumer Climate slipped to 9.9 from 10.1 (expected 10.1)
- UK’s July Public Sector Net Borrowing –GBP2.07 billion (expected –GBP2.40 billion; prior GBP8.64 billion)
- France’s preliminary August Manufacturing PMI 48.6 (consensus 49.7; prior 49.6) while preliminary August Services PMI 51.8 (consensus 52.0; last 52.0)
Closing Prices
- UK’s FTSE: -2.8%
- Germany’s DAX: -3.0%
- France’s CAC: -3.2%
- Spain’s IBEX: -2.8%
- Portugal’s PSI: -2.7%
- Italy’s MIB Index: -2.8%
- Irish Ovrl Index: -3.1%
- Greece ASE General Index: -2.5%
Macroeconomic Data
Economic Data
from Briefing.com
- No Economic Data
Market Internals
NYSE:
Higher Volumes than the day before – 1337.8M vs 927.4M
Decliners outpaced Advancers (adv/dec): 446 / 2679
New Lows outpaced New Highs (highs/lows): 0 / 611
NASDAQ:
Higher Volumes than the day before – 2735.7M vs 2069.7M
Decliners outpaced Advancers (adv/dec): 836 / 2024
New Lows outpaced New Highs (highs/lows): 13 / 342
VOLATILITY S&P500 (VIX)
28.03 +8.89 (+46.45%)
Technical Updates
16,459.75 -530.94 (-3.12%)
Volume: 225,172,151 (above average of 95,880,272)
Range: 16,459.55 - 16,990.69
Range: 16,459.55 - 16,990.69
4,706.04 -171.45 (-3.52%)
Volume: 716,256,607 (above average of 437,615,711)
Volume: 716,256,607 (above average of 437,615,711)
Range: 4,706.04 - 4,856.75
1,970.89 -64.84 (-3.19%)
Volume: 1,064,386,000 (above average of 545,713,292)
Range: 1,970.89 - 2,034.08
All 3 indices broke down big time. DOW continued to break below the support at around 17,000. NASDAQ also went under both its 200MA and support at 4820 area. Likewise for S&P, it also broke below 2 support levels at 2,040 and 1,990 area. Looking at the increase in daily range, it looks like the indices would break much lower than expected in the short-term.
Commodities
- Oil was on the move again.WTI crude oil futures (continuous) briefly fell below $40/barrel for the first time since March 2009.
- Oil began to rally some into the close of floor trade and by the end of today’s session, October crude oil futures fell $0.82 (-2%) to $40.44/barrel
- Overall, the dollar index has been trading lower all day, which has helped select commodities
- At the same time, broader markets (S&P 500, Nasdaq and Dow) are all near today’s lows
- Gold held some gains into the close on the dollar weakness, ending +0.6% at $1159.70/oz. However, Sept silver fell 1.4% to $15.30/oz
- Copper closed -0.4% at $2.31/lb
Energy
- October crude oil futures fell $0.82 (-2%) to $40.44/barrel
- September natural gas closed $0.07 lower (-2.5%) at $2.68/MMBtu
- RBOB Gasoline closed $0.01 higher at $1.54/gallon
- Heating oil futures closed $0.04 lower at $1.47/gallon
Agriculture
- December corn closed $0.06 lower at $3.77/bushel
- December wheat closed $0.06 lower at $5.04/bushel
- November soybeans closed $0.16 lower to $8.90/bushel
- Sugar #11 closed $0.18 cents lower at 10.44 cents/lb
Metals
- December gold ended today’s session $6.40 higher (+0.6%) at $1159.70/oz
- September silver closed today’s session $0.22 lower (-1.4%) at $15.30/oz
- September copper closed $0.01 lower (-0.4%) at $2.31/lb
Currencies
Greenback and Loonie Decline
- The Intercontinental Exchange's U.S. Dollar Index fell 1.01% to 95.03 as short EUR/USD carry trades continued to unwind in the face of market volatility
- The Markit preliminary Manufacturing PMI fell to 52.9 in August from 53.9 in July. The market's expectation was for 54
- EUR/USD: +1.01% to $1.1354
- The eurozone's Markit Composite PMI unexpectedly jumped to 54.1 in August from 53.9 in July. Readings above 50 indicate expansion
- Germany's GfK Consumer Climate index fell to a worse-than-expected 9.9 in September from 10.1 in August?
- 25 left-wing members of Syriza left to form their own party, Popular Unity, which will now be the third-largest party in the Greek parliament?
- GBP/USD: +0.07% to $1.5701
- Public Sector Net Borrowing fell to -2.07 bln pounds in July from +8.64 bln in June
- USD/JPY: -0.95% to 122.25
- Japan's Manufacturing PMI climbed to 51.9 in August from 51.2 in July. Expectations were for a larger jump
- USD/CHF: -0.96% to 0.9495
- USD/CAD: +0.57% to 1.3163
- Canada's Core CPI was unchanged m/m in July, in line with expectations and the prior reading
- Core Retail Sales rose a better-than-expected 0.8% m/m in June, the same as in May
- AUD/USD: -0.08% to $0.7330
- NZD/USD: +0.97% to $0.6676
Bonds
Yields Drop on Risk Aversion
- Treasuries rallied today in a curve-steepening trade after global stock indices made multi-month lows. There were no scheduled market-moving events except for St. Louis Fed President Bullard's interview, which did not provide much succor for equity bulls. He said that he doesn't react directly to equity markets
- Yield Check:
- 2-yr: -4 bps to 0.62%
- 5-yr: -4 bps to 1.43%
- 10-yr: -2 bps to 2.05%
- 30-yr: -2 bps to 2.74%
- News:
- Overnight, China's Caixin Manufacturing PMI disappointed market expectations, falling to 47.1 in August from 47.8 in July. That was the sixth straight month of sub-50 readings, which indicate contraction in the manufacturing sector
- U.S. equities took their worst losses at least since the Ebola crisis of October 2014. The S&P 500 is down 2.7% to 1,981, the Nasdaq 100 is down 3.67% to 4,224.1168, and the Dow Jones Industrial Average is down 2.65% to 16,540.93
- St. Louis Fed President Bullard (hawk and non-voter) said today that he's more "sanguine" on the global outlook than markets are
- In an interview on XM Radio, he said that he's still looking for 2.5-3.0% GDP growth for Q3
- Bullard said that unemployment will fall to 4-4.5% over the next two years
- He thinks that Fed funds will eventually get to 3.25%
- He said the Fed hasn't raised rates in 10 years, so traders don't know how to handle rate hikes and that's why markets are wrong
- Commodities:
- WTI crude: -2.54% to $40.27/bbl.
- Gold: +0.49% to 1,158.80/troy oz.
- Copper: -0.86% to 2.2995/lb.
- Currencies:
- EUR/USD: +1.05% to $1.1357
- USD/JPY: -0.98% to 122.22
- Week Ahead:
- Monday: Atlanta Fed President Lockhart speaks on “Pensions and Economy” (15:55 ET)
- Tuesday: June Case-Shiller 20-City Index (09:00 ET); June FHFA Housing Price Index (09:00 ET); July New Home Sales (10:00 ET); August Consumer Confidence (10:00 ET); $26 bln 2-year note auction (13:00 ET)
- Wednesday: Mortgage Index for the week ended 8/22 (07:00 ET); July Durable Goods Orders and Durable Goods ex-transportation (08:30 ET); Crude Inventories for the week ended 8/22 (10:30 ET); $35 bln 5-year note auction (13:00 ET)
- Thursday: Initial Jobless Claims for the week ended 8/22 and Continuing Jobless Claims for the week ended 8/15 (08:30 ET); Q2 GDP and GDP Deflator – Second Estimate (08:30 ET); July Pending Home Sales (10:00 ET); Natural Gas Inventories for the week ended 8/22 (10:30 ET); $29 bln 7-year note auction
- Friday: July Personal Income, Personal Spending, and PCE Prices – Core (08:30 ET); August Michigan Sentiment – Final (10:00 ET)
Treasury Yields:
- 2 Year Note 0.64% -0.05
- 5 Year Note 1.44% -0.06
- 10 Year Note 2.05% -0.04
- 30 Year Bond 2.74% -0.02
2/30 Spread: 210 bps ( +3 ) … 2/10 Spread: 141 bps ( +1 )
Preview for the week Monday 24 August to Friday 28 August, 2015
Economic Data
Monday (24 Aug) :
- No Economic Data
- Case-Shiller 20-city Index : 5.0% (Prior 4.9%)
- FHFA Housing Price Index : (Prior 0.4%)
- New Home Sales : 507K (Prior 482K)
- Consumer Confidence : 92.6 (Prior 90.9)
- MBA Mortgage Index : (Prior 3.6%)
- Durable Orders : -0.8% (Prior 3.4%)
- Durable Goods - ex transportation : 0.5% (Prior 0.8%)
- Crude Inventories : (Prior 2.620M)
- Initial Claims : 272K (Prior )
- Continuing Claims : 2239K (Prior )
- GDP - Second Estimate : 3.1% (Prior 2.3%)
- GDP Deflator - Second Estimate : 2.0% (Prior 2.0%)
- Pending Home Sales : 1.0% (Prior -1.8%)
- Natural Gas Inventories : (Prior 53 bcf)
- Personal Income : 0.3% (Prior 0.4%)
- Personal Spending : 0.4% (Prior 0.2%)
- PCE Prices - Core : 0.1% (Prior 0.1%)
- Michigan Sentiment - Final : 93.0 (Prior 92.9)
Earnings Highlights
Monday (24 Aug) :
BMO - SKYS TOUR
AMC - PINC QUNR
BMO - SKYS TOUR
AMC - PINC QUNR
Tuesday (25 Aug) :
BMO - BMO BBY DAKT DSW EJ LEJU SOL SAFM SXI PLCE TOL VAL VPG
AMC - DY GSM HEI JKHY LCI NMBL SLH ZPIN
Wednesday (26 Aug) :
BMO - ANF WMS BF.B CHS DANG EVLV EXPR OLLI RY
AMC - VNET AGTC ARCW AVGO GES NQ OOMA PSEC PVH STB TLYS WSM WDAY
Thursday (27 Aug) :
BMO - FLWS BURL DXLG DG IKGH ISLE SJM MIK MOV PLL PDCO SDRL SIG TIF TD YGE
AMC - ARO ANFI ADSK BEBE CAL GME MRVL MCFT OVTI QADA SWHC SPLK SPWH ULTA VEEV VMEM ZOES
Friday (28 Aug) :
BMO - BIG RGS BNS
AMC - None
Summary
We are technically in a bearish market but things might not be that bad. Yield curve is not really inverted which indicates what we are seeing now is more of a correction in the market. Huge correction I would say. But that doesn't stop the market from more selling. Reason being there are still many weaknesses persist in the global market - China factor, bearish oil prices, fed rate hike etc.
Looking so, I reckon market is going to stay low for the short-term. As the volatility in the market has taken a sharp rise lately, it would be recommended to reduce position sizing.
There is no economic data on Monday except a speech by FOMC member Lockhart. That is likely to influence the market movement
At this point of time in writing, Asia markets were close in red. And Europe isn't doing any where better. /ES and $SPY has already saw some downside to somewhat start the week.
We are technically in a bearish market but things might not be that bad. Yield curve is not really inverted which indicates what we are seeing now is more of a correction in the market. Huge correction I would say. But that doesn't stop the market from more selling. Reason being there are still many weaknesses persist in the global market - China factor, bearish oil prices, fed rate hike etc.
Looking so, I reckon market is going to stay low for the short-term. As the volatility in the market has taken a sharp rise lately, it would be recommended to reduce position sizing.
There is no economic data on Monday except a speech by FOMC member Lockhart. That is likely to influence the market movement
At this point of time in writing, Asia markets were close in red. And Europe isn't doing any where better. /ES and $SPY has already saw some downside to somewhat start the week.
Direction for Monday 24 Aug, 2015: Down
Direction for the week Monday 24 Aug to Friday 28 Aug, 2015: Down
Direction for the week Monday 24 Aug to Friday 28 Aug, 2015: Down
2015 Daily Directional Accuracy: 83/132 (62.88%)
2015 Weekly Directional Accuracy: 19/31 (61.29%)
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