Dow -120.72 at 17419.75, Nasdaq -83.50 at 5056.44, S&P -16.28 at 2083.56
There was some selling at the opening, found a support at recent low and market went on sideway in the second half session. Surely there is not much of bullishness on Thursday. I feel market was rather quiet ahead of the NFP announcement next day.
Crude oil continues to slide lower to $44.20 and we are very much closer to the 52-weeks low at $42.50.
Asia market remains mixed while we saw Europe was getting weaker as the markets closed in red. China seems to show some recovery but I am not putting too much focus to that. It remains a time-bomb in my opinion.
Market Summary
Industry Watch
Strong: Consumer Staples, Energy, Financials, Utilities
Weak: Consumer Discretionary, Health Care, Technology, Telecom Services
Other Market Moving Factor:
- S&P 500 slips below 50- and 100-day moving averages (2,098)
- Media names show considerable weakness for the second consecutive day
Equities opened just above their flat lines, but the S&P 500 dipped into the red and slid below its 100-day moving average (2,098) during the opening hour. Eight of ten sectors settled in the red with the consumer discretionary space (-1.3%) showing notable weakness for the second day in a row.
Specifically, media names weighed on discretionary shares once again with Viacom (VIAB 44.10, -7.31) tumbling 14.2% after reporting in-line results on light revenue. Similarly, Viacom's peer 21st Century Fox (FOXA 29.87, -2.05) sank 6.4% despite reporting a bottom-line beat while Disney (DIS 108.55, -1.98) lost 1.8% after plunging 9.2% yesterday.
The battered industry group was able to climb off its low ahead of the close, but losses in other influential areas kept the market pressured into the afternoon.
Elsewhere among cyclical sectors, technology (-1.0%) also settled behind the broader market amid notable weakness in high-beta chipmaker names. SunEdison (SUNE 17.08, -5.79) dove 25.3% after missing earnings estimates while the PHLX Semiconductor Index lost 1.8% with all but three components ending in the red.
In other earnings of note, Tesla (TSLA 246.13, -24.00) tumbled 8.9% after lowered delivery guidance overshadowed better than expected results for the past quarter. Tesla's loss contributed to the underperformance in the Nasdaq, but the index also had to contend with notable weakness in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 370.08, -16.64) slumped 4.3% while the broader health care sector (-2.1%) ended behind the remaining nine groups.
On the upside, energy (+1.6%) and utilities (+0.5%) settled in the green with the energy sector overcoming a 1.0% decline in crude oil, which settled at $44.66/bbl. As for utilities, the rate-sensitive sector benefited from lower rates as Treasuries ended on their highs with the 10-yr yield lower by five basis points at 2.22%.
Today's participation was ahead of recent averages with more than 930 million shares changing hands at the NYSE floor.
Economic data was limited to weekly Initial Claims, which increased to 270,000 from an unrevised 267,000 while the Briefing.com consensus expected a reading of 271,000. Since reaching a 40-year low (255,000) two weeks ago, the initial claims level has slowly inched back into the bottom of its previous 270,000 - 290,000 range. These are levels that support the theory that the labor market has returned to full employment.
Tomorrow, the Nonfarm Payrolls report for July (Briefing.com consensus 229K) will be released at 8:30 ET while June Consumer Credit (expected $17.00 billion) will be reported at 15:00 ET.
Global Market
Asian Markets Close: Japan’s Nikkei +0.2%; Hong Kong’s Hang Seng -0.6%; China’s Shanghai Composite -0.9%
With a few exceptions, markets in the Asia-Pacific region finished lower on Thursday. China’s Shanghai Composite (-0.9%) was the weakest among the closely-followed markets. The Nikkei (+0.2%) bucked the broader trend, but ended its session on a weak note.
Economic data
- Japan
- June Leading Index 107.2 (expected 106.9; prior 106.2); +1.2% month-over-month (prior +0.6%)
- Coincident Indicator +0.7%; prior -2.2%)
- Australia
- July Employment Change 38,500 (expected 10,000; prior 7,000)
- July Unemployment Rate 6.3% (expected 6.0%; prior 6.1%)
- July Participation Rate 65.1% (expected 64.8%; prior 64.8%)
Equity Markets
- Japan’s Nikkei increased 0.2%, but closed on a weak note, shedding 0.5% in the last 45 minutes of trading and finished on its low for the session. Modest gains were led by the consumer staples (+3.6%), materials (+2.1%), and industrials (+1.3%) sectors. The best-performing stocks were MEIJI Holdings (+17.0%), Toyobo Co (+7.6%), and Taiyo Yuden (+6.5%). Nippon Suisan Kaisha (-8.5%), Ebara Corp (-6.8%), and Credit Saison (-6.1%) were the weakest issues. Out of the 225 index members, 136 ended higher, 81 finished lower, and 8 were unchanged.
- Hong Kong’s Hang Seng declined 0.6% and closed near its lows for the day, tracking the action in the mainland market. Li & Fung (-4.2%), China Resources Power Holdings (-3.8%), and Power Assets Holdings (-3.3%) led a long list of laggards. MTR Corp (+1.7%), Belle International Holdings (+1.4%), and CK Hutchison Holdings (+1.0%) paced the winners. Out of the 50 index members, 11 ended higher, 36 finished lower, and 3 were unchanged.
- China’s Shanghai Composite opened on a weak note, staged a rebound effort, and then closed on a weak note, declining 0.9% for the session on a lack of any market-moving news. The CSI 300 Index also closed down 0.9%. · India’s Sensex increased 0.3% and closed near its best levels of the day thanks to an afternoon reversal. The industrials (+2.5%), health care (+1.4%, technology (+0.5%), and financials (+0.4%) sectors led the way. Larsen & Toubro (+2.9%), Dr Reddy’s Laboratories (+1.8%), and Tata Motors (+1.8%) topped the list of winners while ITC Ltd (-1.7%), Coal India (-1.6%), and Reliance Industries (-0.9%) brought up the rear. Out of the 30 index members, 17 ended higher and 13 finished lower.
- Australia’s S&P/ASX 200 had a tough session, dropping 1.1% in steady fashion and despite an encouraging employment report. A final hour bounce helped pare some of Thursday’s losses. Sectors leading the way lower included the financials (-1.7%), energy (-1.4%), and industrials (-1.3%) sectors. Out of the 200 index members, 55 ended higher, 132 finished lower, and 13 were unchanged.
- Regional advancers: Singapore +0.2%
- Regional decliners: South Korea -0.8%, Taiwan -1.1%, Malaysia -1.8%, Indonesia -0.9%, Thailand -0.7%, Vietnam -1.0%, Philippines -1.0%
FX
- USD/CNY unch at 6.2097
- USD/INR +0.03% at 63.7750
- USD/JPY -0.02% at 124.84
EUROPE
Major European indices trade near their flat lines with France’s CAC (+0.3%) showing relative strength. Elsewhere, the Bank of England made no changes to its policy stance, keeping its key interest rate and purchasing program unchanged at 0.5% and GBP375 billion, respectively. Despite the lack of changes to policy, one member now supports a rate hike after shifting from the ‘no change’ camp. Separately, the central bank cut its inflation outlook for this year to 0.3% from 0.6% that was expected in May. The pound has retreated 0.5% against the dollar to 1.5520.
- Eurozone Retail PMI 54.2 (prior 50.4)
- Germany’s June Factory Orders +2.0% month-over-month (expected 0.2%; prior -0.3%)
- UK’s July Halifax House Price Index -0.6% month-over-month (consensus 0.5%; prior 1.6%); +7.9% year-over-year (expected 8.2%; last 9.6%). Separately, June Industrial Production -0.4% month-over-month (expected 0.1%; prior 0.3%); +1.5% year-over-year (consensus 2.2%; prior 1.9%), and Manufacturing Production +0.2% month-over-month (expected 0.2%; previous -0.6%); +0.5% year-over-year (consensus 0.4%; last 1.0%)
Closing Prices
- UK’s FTSE: -0.1%
- Germany’s DAX: -0.4%
- France’s CAC: -0.1%
- Spain’s IBEX: -0.2%
- Portugal’s PSI: -2.3%
- Italy’s MIB Index: -0.4%
- Irish Ovrl Index: -1.3%
- Greece ASE General Index: + 3.7%
Macroeconomic Data
Economic Data
from Briefing.com
- Challenger Job Cuts : 125.4% (Prior 9.3%)
- Initial Claims : 270K vs 271K (Prior 267K)
- Continuing Claims : 2255K vs 2238K (Prior 2269K - Up)
- Natural Gas Inventories : 32 bcf (Prior 52 bcf)
UNEMPLOYMENT CLAIMS
Highlights
- The initial claims level increased to 270,000 for the week ending August 1 from an unrevised 267,000 for the week ending July 25. The Briefing.com Consensus expected the initial claims level to increase to 271,000.
- The continuing claims level decreased to 2.255 mln for the week ending July 25 from an upwardly revised 2.269 mln (from 2.262 mln) for the week ending July 18. The consensus expected the continuing claims level to fall to 2.238 mln.
Key Factors
- Since reaching a 40-year low (255,000) two weeks ago, the initial claims level has slowly inched back into the bottom of its previous 270,000 - 290,000 range. These are levels that support the theory that the labor market has returned to full employment.
Big Picture
- The initial claims level stays low after the historic drop during the week ending July 18.
Market Internals
NYSE:
Higher Volumes than the day before – 956.5M vs 913.1M
Decliners outpaced Advancers (adv/dec): 1243 / 1837
New Lows outpaced New Highs (highs/lows): 50 / 333
NASDAQ:
Higher Volumes than the day before – 2281.6M vs 2034.9M
Decliners outpaced Advancers (adv/dec): 836 / 2023
New Lows outpaced New Highs (highs/lows): 62 / 193
VOLATILITY S&P500 (VIX)
13.77 +1.26 (+10.07%)
Technical Updates
17,419.75 -120.72 (-0.69%)
Volume: 96,168,008 (above average of 92,570,694)
Range: 17,362.86 - 17,572.04
Range: 17,362.86 - 17,572.04
5,056.44 -83.51 (-1.62%)
Volume: 511.5M (above average of 430,034,455)
Volume: 511.5M (above average of 430,034,455)
Range: 5,035.41 - 5,035.41
2,083.56 -16.28 (-0.78%)
Volume: 611.7M (above average of 528,048,750)
Range: 2,075.53 - 2,103.32
DOW remains weak as it broke below its previous low and find a support at around 17,400. As the death cross (50MA cross below 200MA) is approaching, I reckon we might see more downside in the market. I think NASDAQ saw a reversal as it broke below both 20 and 50MAs and found a support on the channel. The head and shoulder pattern is somehow formed and if the neckline at around 5,010 does not hold, I think there is going to be more sell-off. S&P also broke below its 61.8% Fib support level and found a support on its ascending trend line while it is approaching the 200MA. So question is are we going to see a bearish market from here? Maybe NFP tomorrow will be a catalyst to the market.
Commodities
- Some commodities got a boost today as the dollar index slid off of morning lows
- However, not much helped give oil prices a boost today. Oil attempted a couple times to run, but it remained in the red in afternoon trading
- Sept crude oil ended the day -1% at $44.66/barrel
- In other energy, Sept nat gas rallied higher following the weekly EIA storage data this morning, which showed a smaller-than-expected build
- Sept NG closed pit trading +0.7% at $2.82/MMBtu
- Copper ended flat at $2.35/lb, while precious metals closed higher
- Dec gold rose +0.4% at $1090.20/oz, while Sept silver gained +0.8% at $14.68/oz.
Energy
- September crude oil futures fell $0.45 (-1%) to $44.66/barrel
- September natural gas closed $0.02 higher (+0.7%) at $2.82/MMBtu
- RBOB Gasoline closed $0.02 lower at $1.65/gallon
- Heating oil futures closed $0.01 higher at $1.55/gallon
Agriculture
- December corn closed $0.03 lower at $3.81/bushel
- September wheat closed $0.04 higher at $5.07/bushel
- November soybeans closed $0.11 lower to $9.43/bushel
- Sugar #11 closed $0.06 cents lower at 10.70 cents/lb
Metals
- December gold ended today’s session $4.60 higher (+0.4%) at $1090.20/oz
- September silver closed today’s session $0.12 higher (+0.8%) at $14.68/oz
- September copper closed flat at $2.35/lb
Currencies
- The Bank of England's Monetary Policy Committee voted 8-1 in favor of holding its main policy rate at 0.50%. The market had been expecting more dissenters in favor of a rate hike
- In the BoE's latest quarterly Inflation Report, the central bank said the inflation outlook was "muted"
- GBP/USD: -0.56% to $1.5515
- EUR/USD: +0.17% to $1.0922
- German Factory Orders handily beat expectations, climbing 2.0% m/m in June versus a 0.3% drop in May
- USD/JPY:-0.02% to 124.75
- While one might have expected the yen to be a safe haven on a down day for equities, that was clearly not the case
- In Japan, the Coincident Indicator of economic conditions rose 0.7% m/m in June versus a 2.2% decline in May
- The Leading Index rose to a better-than-expected 107.2 from 106.2 in June
- USD/CHF: +0.15% to 0.9807
- The SECO Consumer Climate Index fell to -19 in Q3 from the prior reading of -6, badly disappointing expectations
- USD/CAD: -0.46% to 1.3118
- AUD/USD: -0.18% to $0.7339
- The Australian economy added 38,500 jobs in July, much better than expected and more than the 7,000 jobs added in June. The unemployment rate jumped to 6.3% from 6.1% in the prior month
- NZD/USD: 0.37% to $0.6548
- The U.S. Dollar Index fell 0.13% to 97.83 as Treasury yields declined
Bonds
- U.S. equities were steadily offered today and the Treasury complex rallied in sympathy. The yield curve exhibited some flattening tendencies at times, but by the end of the day 2's/10's only narrowed 1 bp and 5's/30's was flat. The Employment Situation report for July will be released Friday morning
- Yield Check:
- 2-yr: -3 bps to to 0.70%
- 5-yr: -4 bps to 1.61%
- 10-yr: -4 bps to 2.23%
- 30-yr: -4 bps to 2.90%
- News:
- Initial Jobless Claims for the week ending August 1st were reported at 270K, just shy of the Briefing.com consensus of 271K. The prior week saw 267K initial unemployment claims
- Continuing Jobless Claims for the week ending July 25th were 2255K, somewhat higher than the Briefing.com consensus of 2238K but lower than the prior, upwardly-revised reading of 2269K
- U.S. layoffs jumped due to cutbacks in the military. The Challenger Job Cuts report showed that employers announced 105,696 job cuts in July, the highest number of job losses in almost four years
- The Dow Jones Industrial Average made a fresh six-month low at 17,363
- Commodities:
- WTI crude: -1.13% to $44.64/bbl.
- Gold: +0.39% to $1,098.80
- Copper: -0.21% to $2.3435/lb.
- Currencies:
- EUR/USD: +0.28% to $1.0934
- USD/JPY: -0.09% to 124.66
- Data out Friday:
- July Employment Situation Report (08:30 ET)
- June Consumer Credit (15:00 ET)
Treasury Yields:
- 2 Year Note 0.71% -0.02
- 5 Year Note 1.62% -0.03
- 10 Year Note 2.23% -0.05
- 30 Year Bond 2.90% -0.04
2/30 Spread: 219 bps ( -2 ) … 2/10 Spread: 152 bps ( -3 )
Preview for Friday 7 August, 2015
Economic Data
Friday (7 Aug) :
- Nonfarm Payrolls : 227K (Prior 223K)
- Nonfarm Private Payrolls : 223K (Prior 223K)
- Unemployment Rate : 5.3% (Prior 5.3%)
- Hourly Earnings : 0.2% (Prior 0.0%)
- Average Workweek : 34.5 (Prior 34.5)
- Consumer Credit : $17.0B (Prior $16.1B)
Earnings Highlights
Friday (7 Aug) :
BMO - BCRX NILE BR BAM CVC CST DRH EBIX ERF ESNT GRPN HRS HSY HRC HIMX HMSY HZNP ZINC JD LMIA LXU MGA MHR PMC DOC SSP SIRO BID SFUN SJI TU TTI WWAV WLH
AMC - BRK.B GST KRO SN
BMO - BCRX NILE BR BAM CVC CST DRH EBIX ERF ESNT GRPN HRS HSY HRC HIMX HMSY HZNP ZINC JD LMIA LXU MGA MHR PMC DOC SSP SIRO BID SFUN SJI TU TTI WWAV WLH
AMC - BRK.B GST KRO SN
Summary
Despite we have seen the market went down for the week, I don't think it is showing any significant bearishness yet. There seems to be some uncertainty ahead of the employment data.
Although technicals are suggesting more downside in the market but given tomorrow is a NFP announcement day, be ready to throw away the technicals and expect volatility in the market.
Despite we have seen the market went down for the week, I don't think it is showing any significant bearishness yet. There seems to be some uncertainty ahead of the employment data.
Although technicals are suggesting more downside in the market but given tomorrow is a NFP announcement day, be ready to throw away the technicals and expect volatility in the market.
Direction for Friday 7 Aug, 2015: Abstain
2015 Daily Directional Accuracy: 76/122 (62.30%)
2015 Weekly Directional Accuracy: 17/28 (60.71%)
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