Dow +14.57 at 17230.54, Nasdaq +18.78 at 4905.47, S&P +0.55 at 2033.65
Market barely managed to get positive on Monday. Both DOW and S&P were down for almost the full session but there were still some buying in the market. However it seems the bulls are losing their steams.
Meanwhile, Europe and Asia markets were also showing a mixed performance.
Market Summary
Industry Watch
Strong: Consumer Discretionary, Consumer Staples, Technology
Weak: Energy, Materials, Telecom Services, Utilities
Other Market Moving Factor:
- China's Q3 GDP beats estimates (6.9% year-over-year; consensus 6.8%), but slows from prior growth rate of 7.0% YoY
[BRIEFING.COM] The stock market began the trading week on a quiet note with the major averages spending the Monday session inside narrow ranges. The S&P 500 settled just above its flat line after climbing off its opening low while the Nasdaq Composite (+0.4%) outperformed.
In some ways, the range-bound action was a bit of a surprise considering investors received China's Q3 GDP report over the weekend. The growth report proved to be a mixed bag as GDP beat estimates (+6.9%; consensus 6.8%), but dipped below the official target growth rate of 7.0% year-over-year.
Asian markets took the data in stride with China's Shanghai Composite and Hong Kong's Hang Seng both ending flat; however, the slowdown in the year-over-year growth rate weighed on commodities, sending crude oil lower by 3.0% to $45.90/bbl.
The sell-off in crude oil futures pressured the energy sector (-2.0%) while a major sector component—Halliburton (HAL 37.36, -0.45)—lost 1.2% in reaction to better than expected earnings on below-consensus revenue.
Similar to energy, the materials sector (-0.8%) ended well behind the broader market while the remaining sectors fared better. The top-weighted technology sector (+0.3%) eked out a modest gain while another influential group—financials (unch)—ended just below its flat line despite a 4.8% dive in the shares of Morgan Stanley (MS 32.32, -1.63) brought on by a disappointing earnings report.
Elsewhere among cyclical sectors, the discretionary space (+0.5%) outperformed throughout the day thanks to strength in retail names. Also in the discretionary sector, Weight Watchers (WTW 13.92, +7.13) soared 105.0% after announcing Oprah Winfrey will purchase newly-issued shares representing 10.0% of all shares outstanding.
Moving to the countercyclical side, the health care sector (+0.3%) settled among the leaders after enduring a volatile session that mirrored the price action in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 315.94, +1.62) was up more than 2.0% at the start, but surrendered that gain after presidential candidate Hillary Clinton sent a letter to the Food and Drug Administration and the Federal Trade Commission, requesting an inquiry into drug pricing. The biotech ETF returned into the green by the closing bell, ending higher by 0.5%.
Similar to stocks, Treasuries maintained narrow ranges throughout the day with the 10-yr yield ending flat at 2.03%.
Today's participation was a bit below average as just over 800 million shares changed hands at the NYSE floor.
Economic data was limited to the NAHB Housing Market Index for October, which rose to 64 from a downwardly revised 61 (from 62) while the Briefing.com consensus expected the reading to come in at 62. Tomorrow's economic data will be limited to September Housing Starts (Briefing.com consensus 1.15 million) and Building Permits (consensus 1.17 million) with both data points set to cross at 8:30 ET.
Global Market
ASIA
Traders found themselves preoccupied Monday with a batch of economic data out of China, which featured a better than expected Q3 GDP report. September retail sales were also better than expected, yet September industrial production and fixed asset investment were weaker than expected. The mixed data set the tone for a relatively mixed day of trading action, which saw the major indices restricted to gains or losses that didn’t exceed 1.0%. China’s Shanghai Composite dipped 0.1% while Japan’s Nikkei declined 0.9% after Finance Minister Aso reportedly downplayed the need for more policy stimulus at this time.
Economic data
- China
- Q3 GDP +1.8% quarter-over-quarter (expected +1.7%; prior +1.7%); +6.9% year-over-year (expected +6.8%; prior +7.0%)
- September Industrial Production +5.7% year-over-year (expected +6.0%; prior +6.1%)
- September Fixed Asset Investment +10.3% year-over-year (expected +10.8%; prior +10.9%)
- September Retail Sales +10.9% year-over-year (expected +10.8%; prior +10.8%)
- New Zealand
- Q3 Labor Cost Index +0.5% quarter-over-quarter (expected +0.5%; prior +0.5%)
Equity Markets
- Japan’s Nikkei declined 0.9% and ended near its lows for the day on stepped-up selling pressure in the afternoon trade. The weakest links were the materials (-1.8%), industrials (-1.7%), and financials (-1.3%) sectors. Asahi Kasei Corp (-8.5%), Sumco Corp (-5.8%), and NSK Ltd (-4.7%) were the worst-performing stocks. Nippon Soda (+14.3%), Shiseido (+3.5%), and Tokyo Electric Power (+3.4%) topped the list of winners. Out of the 225 index members, 51 ended higher, 170 finished lower, and 4 were unchanged.
- Hong Kong’s Hang Seng edged up 0.04%, eking out a fractional gain thanks to a burst of buying interest over the final two hours. That late push mirrored a similar move in the mainland market. China Merchants Holdings International (+3.0%), China Resources Power Holdings (+2.1%), and China Mobile (+1.9%) were the best-performing issues while Sands China (-6.4%), Galaxy Entertainment (-5.0%), and Swire Pacific (-2.8%) brought up the rear. Out of the 50 index members, 23 ended higher, 23 finished lower, and 4 were unchanged.
- China’s Shanghai Composite declined 0.1% after being down 1.0% with less than an hour to go in the trading session. A late burst of buying interest helped limit the damage, which saw the Composite drop 2.0% from its intraday high to its intraday low. The aforementioned high came in the morning session as traders digested China’s better than expected Q3 GDP report and other data points.
- India’s Sensex increased 0.6% and ended near its high for the day. Gains were paced by the energy (+2.7%), health care (+1.3%), technology (+1.0%), and consumer staples (+1.0%) sectors. Reliance Industries (+5.5%), Bharti Airtel (+3.9%), and Infosys (+1.8%) were the biggest gainers while Oil & Natural Gas Co (-2.5%), Tata Steel (-2.0%), and Tata Motors (-1.9%) were the biggest laggards. Out of the 30 index members, 18 ended higher and 12 finished lower.
- Australia’s S&P/ASX 200 sported an early 0.5% gain but faded as the session progressed and ended up just 0.03%. The financials (+0.7%), energy (+0.5%), and consumer staples (+0.2%) were the main sources of support for the market. Out of the 200 index members, 79 ended higher, 102 finished lower, and 19 were unchanged.
- Regional advancers: South Korea unch, Taiwan +0.3%, Malaysia +0.1%, Indonesia +1.1%, Vietnam +0.3%
- Regional decliners: Singapore -0.2%, Thailand -0.3%, Philippines -0.01%
FX
- USD/CNY +0.1% at 6.3604
- USD/INR -0.05% at 64.7838
- USD/JPY +0.01% at 119.45
EUROPE
Major European indices trade in mixed fashion after sliding from their early highs. It is worth noting that European Central Bank member Ewald Nowotny said that fiscal policy in the eurozone may need to shift to expansive from neutral.
- Investors did not receive any economic data of note
Closing Prices
- UK’s FTSE: -0.4%
- Germany’s DAX: + 0.6%
- France’s CAC: + 0.0%
- Spain’s IBEX: -0.2%
- Portugal’s PSI: + 0.1%
- Italy’s MIB Index: + 0.4%
- Irish Ovrl Index: + 0.2%
- Greece ASE General Index: -0.1%
Macroeconomic Data
Economic Data
from Briefing.com
- NAHB Housing Market Index : 64 vs 62 (Prior 62)
Market Internals
NYSE:
Lower Volumes than the day before – 826.0M vs 960.3M
Decliners outpaced Advancers (adv/dec): 1432 / 1662
New Highs outpaced New Lows (highs/lows): 62 / 23
NASDAQ:
Lower Volumes than the day before – 1610.1M vs 1843.8M
Advancers outpaced Decliners (adv/dec): 1416 / 1403
New Highs outpaced New Lows (highs/lows): 50 / 38
VOLATILITY S&P500 (VIX)
14.98 -0.07 (-0.47%)
Technical Updates
Volume: 118,433,685 (above average of 115,456,723)
Range: 17,129.19 - 17,235.95
Range: 17,129.19 - 17,235.95
4,905.47 +18.78 (+0.38%)
Volume: 380,425,611 (below average of 477,280,005)
Volume: 380,425,611 (below average of 477,280,005)
Range: 4,865.83 - 4,915.49
2,033.66 +0.55 (+0.03%)
Volume: 600,551,000 (below average of 645,984,143)
Range: 2,022.31 - 2,034.45
I would say that the candlesticks are still showing some potential for upside in the market. DOW sits on its support at 17,140 and it is a crucial support for the index. NASDAQ went to test its 200MA but was rejected and close around the resistance at 4,900. A break above the 200MA will certainly bring more bullishness to the market. S&P is also sitting on its support at 2,020 while looking to approach its resistance at 2,040 and followed by the 200MA. I think a consolidation is more likely before market push for another rally.
Commodities
- The dollar index continued to trade higher today, which helped weigh on commodities today
- Commodities, as measured by the Bloomberg Commodity Index, fell 1.4% today
- Nov WTI crude oil futures slid lower today and was in the red all day
- Nov crude ended today’s session -3% at $45.90/barrel
- Nov natural gas closed +0.4% at $2.44/MMBtu
- Metals got hit today too
- Dec gold ended floor trading -0.9% at $1172.70/oz, while Dec silver closed -1.6% at $15.84/oz
- Dec copper finished -1.7% at $2.36/lb
Energy Closing Prices
- November crude oil futures fell $1.41 (-3%) to $45.90/barrel
- November natural gas closed $0.01 higher (+0.4%) at $2.44/MMBtu
- RBOB Gasoline closed $0.05 lower at $1.26/gallon
- Heating oil futures closed $0.05 lower at $1.45/gallon
Agriculture Closing Prices
- December corn closed $0.04 lower at $3.73/bushel
- December wheat closed $0.07 lower at $4.87/bushel
- November soybeans closed $0.09 lower at $8.91/bushel
- Sugar #11 closed $0.01 cents lower at 14.26 cents/lb
Metals Closing Prices
- December gold ended today’s session $10.50 lower (-0.9%) at $1172.70/oz
- December silver closed today’s session $0.26 lower (-1.6%) at $15.84/oz
- December copper closed $0.04 lower (-1.7%) at $2.36/lb
Currencies
Greenback Gains
- U.S. Dollar Index: +0.42% to 94.93
- Home-builder confidence in the U.S. touched a 10-year high in October according the NAHB housing market index. The index registered a reading of 64, up from a downwardly-revised 61 in September. The Briefing.com consensus was 62
- The sub-index for sales expectations jumped to 75 in October from 68. Current conditions rose to 70 from 67
- Home-builder confidence in the U.S. touched a 10-year high in October according the NAHB housing market index. The index registered a reading of 64, up from a downwardly-revised 61 in September. The Briefing.com consensus was 62
- EUR/USD: -0.19% to $1.1325
- The European Central Bank will meet on Thursday and announce its interest rate decision accompanied by ECB President Mario Draghi's press conference. Traders and investors are trying to handicap the odds for an expansion of the central bank's current EUR 60 bln/month asset purchase program. Most are seeing the odds as below 50/50. There is also some speculation of reducing the deposit rate from -20 bps, which would allow the purchase of more government bonds. The current rules prohibit the asset purchase program from buying debt with yields below the deposit rate
- The European Central Bank will meet on Thursday and announce its interest rate decision accompanied by ECB President Mario Draghi's press conference. Traders and investors are trying to handicap the odds for an expansion of the central bank's current EUR 60 bln/month asset purchase program. Most are seeing the odds as below 50/50. There is also some speculation of reducing the deposit rate from -20 bps, which would allow the purchase of more government bonds. The current rules prohibit the asset purchase program from buying debt with yields below the deposit rate
- GBP/USD: +0.14% to $1.5468
- The Rightmove House Price Index rose 0.6% m/m in October, slowing from 0.9% growth in September
- USD/CHF: +0.22% to 0.9560
- USD/JPY: unch at 119.43
- USD/CAD: +0.85% to 1.3022
- AUD/USD: -0.20% to $0.7252
- NZD/USD: -0.15% to $0.6797
- New Zealand's Labor Cost Index rose 0.5% q/q in the third quarter after rising the same amount in Q2
Bonds
Treasuries Climb Despite Home-Builder Optimism
- U.S. Treasuries moved higher today in a curve-steepening trade as weaker oil prices and a dovish Fed outweighed upbeat news on the housing front. The S&P 500 is trading down 2.5 points to 2,030.6
- Yield Check:
- 2-yr: -2 bps to 0.59%
- 5-yr: -1 bp to 1.34%
- 10-yr: -1 bp to 2.03%
- 30-yr: unch at 2.89%
- News:
- The NAHB's index of home-builder confidence touched a 10-year high in October. The index registered a reading of 64, up from a downwardly-revised 61 in September. The Briefing.com consensus was 62
- San Francisco Fed President Williams says tough call on rates
- He said he believes it would be better to move earlier and at a more gradual pace
- Williams also said that if the Fed raised rates and the economy deteriorated, the Fed has the option of rolling back
- It was reported on Reuters today that New York Fed President Dudley told Italian newspaper last Thursday that "It's true we thought we could raise interest rates by the end of 2015, but turbulence on financial markets, modest global growth, energy prices and macro-prudential imbalances are slowing this process down."
- The comments were made on the sidelines of the Brookings Institution conference
- Commodities:
- WTI crude: -2.66% to $46.45/bbl.
- Gold: -1.04% to $1,170.80/troy oz.
- Copper: -1.58% to $2.365/lb.
- Currencies:
- EUR/USD: -0.20% to $1.1325
- USD/JPY: +0.04% to 119.48
- Data Out Tuesday:
- September Housing Starts and Building Permits (08:30 ET)
Treasury Yields:
- 2 Year Note 0.61% UNCH
- 5 Year Note 1.35% -0.01
- 10 Year Note 2.04% UNCH
- 30 Year Bond 2.89% +0.02
2/30 Spread: 228 bps ( +2 ) … 2/10 Spread: 143 bps ( UNCH )
Preview for Tuesday 20 Oct, 2015
Tuesday (20 Oct) :
- Housing Starts : 1150K (Prior 1126K)
- Building Permits : 1170K (Prior 1170K)
Earnings Highlights
Tuesday (20 Oct) :
BMO - ATI ASTE BK EAT CP DOV FITB FCFS HOG LMT EDU NVR OMC PNR PLD RF STBA SBNY SNV TTS TRV UTX VZ WWW
AMC - SHLM ACE CATY CLS CPHD CMG CB CREE DFS EFII ESND FMBI FTI FULT ILMN IBKR ISRG IRBT LTXB MANH NAVI PKG PNFP RNST OKSB TEX VASC VMW WERN WSBC YHOO ZIXI
AMC - SHLM ACE CATY CLS CPHD CMG CB CREE DFS EFII ESND FMBI FTI FULT ILMN IBKR ISRG IRBT LTXB MANH NAVI PKG PNFP RNST OKSB TEX VASC VMW WERN WSBC YHOO ZIXI
Summary
As we are into the midst of earnings season, market is easily influenced by them especially from the big caps. I reckon we might see some sideway or even a slight pullback due to some weakness in the market. Even so, I think market is still pointing more towards bullishness.
There is going to be speeches from Fed Chair Yellen and other Fed members tomorrow. That might give the market some volatility.
As we are into the midst of earnings season, market is easily influenced by them especially from the big caps. I reckon we might see some sideway or even a slight pullback due to some weakness in the market. Even so, I think market is still pointing more towards bullishness.
There is going to be speeches from Fed Chair Yellen and other Fed members tomorrow. That might give the market some volatility.
Direction for Tuesday 20 Oct, 2015: Down
2015 Daily Directional Accuracy: 106/165 (64.24%)
2015 Weekly Directional Accuracy: 24/38 (63.16%)
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