Dow -23.72 at 17755.80, Nasdaq -21.42 at 5074.27, S&P -0.94 at 2089.41
If there is any direction in the market now, it's sideway. Market stay flat along with some profit-taking. Now if the rally is to continue, we should see the support holds in the market.
Mixed performance across Europe and Asia markets. The Fed statement on possibility of raising interest rate at the end of 2015 somehow put on a cautious sentiment.
Market Summary
Industry Watch
Strong: Consumer Discretionary, Health Care, Energy, Materials
Weak: Technology, Financials, Industrials, Consumer Staples, Utilities
Other Market Moving Factor:
- Advance Q3 GDP just below expectations (1.5%; Briefing.com consensus 1.6%), but real final sales grow 3.0%
- Host of disappointing quarterly reports
[BRIEFING.COM] The stock market spun its wheels through the bulk of the Thursday affair, but a final-hour charge helped the S&P 500 end little changed while the Nasdaq Composite (-0.4%) underperformed throughout the session.
Equities followed Wednesday's roller-coaster ride with a range-bound Thursday session that saw weakness in heavily-weighted cyclical sectors while health care (+0.5%) surrendered the bulk of its gain into the close; however, the market maintained its range through the afternoon as technology (-0.3%) cut its opening loss in half while energy (+0.5%) and consumer discretionary (+0.3%) outperformed.
Most notably, the technology sector (-0.4%) struggled from the start and the bulk of its weakness could be found in the semiconductor group where NXP Semiconductor (NXPI 73.00, -17.92) plunged 19.7% after below-consensus revenue and concerns about the company's inventories overshadowed a bottom-line beat and an expanded share buyback. Also of note, STMicroelectronics (STM 6.79, -0.42) fell 5.8% after issuing disappointing guidance and denying interest in Fairchild Semiconductor (FCS 16.56, -0.99). Meanwhile, the PHLX Semiconductor Index dove 3.0% after ending yesterday's session above its 200-day moving average (673.21).
Staying in the tech space, GoPro (GPRO 25.62, -4.59) sank 15.2% to a fresh all-time low in reaction to an uninspiring guidance while Cirrus Logic (CRUS 30.33, -1.29) dropped 4.1% despite beating estimates and issuing better than expected revenue guidance.
Similar to technology, growth-sensitive financials (-0.3%) and industrials (-0.1%) underperformed while consumer discretionary (+0.3%) outperformed with help from media names. Charter Communications (CHTR 193.33, +9.23) was a standout performer, spiking 5.0%, in reaction to solid results.
Also of note, the energy sector (+0.5%) displayed relative strength throughout the day while crude oil oscillated near its flat line to end little changed near $46.00/bbl. Earnings contributed to increased activity in the sector with ConocoPhillips (COP 53.62, +0.28), Marathon Petroleum (MPC 51.24, +1.40), Tesoro (TSO 108.99, +3.71), and Suncor Energy (SU 29.48, +1.01) jumping between 0.5% and 3.6% after beating estimates. On the downside, Royal Dutch Shell (RDS.A 52.56, -0.46) fell 0.9% after missing earnings estimates on better than expected revenue.
In addition to energy, the health care sector (+0.5%) provided a measure of support throughout the day. That being said, the sector backed away from its high during afternoon action amid a turnaround in biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 328.55, -3.24) ended lower by 1.0%, masking a 6.0% surge in Allergan (AGN 304.38, +17.18) after the company confirmed it has been approached by Pfizer (PFE 34.77, -0.68) about a potential merger.
Unlike stocks, Treasuries slid throughout the session with the 10-yr yield rising eight basis points to 2.17%.
Today's participation was right in line with average as roughly 850 million shares changed hands at the NYSE floor.
Economic data included GDP, Initial Claims, and Pending Home Sales:
- GDP increased 1.5% in the third quarter, down from a 3.9% gain in Q2 2015 while the Briefing.com consensus an increase of 1.6%
- Even though the headline growth level was on the lighter side, the overall economy looked pretty healthy in the third quarter with the drag resulting from a substantial pullback in inventory growth; however, that was a normal reaction following two consecutive quarterly gains
- Excluding inventories, real final sales rose 3.0%, which was in-line with normal potential growth patterns
- The weekly initial claims level increased to 260,000 from an unrevised 259,000 while the Briefing.com consensus expected an increase to 264,000
- The four-week moving average fell below 260,000 for the first time since 1973
- The continuing claims level declined to 2.144 mln from an upwardly revised 2.181 mln (from 2.170 mln) while the consensus expected an increase to 2.185 mln
- Pending home sales for September fell 2.3% while the Briefing.com consensus expected an increase of 0.6%.
Tomorrow, September Personal Income (Briefing.com consensus 0.2%), Personal Spending (expected 0.2%), core PCE Prices (consensus 0.1%), and Q3 Employment Cost Index (consensus 0.5%) will all be reported at 8:30 ET while October Chicago PMI (consensus 49.0) and the final reading of the Michigan Sentiment Index for October (expected 92.6) will be released at 9:45 ET and 10:00 ET, respectively.
Global Market
ASIA
Markets in the Asia-Pacific region were mostly lower Thursday, with the notable exceptions of Japan (+0.2%) and China (+0.4%). The former bumped up ahead of the Bank of Japan policy announcement and following better than expected industrial production data. China advanced despite talk Chinese officials may soon lower the GDP growth target. Many emerging markets, meanwhile, felt the pinch of the FOMC’s relatively hawkish directive on Wednesday, which kept alive the possibility of a rate hike in December and led to a dollar rally.
Economic data
- Japan
- September Industrial Production +1.0% month-over-month (expected -0.5%; prior -1.2%)
- Australia
- September HIA New Home Sales -4.0% (prior +2.3%)
- Q3 Export Price Index 0.0% quarter-over-quarter (expected +0.5%; prior -4.4%)
- Q3 Import Price Index +1.4% quarter-over-quarter (expected +1.6%; prior +1.4%)
- Singapore
- Q3 Unemployment Rate 2.0% (expected 2.0%; prior 2.0%)
- New Zealand
- Reserve Bank of New Zealand leaves official cash rate unchanged at 2.75% as expected
Equity Markets
- Japan’s Nikkei increased 0.2% following some better than expected industrial production data for September. It took a late rebound, however, to finish in positive territory. The industrials (+1.3%) and health care (+0.9%) sectors were the best-performing areas. OKUMA Corp (+9.2%), Fujikura (+6.3%), and Nippon Electric Glass (+3.8%) topped the list of individual winners. DeNA Co (-14.9%), Mitsui Mining & Smelting (-8.3%), and Asahi Kasei (-5.3%) led the losers. Out of the 225 index members, 126 ended higher, 89 finished lower, and 10 were unchanged.
- Hong Kong’s Hang Seng declined 0.6% and ended at its lows for the day with financial and property companies weighing. China Life Insurance (-5.4%), China Merchants Holdings (-3.0%), and China Resources Power Holdings (-2.9%) were the worst-performing issues. CNOOC (+3.4%), PetroChina (+2.0%), and Lenovo Group (+1.9%) led advancing issues. Out of the 50 index members, 12 ended higher, 37 finished lower, and 1 was unchanged.
- China’s Shanghai Composite increased 0.4% in a choppy day of trading that was accented by reports that China is apt to lower its GDP growth target soon. Financial shares were among the laggards that held the market in check.
- India’s Sensex declined 0.8% and closed near its lows for the day, pressured by weakness in the industrials (-2.0%), technology (-1.1%), and financials (-0.9%) sectors. Bharat Heavy Electricals (-4.4%), Axis Bank (-3.1%), and Coal India (-2.9%) led individual decliners. Dr Reddy’s Laboratories (+2.6%), Vedanta (+2.0%), and Lupin (+0.9%) were the best-performing issues. Out of the 30 index members, 10 ended higher and 20 finished lower.
- Australia’s S&P/ASX 200 declined 1.3% and closed near its lows for the day, getting undercut by weakness in the gold (-6.3%), consumer staples (-5.4%), and metals & mining (-2.0%) sectors. Out of the 200 index members, 55 ended higher, 131 finished lower, and 14 were unchanged.
- Regional advancers: Vietnam +1.5%
- Regional decliners: South Korea -0.4%, Taiwan -1.1%, Malaysia -1.2%, Indonesia -3.0%, Singapore -1.3%, Thailand -1.4%, Philippines -1.4%
FX
- USD/CNY -0.03% at 6.3566
- USD/INR +0.5 at 65.2312
- USD/JPY -0.2% at 120.85
EUROPE
Major European indices trade in negative territory with UK’s FTSE (-1.1%) showing relative weakness. Elsewhere, Sveriges Riksbank Governor Stefan Ingves said the central bank could continue cutting its benchmark rate, going below -0.35% if needed. Mr. Ingves also noted that he sees significant risks in rising debt levels.
- Eurozone October Business and Consumer Survey ticked up to 105.9 from 105.6 (expected 105.2)
- UK’s September BoE Consumer Credit GBP1.261 billion (expected GBP1.10 billion; prior GBP1.263 billion) and Mortgage Lending GBP3.60 billion (consensus GBP3.50 billion; previous GBP3.40 billion). Separately, October CBI Distributive Trades Survey fell to 19 from 49 (expected 35) and Nationwide HPI 0.6% month-over-month (expected 0.5%; prior 0.5%)
- Germany’s October Unemployment Change -5,000 (expected -4,000; prior 1,000) while the Unemployment Rate held at 6.4%, as expected
- Spain’s September Retail Sales +4.3% year-over-year (consensus 3.0%; prior 3.0%) and October CPI +0.7% month-over-month, as expected; -0.7% year-over-year (consensus -0.6%)
Closing Prices
- FTSE100 -0.65%
- DAX -0.29%
- CAC40 +0.09%
- IBEX35 +0.24%
- Stoxx600 +0.05%
Macroeconomic Data
Economic Data
from Briefing.com
- Initial Claims : 260K vs 264K (Prior 259K)
- Continuing Claims : 2144K vs 2185K (Prior 2181K - Up)
- GDP - Adv : 1.5% vs 1.6% (Prior 3.9%)
- Chain Deflator - Adv : 1.2% vs 1.3% (Prior 2.1%)
- Pending Home Sales : -2.3% vs 0.6% (Prior -1.4%)
- Natural Gas Inventories : 63 bcf (Prior 81 bcf)
UNEMPLOYMENT CLAIMS
Highlights
- The initial claims level increased to 260,000 for the week ending October 24 from an unrevised 259,000 for the week ending October 17. The Briefing.com Consensus expected the initial claims level to increase to 264,000.
- The continuing claims level declined to 2.144 mln for the week ending October 17 from an upwardly revised 2.181 mln (from 2.170 mln) for the week ending October 10. The consensus expected the continuing claims level to increase to 2.185 mln.
Key Factors
- The four-week moving average fell below 260,000 for the first time since 1973. Trends in the initial claims level support the idea that the labor market is at full employment.
- That was the lowest continuing claims level since November 2000.
Big Picture
- The overall trend in claims supports a labor market that is at, or very near, full employment.
Highlights
- GDP increased 1.5% in the third quarter, down from a 3.9% gain in Q2 2015. The Briefing.com Consensus expected GDP to increase 1.6%.
- Excluding inventories, real final sales rose 3.0%. That is in-line with normal potential growth patterns.
Key Factors
- Even though the headline growth level was on the lighter side, the overall economy looked pretty healthy in the third quarter.
- All of the downside growth trend was the result of a substantial pullback in inventory growth. That was a normal reaction following two consecutive quarterly gains.
- Personal consumption spending increased 3.2% in Q3 2015, down from a 3.6% gain in the second quarter. Goods spending increased 4.5%, with much of that gain coming from a 6.7% increase in durable goods demand. Services spending increased 2.6%.
- Nonresidential fixed investment increased 2.1% in the third quarter after increasing 4.1% in the second quarter. Spending on nonresidential structures was weak, falling 4.0% in the third quarter. Much of that decline was likely the result of the ongoing slowdown in the fracking industry. Spending on equipment (5.3%) and intellectual property products (1.8%) were positive.
- Residential investment spending increased 6.1% in the third quarter. That was the sixth consecutive quarterly gain.
- The net export deficit was virtually flat, increasing to $536.2 bln from $534.6 bln in the second quarter. It had almost zero impact on GDP growth.
- Government spending increased 1.7% after increasing 2.6% in the second quarter.
Big Picture
- While the headline growth level was undoubtedly low, sector trends were very healthy. The economy is trending near its potential level.
Market Internals
NYSE:
Lower Volumes than the day before – 871.5M vs 1012.4M
Decliners outpaced Advancers (adv/dec): 1187 / 1850
New Highs outpaced New Lows (highs/lows): 80 / 42
NASDAQ:
Lower Volumes than the day before – 1900.7M vs 2123.9M
Decliners outpaced Advancers (adv/dec): 1003 / 1843
New Highs outpaced New Lows (highs/lows): 100 / 84
VOLATILITY S&P500 (VIX)
14.61 +0.28 (+1.95%)
Technical Updates
Volume: 90,301,305 (below average of 116,516,273)
Range: 17,684.72 - 17,786.00
Range: 17,684.72 - 17,786.00
5,074.27 -21.42 (-0.42%)
Volume: 426,893,331 (below average of 475,688,638)
Volume: 426,893,331 (below average of 475,688,638)
Range: 5,066.89 - 5,084.63
2,089.41 -0.94 (-0.04%)
Volume: 549,091,000 (below average of 651,743,132)
Range: 2,082.63 - 2,092.52
The lack in volume is suggesting that this rally might not be that sustainable. The 3 indices somewhat formed a doji candlestick pattern which could refer to a possibility of a pullback or another consolidation. They are sitting on their respective support level at the moment and if the support fail, we should see a correction in the market.
Commodities
- The dollar index remain in the red today, but this didn’t give commodities a boost as it normally would
- Gold, silver, copper and natural gas futures currently remain near today’s lows
- Dec gold closed out of today’s floor trading session -2.5% at $1147.50/oz, while Dec silver shed -4.4% at $15.56/oz
- Dec copper slid -1.7% to $2.32/lb
- Natural gas was volatile today, starting the day off strong and holding gains following the weekly EIA storage data, which was bullish for nat gas.
- However, following this, nat gas (Dec) would lost steam and finished the day off -1.3% at $2.29/MMBtu
Energy Closing Prices
- December crude oil futures rose $0.10 (+0.2%) to $46.03/barrel
- December natural gas closed $0.03 lower (-1.3%) at $2.29/MMBtu
- RBOB Gasoline closed flat at $1.34/gallon
- Heating oil futures closed flat at $1.50/gallon
Agriculture Closing Prices
- December corn closed $0.03 higher at $3.80/bushel
- December wheat closed $0.09 higher at $5.16/bushel
- November soybeans closed $0.03 lower at $8.78/bushel
- Sugar #11 closed $0.09 cents lower at 14.56 cents/lb
Metals Closing Prices
- December gold ended today’s session $28.90 lower (-2.5%) at $1147.50/oz
- December silver closed today’s session $0.72 lower (-4.4%) at $15.56/oz
- December copper closed $0.04 lower (-1.7%) at $2.32/lb
Currencies
Dollar Longs Take Profits after FOMC Rally
- The U.S. Dollar Index fell 0.43% today to 97.36 although it remains up substantially from its pre-FOMC statement level. The statement referred specifically to the "next meeting" and the dollar jumped on the news in continuation of the sharp uptrend that began with last Thursday's European Central Bank meeting. The FOMC statement showed less concern for risks associated with China and emerging markets
- EUR/USD: +0.50% to $1.0978
- The number of Germans without jobs declined by 5K in October, better than expected. The rolls of the unemployed grew by 1K in September
- The preliminary estimate of Germany's CPI change in October was no change m/m. Economists had forecast a decline after the 0.2% fall in September
- Spain's harmonized index of consumer prices fell 0.9% in the year to October, in line with expectations
- GBP/USD: +0.30% to $1.5312
- In the U.K., the Nationwide Housing Price Index rose 3.9% in the year to October, better than both expectations and the September reading of 3.8%
- USD/CHF: -0.42% to 0.9900
- USD/JPY: +0.05% to 121.13
- Japanese industrial production climbed 1.0% m/m in September according to preliminary data, better than the expectations for a decline. Industrial production fell 1.2% in August
- The Bank of Japan meets on Friday. Analysts see slightly worse than even odds for further monetary easing
- USD/CAD: -0.29% to 1.3162
- Canada's Raw Materials Price Index rose a better-than-expected 3.0% m/m in September after falling a downwardly-revised 6.8% in August
- AUD/USD: -0.25% to $0.7078
- In Australia, the Housing Industry Association reported that new home sales fell 4.0% m/m in September after rising 2.3% in August
- NZD/USD: +0.20% to $0.6690
- The Reserve Bank of New Zealand kept its main policy rate on hold at 2.75%
Bonds
Yields Rise as Curve Steepens
- U.S. government notes and bonds sold off today in a curve-steepening move as a tepid GDP growth number for the third quarter belied strong end demand. While the month of October has been terrific for stocks, Treasury yields had remained low until Wednesday as divisions within the Fed and the prospect of expanded government bond buying from the European Central Bank conspired to support Treasuries. The FOMC's specific mention of the "next meeting" in its statement released yesterday as well as its downgrade of the global risks to its outlook for growth and inflation set 2 and 5-year Treasury holders selling and the long end of the curve followed in suit today
- Yield Check:
- 2-yr: +2 bps to 0.73%
- 5-yr: +5 bps to 1.53%
- 10-yr: +8 bps to 2.18%
- 30-yr: +9 bps to 2.97%
- News:
- U.S. GDP grew 1.5% in the third quarter, down from a 3.9% gain in Q2 2015. The Briefing.com consensus was 1.6%
- All of the downside growth trend was the result of a substantial pullback in inventory growth. That was a normal reaction following two consecutive quarterly gains
- Excluding inventories, real final sales rose 3.0%. That is in-line with normal potential growth patterns
- Initial jobless claims grew to 260K for the week ending October 24 from an unrevised 259K for the week ending October 17. The Briefing.com consensus was 264K
- Continuing jobless claims declined to 2.144 mln for the week ending October 17 from an upwardly-revised 2.181 mln (from 2.170 mln) for the week ending October 10.
- Pending home sales fell 2.3% in September after dropping 1.4% in August. The Briefing.com consensus was for a gain of 0.5%
- The $29 bln 7-year note auction stopped through, indicating solid demand. The dealer takedown of 23.7% (100% - indirect bid - direct bid) was the lowest on record
- High yield 1.885%
- Bid-to-cover 2.55
- Indirect bid 62.3%
- Direct bid 14.0%
- U.S. GDP grew 1.5% in the third quarter, down from a 3.9% gain in Q2 2015. The Briefing.com consensus was 1.6%
- Commodities:
- WTI crude: -0.39% to $45.76/bbl.
- Gold: -2.47% to $1,147.10/troy oz.
- Copper: -1.57% to $2.3255/lb.
- Currencies:
- EUR/USD: +0.49% to $1.0979
- USD/JPY: +0.02% to 121.09
- Data Out Friday:
- September Personal Income and Personal Spending (08:30 ET)
- September PCE Prices – Core (08:30 ET)
- Q3 Employment Cost Index (08:30 ET)
- October Chicago PMI (09:45 ET)
- October Michigan Sentiment – Final (10:00 ET)
Treasury Yields:
- 2 Year Note 0.75% +0.02
- 5 Year Note 1.53% +0.06
- 10 Year Note 2.19% +0.09
- 30 Year Bond 2.96% +0.09
2/30 Spread: 221 bps ( +7 ) … 2/10 Spread: 144 bps ( +7 )
Preview for Friday 30 Oct, 2015
Economic Data
Friday (30 Oct) :
- Personal Income : 0.2% (Prior 0.3%)
- Personal Spending : 0.2% (Prior 0.4%)
- PCE Prices - Core : 0.1% (Prior 0.1%)
- Employment Cost Index : 0.5% (Prior 0.2%)
- Chicago PMI : 49.0 (Prior 48.7)
- Michigan Sentiment - Final : 92.6 (Prior 92.1)
Earnings Highlights
Friday (30 Oct) :
BMO - AAN ABBV AXL BUD AON ARCB BCO BPL CPN CBOE CVX CHH CLCMCO CVS UFS DRQ ETN EGO EXC XOM GWR GBX HPY IMO IRT IDCC IRMD IRM ITT KCG LM LPNT LECO MGI TYPE MCO MSGN MYL NWL POM PSX PSXP PNW PNM PFS PEG COL RUTH STX STE SWC TDS TOWR USM VLP HCN WY WETF
AMC - CCJ
AMC - CCJ
Summary
Overall I think the market is somewhat bullish but I reckon we should see a correction before another rally. Market is getting more cautious after Wednesday's Fed statement. I suppose the traders are still digesting on the information and Friday is going to be a session to set up for next week. If the support is going to hold, we should see more upside going into next week.
Overall I think the market is somewhat bullish but I reckon we should see a correction before another rally. Market is getting more cautious after Wednesday's Fed statement. I suppose the traders are still digesting on the information and Friday is going to be a session to set up for next week. If the support is going to hold, we should see more upside going into next week.
Direction for Friday 30 Oct, 2015: Down
2015 Daily Directional Accuracy: 110/171 (64.33%)
2015 Weekly Directional Accuracy: 25/39 (64.10%)
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