Dow +235.57 at 16284.70, Nasdaq +102.84 at 4620.16, S&P +35.93 at 1920.02
It turns out that we saw a strong bullish opening that led the market to a positive start. However market went down slightly but not before more buyers came in and kept the market at high. It looks to me that Wednesday was moving towards dip buying than short-covering as TRIN was staying below 1 throughout the session.
Markets around the world also finished the last day of the quarter in green. And that provided some confidence for the US market.
Market Summary
Industry Watch
Strong: Consumer Discretionary, Health Care, Technology
Weak: Financials
Other Market Moving Factor:
- S&P 500 enters final September session -4.5% month-to-date and -8.7% quarter-to-date
- September ADP Employment in-line with expectations (200,000)
[BRIEFING.COM] The stock market ended the midweek session on a higher note, but could not avoid its second consecutive monthly decline. The S&P 500 gained 1.9% on Wednesday, but surrendered 2.7% in September. The tech-heavy Nasdaq Composite (+2.3%) outperformed today, but lost 3.3% for the month.
The Wednesday session also marked the end of the third quarter, during which the S&P 500 fell 6.9% versus a 7.4% decline in the Nasdaq. The end of Q3 meant that quarter-end positioning and portfolio rebalancing likely played a part in today's advance.
Equity indices began the trading day with solid gains after index futures rallied alongside markets in Europe. The S&P 500 built on its opening spike, notching a session high just before 10:30 ET; however, that move was followed by a pullback into the middle of today's trading range, which occurred alongside rally in the yen that briefly dropped the dollar/yen pair below the 120.00 level.
The short-lived swoon in the dollar/yen pair was followed by a rebound into the 120.00 area while stocks climbed to new highs.
All ten sectors finished the day with gains, paced by a 2.7% spike in the consumer discretionary space. The cyclical sector held the lead throughout the session while four of the remaining nine groups added 2.0% or more. Notably, the health care sector (+2.1%) spent the day among the leaders with biotechnology underpinning the strength. The iShares Nasdaq Biotechnology ETF (IBB 303.33, +13.85) surged 4.8%, narrowing its September loss to 11.3%. For its part, the health care sector lost 5.8% in September.
Today's relative strength in biotechnology helped the Nasdaq spend the day ahead of the broader market. To be fair, the index received another helping hand from large cap tech names with the likes of Google (GOOGL 637.20, +14.59), Microsoft (MSFT 44.20, +0.76), and Facebook (FB 89.73, +3.06) gaining between 1.8% and 3.5%. Chipmakers also showed considerable strength with the PHLX Semiconductor Index surging 3.8% after EZchip (EZCH 25.16, +3.17) agreed to be acquired by Mellanox (MLNX 37.79, -2.00) for $25.50/share.
In other sector news, Western Digital (WDC 79.40, +10.53) surged 15.3% after Unisplendour made a $3.78 billion investment in WDC by acquiring newly issued shares at $92.50/share.
On the earnings front, Barracuda Networks (CUDA 15.58, -7.97) plunged 33.8% after cautious guidance overshadowed a one-cent beat.
Treasuries slumped overnight, but they began rallying around 7:00 ET with the move continuing into the afternoon. As a result, the 10-yr note reclaimed its overnight loss with the benchmark yield ending flat at 2.05%.
Today's participation was well above average as more than a billion shares changed hands at the NYSE floor.
Economic data reported today included ADP Employment, Chicago PMI, and MBA Mortgage Index:
- The ADP National Employment Report revealed that employment in the nonfarm private business sector rose by 200K in September, which was in line with the Briefing.com consensus
- The August reading was revised down to 186,000 from 190,000
- The weekly MBA Mortgage Index fell 6.7% to follow last week's 13.9% spike
- The Chicago PMI dropped to 48.7 in September from 54.4 in August while the Briefing.com Consensus expected a decline to 52.9
- The reading highlights this year's volatility in the survey as monthly contractions (five times) have occurred more regularly than expansions (four times) so far in 2015
- The Production Index dropped to 43.6 from 59.0 in August, representing the lowest reading since July 2009 and the biggest one-month decline since February
Tomorrow, weekly Initial Claims (Briefing.com consensus 270K) will be released at 8:30 ET while August Construction Spending (consensus 0.5%) and September ISM Index (consensus 50.6) will both be reported at 10:00 ET.
Global Market
ASIA
Markets in the Asia-Pacific region closed out an ugly third quarter on a winning note and following some otherwise disappointing economic data from one of the world’s largest economies, Japan, which reported weaker than expected industrial production and retail sales figures. The disappointing reports fueled speculation that the Bank of Japan might soon introduce new monetary stimulus.
Economic data
- Japan
- August Industrial Production -0.5% month-over-month (expected +1.0%; prior -0.8%)
- August Retail Sales +0.8% year-over-year (expected +1.1%; prior +1.8%)
- August Construction Orders -15.6% year-over-year (prior -4.0%)
- August Housing Starts +8.8% year-over-year (expected +7.8%; prior +7.4%)
- China
- September Westpac MNI China Consumer Sentiment 118.2 (prior 116.5)
- South Korea
- October Manufacturing BSI Index 70.0 (prior 73.0)
- Australia
- August Building Approvals -6.9% month-over-month (expected -2.0%; prior +7.9%)
- August Housing Credit +0.6% (prior +0.6%)
- August Private Sector Credit +0.6% month-over-month (expected +0.5%; prior +0.6%)
- New Zealand
- September ANZ Business Confidence -18.9% (prior -29.1%)
- September NBNZ Own Activity +16.7% (prior +12.2%)
- August Building Consents -4.9% month-over-month (prior +20.4%)
Equity Markets
- Japan’s Nikkei increased 2.7% on the heels of Tuesday’s 4.1% decline. The updraft followed some weaker-than-expected industrial production data which stoked speculation the Bank of Japan will soon provide more monetary stimulus. Gains were led by the materials (+3.1%), health care (+3.0%), and technology (+2.8%) sectors. Kyowa Hakko Kirin (+7.8%), Taiyo Yuden (+6.3%), and Mazda Motor (+5.9%) topped the list of individual winners while Japan Tobacco (-6.7%) brought up the rear. Out of the 225 index members, 214 ended higher, 10 finished lower, and 1 was unchanged. For the quarter, the Nikkei declined 14.1%.
- Hong Kong’s Hang Seng closed up 1.4%, riding the strength of broad-based buying interest. CNOOC (+6.6%), Li & Fung (+6.5%), and Kunlun Energy (+5.7%) were the best-performing issues while Sands China (-3.9%), Galaxy Entertainment Group (-0.8%), and China Mobile (-0.3%) led a small group of losers. Out of the 50 index members, 44 ended higher, 5 finished lower, and 1 was unchanged. For the quarter, the Hang Seng declined 20.6%.
- China’s Shanghai Composite increased 0.5%, but faded into the close on some selling pressure as investors took some money off the table ahead of the week-long National Holiday beginning on Thursday. The Shanghai Composite will reopen for trading on Thursday, October 8. For the quarter, the Shanghai Composite plunged 34.1%.
- India’s Sensex increased 1.5%, bolstered by strength in the consumer staples (+3.4%), materials (+3.3%), and utilities (+3.2%) sectors. The financials sector (-0.4%) was the only weak spot. Tata Steel (+5.6%), Bharti Airtel (+4.7%), and Bharat Heavy Electricals (+4.2%) led all gainers. State Bank of India (-2.0%) and Axis Bank (-1.8%) were the worst-performing issues. Out of the 30 index members, 24 ended higher and 6 finished lower. For the quarter, the Sensex declined 5.9%.
- Australia’s S&P/ASX 200 increased 2.1% in a rebound trade that was led by the metals & mining (+2.6%), financials (+2.5%), and telecom services (+2.5%) sectors. Out of the 200 index members, 168 ended higher, 24 finished lower, and 8 were unchanged. For the quarter, the S&P/ASX 200 declined 8.0%.
- Regional advancers: South Korea +1.0%, Taiwan +0.6%, Malaysia +1.1%, Indonesia +1.1%, Singapore +0.1%, Thailand +0.1%, Vietnam +0.3%, Philippines +0.5%
- Regional decliners: None
FX
- USD/CNY -0.1% at 6.3560
- USD/INR -0.5% at 65.6537
- USD/JPY +0.5% at 120.29
EUROPE
Major European indices trade higher across the board with France’s CAC (+2.8%) in the lead. Despite today’s advance, key regional indices are on track to end the month with losses.
- Eurozone September CPI -0.1% year-over-year (expected 0.0%; prior 0.1%) and Core CPI +0.9% year-over-year (consensus 0.9%; last 0.9%). Separately, August Unemployment Rate held at 11.0% (expected 10.9%)
- Germany’s September Unemployment Change 2,000 (expected -5,000; prior -6,000) while the September Unemployment Rate held at 6.4%, as expected. Also of note, August Retail Sales -0.4% month-over-month (expected 0.2%; prior 1.6%); 2.5% year-over-year (consensus 3.1%; last 3.8%)
- UK’s Q2 GDP +0.7% quarter-over-quarter, as expected; +2.4% year-over-year (consensus 2.6%; previous 2.6%). Separately, Q2 Business Investment 1.6% quarter-over-quarter (expected 2.9%; last 2.9%); 3.1% year-over-year (prior 5.0%)
- France’s August PPI -0.9% month-over-month (prior -0.1%) while July Consumer Spending +0.3% month-over-month (expected 0.1%; prior 0.4%)
- Italy’s CPI -0.3% month-over-month, as expected; +0.3% year-over-year, as expected. Separately, August PPI -0.7% month-over-month (prior -0.5%); -2.9% year-over-year (prior -2.3%)
- Spain’s Business Confidence ticked down to 0.0 from 0.3
Closing Prices
- UK’s FTSE: + 2.6%
- Germany’s DAX: + 2.2%
- France’s CAC: + 2.5%
- Spain’s IBEX: + 1.7%
- Portugal’s PSI: + 3.1%
- Italy’s MIB Index: + 2.7%
- Irish Ovrl Index: + 1.9%
- Greece ASE General Index: + 0.6%
Macroeconomic Data
Economic Data
from Briefing.com
- MBA Mortgage Index : -6.7% (Prior 13.9%)
- ADP Employment Change : 200K vs 200K (Prior 186K - Down)
- Chicago PMI : 48.7 vs 52.7 (Prior 54.4)
- Crude Inventories : 3.995M (Prior -1.925M)
CHICAGO PMI
Highlights
- The Chicago PMI declined to 48.7 in September from 54.4 in August. The Briefing.com Consensus expected the index to decline to 52.9.
Key Factors
- It's been an up-and-down year thus far for the manufacturing sector in the Chicago region. Monthly contractions (five times) have occurred more regularly than expansions (four times).
- The September number was notable for the fact that the Production Index dropped to 43.6 from 59.0 in August. That was the lowest reading in production levels since July 2009 and the biggest one-month decline since February.
- The drop in production was a result of an end to a three-month expansion in new orders growth (49.5 in September from 56.7 in August) and the eighth consecutive monthly contraction (46.5 in September from 46.2 in August) in order backlogs.
- On a positive note, the employment index ended four consecutive monthly contractions as the related index increased to 52.3 in September from 49.1 in August.
Big Picture
- The Chicago PMI has little overall economic value, and is only watched by the financial markets because it is usually released one day in advance of the similar national ISM manufacturing survey. A significant move in this regional survey will therefore sometimes be seen as having predictive value for the ISM index.
Market Internals
NYSE:
Higher Volumes than the day before – 1233.9M vs 1016.0M
Advancers outpaced Decliners (adv/dec): 2350 / 767
New Lows outpaced New Highs (highs/lows): 6 / 192
NASDAQ:
Higher Volumes than the day before – 2366.5M vs 2281.7M
Advancers outpaced Decliners (adv/dec): 2083 / 811
New Lows outpaced New Highs (highs/lows): 21 / 190
VOLATILITY S&P500 (VIX)
24.50 -2.33 (-8.68%)
Technical Updates
Volume: 145,744,847 (above average of 113,311,191)
Range: 16,057.08 - 16,297.60
Range: 16,057.08 - 16,297.60
4,620.17 +102.84 (+2.28%)
Volume: 623,884,846 (above average of 459,306,875)
Volume: 623,884,846 (above average of 459,306,875)
Range: 4,559.18 - 4,620.17
1,920.03 +35.94 (+1.91%)
Volume: 848,521,000 (above average of 637,571,323)
Range: 1,887.14 - 1,920.53
The 3 indices continue to pullback from their respective support levels. DOW held its support around 16,000 and it is approaching a resistance at 16,360. NASDAQ also managed to close above its resistance at 4,600 and the 61.8% Fib level is likely to serve as another resistance point. S&P broke above its resistance at 1,900 and next resistance is around 1,950.
Commodities
Metals
- December gold ended today’s session $11.70 lower (-1.0%) at $1115.30/oz
- December silver closed today’s session $0.06 lower (-0.4%) at $14.53/oz
- December copper closed $0.09 higher (+4%) at $2.34/lb
Agriculture
- December corn closed flat at $3.89/bushel
- December wheat closed $0.09 higher at $5.13/bushel
- November soybeans closed $0.09 higher at $8.93/bushel
- Sugar #11 closed $0.41 cents higher at 12.17 cents/lb
- Prices shown are as of 2:20 pm ET
Energy
- November crude oil futures fell $0.09 (-0.2%) to $45.15/barrel
- November natural gas closed $0.06 lower (-2.3%) at $2.53/MMBtu
- RBOB Gasoline closed $0.02 higher at $1.37/gallon
- Heating oil futures closed $0.01 higher at $1.54/gallon
Currencies
Euro Slides on CPI Miss
- The U.S. Dollar Index jumped 0.50% to 96.33 today as weak European inflation data led to renewed hope for an expansion/extension of the European Central Bank's asset purchase program
- EUR/USD: -0.74% to $1.1168
- The eurozone's consumer price index fell 0.1% in the year to September while economists had expected no change. Prices had risen 0.1% y/y in August
- German unemployment increased by 2K in September versus an earlier estimate of -6K
- German retail sales unexpectedly fell 0.4% m/m in August
- GBP/USD: -0.24% to $1.5119
- Business investment growth in the U.K. was revised down to 1.6% q/q for the second quarter, worse than expected. Business investment growth was 2.0% in Q1
- GDP growth in the second quarter was confirmed at 0.7% q/q after 0.4% growth in Q1
- The Nationwide Housing Price Index rose a better-than-expected 0.5% m/m in September after climbing 0.3% in August
- Business investment growth in the U.K. was revised down to 1.6% q/q for the second quarter, worse than expected. Business investment growth was 2.0% in Q1
- USD/CHF: +0.33% to 0.9748
- In Switzerland, the KOF Leading Indicators Index fell to a worse-than-expected 100.4 in September from 100.7 in August
- USD/JPY: +0.07% to 119.95
- In Japan, preliminary data showed that industrial production unexpectedly fell 0.5% m/m in August after declining 0.8% m/m in July
- Japanese retail sales climbed a smaller-than-expected 0.8% in the year to August after growing 1.6% y/y in July. Retail sales at larger retailers beat expectations, however, rising a greater-than-expected 1.8% y/y in August
- Construction orders fell 15.6% y/y in August after declining 4.0% y/y in July
- In Japan, preliminary data showed that industrial production unexpectedly fell 0.5% m/m in August after declining 0.8% m/m in July
- USD/CAD: -0.49% to 1.3357
- Canadian GDP growth was finalized at a better-than-expected 0.3% m/m for July. The economy had grown 0.5% in June
- USD/MXN: -0.60% to 16.91
- Mexico's second oil tender for five shallow-water blocks in the Gulf of Mexico was very strongly subscribed
- AUD/USD: +0.12% to$ 0.7010
- Private sector credit in Australia grew by 0.6% m/m in August, better than expectations and in line with the reading from June
- NZD/USD: +0.60% to $0.6386
- ANZ Business Confidence showed that 18.9% of businesses were pessimistic about the general economy in September versus 29.1% being pessimistic in August
Bonds
Yield Curve Steepens
- U.S. Treasuries ended mixed today as the front end and belly of the yield curve rallied while the long end lagged. The Chicago PMI came out much weaker than expected, posting its fifth sub-50 reading for 2015. The ADP Employment Change showed a gain of 200K private sector jobs in September
- Yield Check:
- 2-yr: -2 bps to 0.64%
- 5-yr: -1 bp to 1.37%
- 10-yr: unch at 2.05%
- 30-yr: +2 bps to 2.88%
- News:
- The MBA Mortgage Index fell 6.7 for the week ending 9/26 after rising 13.9% in the prior week
- The payroll processor ADP reported that the private sector added 200K jobs in September. The Briefing.com consensus was for 200K and the reading in August was a downwardly-revised 186K
- NY Fed President Dudley, speaking at the SIFMA Liquidity Forum this morning, argued against calls for repeal of new regulations on the basis of adverse effects on bond market liquidity
- The Chicago PMI fell to 48.7 in September from 54.4 in August. The Briefing.com consensus was for 52.9
- The September number was notable for the fact that the Production Index dropped to 43.6 from 59.0 in August. That was the lowest reading in production levels since July 2009 and the biggest one-month decline since February
- Crude oil inventories for the week ending 9/26 rose 3.995 mln barrels. The market had expected a draw of roughly 300K barrels
- Commodities:
- WTI crude: -0.09% to $45.19/bbl.
- Gold: -1.11% to $1,114.30/troy oz.
- Copper: +3.91% to $2.3395/lb.
- Currencies:
- EUR/USD: -0.76% to $1.1166
- USD/JPY: +0.08% to 119.95
- Data Out Thursday:
- September Challenger Job Cuts (07:30 ET)
- Initial Jobless Claims for the week ending 9/26 and Continuing Jobless Claims for the week ending 9/19 (08:30 ET)
- September ISM Index (10:00 ET)
- August Construction Spending (10:00 ET)
- Natural Gas Inventories for the week ending 9/26 (10:30 ET)
- September Auto and Truck Sales (17:00 ET)
- Fed Speaker:
- San Francisco Fed President Williams (FOMC voter) (14:30 ET)
Treasury Yields:
- 2 Year Note 0.64% UNCH
- 5 Year Note 1.37% UNCH
- 10 Year Note 2.06% +0.01
- 30 Year Bond 2.87% +0.02
2/30 Spread: 223 bps ( +2 ) … 2/10 Spread: 142 bps ( +1 )
Preview for Thursday 1 Oct, 2015
Economic Data
Thursday (1 Oct) :
- Challenger Job Cuts : (Prior 2.9%)
- Initial Claims : 270K (Prior 267K)
- Continuing Claims : 2248K (Prior 2242K)
- ISM Index : 50.6 (Prior 51.1)
- Construction Spending : 0.5% (Prior 0.7%)
- Natural Gas Inventories : (Prior 106 bcf)
- Auto Sales : (Prior 5.6M)
- Truck Sales : (Prior 8.5M)
Earnings Highlights
Thursday (1 Oct) :
BMO - ATU BSET MKC
AMC - CAMP MU PRGS RLGT
BMO - ATU BSET MKC
AMC - CAMP MU PRGS RLGT
Summary
Well it looks like at least we finished the last day of Q3 in positive. Even so, Q3 is the worst quarter since September 2011. However I would say we are not out of the woods. Market has been erratic lately and honestly speaking, I have not really seen a clear leadership. The extent of the pullback is yet to be tested but I think we might still see some short covering in the next few sessions.
Historically speaking, October month has not really been good in the market. Nonetheless let's see if the market would pick up from here or are we going to see more downside...
Well it looks like at least we finished the last day of Q3 in positive. Even so, Q3 is the worst quarter since September 2011. However I would say we are not out of the woods. Market has been erratic lately and honestly speaking, I have not really seen a clear leadership. The extent of the pullback is yet to be tested but I think we might still see some short covering in the next few sessions.
Historically speaking, October month has not really been good in the market. Nonetheless let's see if the market would pick up from here or are we going to see more downside...
Direction for Thursday 1 Oct, 2015: Up
2015 Daily Directional Accuracy: 98/154 (63.64%)
2015 Weekly Directional Accuracy: 23/36 (63.89%)
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