Dow -254.15 at 17448.07, Nasdaq -61.94 at 5005.08, S&P -29.03 at 2045.97
More downside for the week. Market broke lower at the opening and remained in a very right range before we saw more selling towards the closing. We have seen quite an extent of pullback this week and a good support could get some dip buyers coming in...
Also crude oil prices has been tanking lately as we are seeing a rise in inventories buildup. That somehow also put some downward pressure to the market.
Markets around the world were showing mostly in red as well. I suppose they are losing steams as well.
Market Summary
Industry Watch
Strong:
Weak: Energy, Health Care, Consumer Staples, Materials, Financials, Industrials
Other Market Moving Factor:
- Energy sector struggles amid continued weakness in crude oil
[BRIEFING.COM] The stock market could not avoid its second consecutive retreat on Thursday with the S&P 500 (-1.4%) falling below its 200-day moving average (2,064). The benchmark index retreated throughout the session while the Nasdaq Composite (-1.2%) settled a step ahead.
Equity indices faced selling pressure from the get-go with the early weakness following a cautious session in Europe where markets in France, Germany, and Spain lost between 1.2% and 2.3%. Things did not improve by the start of the New York Session, which led to opening losses in nine of ten sectors.
Most notably, the energy sector (-2.4%) struggled from the start and the significant underperformance in the growth-sensitive group set the tone for a down day. The sector widened this week's decline to 5.4% while crude oil fell 2.7% to $41.78/bbl.
Similar to energy, the materials sector (-2.0%) finished at the bottom of the leaderboard while other groups posted slimmer losses. For instance, the top-weighted technology sector (-0.9%) outperformed throughout the session, which prevented a bigger decline from unfolding.
Elsewhere on the cyclical side, the consumer discretionary space (-1.0%) settled ahead of the broader market thanks to gains in select apparel retailers after Kohl's (KSS 45.82, +2.66) reported better than expected results. Shares of KSS spiked 6.2% while the SPDR S&P Retail ETF (XRT 44.05, -0.57) could not stay out of the red, falling 1.3%.
Moving to the countercyclical side, the utilities sector (-1.2%) held a slim gain at the start, but could not hold its ground into the afternoon. The rate-sensitive group settled just ahead of the S&P 500 while consumer staples (-1.4%) and health care (-1.8%) registered wider losses. Biotechnology contributed to the underperformance in health care with the iShares Nasdaq Biotechnology ETF(IBB 320.11, -6.74) dropping below its 50-day moving average (325.10). The high-beta ETF fell 2.1%, extending this week's decline to 3.1%.
Unlike stocks, Treasuries spent the day in the green, forcing the 10-yr yield lower by a basis point to 2.32%.
Today's participation was essentially in line with recent averages as 850 million shares changed hands at the NYSE floor.
Economic data included Initial Claims, JOLTS, and the Treasury Budget:
- Weekly initial claims were unchanged from the prior week at 276,000 (Briefing.com consensus 269,000) while continuing claims for the week ending October 31 rose by 5,000 to 2.174 million (Briefing.com consensus 2.155 mln) from an upwardly revised 2.169 million (from 2.163 million)
- Initial claims have ranged primarily between 250,000 and 300,000 since July 2014, so there was nothing out of the ordinary about the latest claims report, which wasn't influenced by any special factors
- The four-week moving average for initial claims increased by 5,000 to 267,750, which is near levels seen in April 2000
- The September Job Openings and Labor Turnover Survey showed that job openings increased to 5.526 million from 5.377 million
- The Treasury Budget statement for October showed a deficit of $136.00 billion (Briefing.com consensus -$130.00 billion)
- The Treasury data are not seasonally adjusted so the October deficit cannot be compared to the $91.10 billion surplus recorded in September
Tomorrow, October PPI (Briefing.com consensus 0.1%) and October Retail Sales (consensus 0.3%) will be reported at 8:30 ET while September Business Inventories (expected 0.0%) and the preliminary reading of the Michigan Sentiment Index for November (consensus 92.0) will be released at 10:00 ET.
Global Market (temporarily unavailable)
Macroeconomic Data
Economic Data
from Briefing.com
- MBA Mortgage Index : -1.3% (Prior -0.8%)
- Initial Claims : 276K vs 269K (Prior 276K)
- Continuing Claims : 2174K vs 2155K (Prior 2169K - Up)
- JOLTS - Job Openings : 5.53M (Prior 5.4M)
- Crude Inventories : 4.22M (Prior 2.85M)
- Treasury Budget : -$136.5B vs -$130.0B (Prior -$121.7B)
UNEMPLOYMENT CLAIMS
Highlights
- Initial claims for the week ending November 7 were unchanged from the prior week at 276,000 (Briefing.com consensus 269,000) while continuing claims for the week ending October 31 rose by 5,000 to 2.174 million (Briefing.com consensus 2.155 mln) from an upwardly revised 2.169 million (from 2.163 million).
Key Factors
- Initial claims have ranged primarily between 250,000 and 300,000 since July 2014, so there was nothing out of the ordinary about the latest claims report, which wasn't influenced by any special factors.
- The four-week moving average for initial claims increased by 5,000 to 267,750, which is near levels seen in April 2000.
- The four-week moving average of 2.165 million for continuing claims continues to hover near its lowest point since November 2000.
Big Picture
- Granted both initial claims and continuing claims were a bit higher than expected with the latest readings, yet neither series was out of whack with the recent trend in claims that points to a labor market at, or close to, full employment.
TREASURY BUDGET
Highlights
- As expected, the Treasury Budget for October showed the new fiscal year starting with a deficit. Specifically, the deficit was $136.5 billion, which was slightly worse than the Briefing.com consensus estimate, which called for a deficit of $130.0 billion.
Key Factors
- The Treasury data are not seasonally adjusted, so the October deficit cannot be compared to the $91.1 billion surplus in September.
- Total revenues in October were $211.0 billion while total outlays were $348 billion.
- Revenues were $1.7 billion less than revenues in October 2014 while total outlays were $13.1 billion more than October 2014.
- The yearly deficit shrunk by $60.8 billion to $453.7 billion.
Big Picture
- Raw data available at: www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/current.htm
Market Internals
NYSE:
Higher Volumes than the day before – 878.7M vs 809.1M
Decliners outpaced Advancers (adv/dec): 565 / 2516
New Lows outpaced New Highs (highs/lows): 20 / 190
NASDAQ:
Higher Volumes than the day before – 1806.9M vs 1667.2M
Decliners outpaced Advancers (adv/dec): 646 / 2211
New Lows outpaced New Highs (highs/lows): 34 / 156
VOLATILITY S&P500 (VIX)
18.37 +2.31 (+14.38%)
Technical Updates
Volume: 113,658,889 (below average of 117,180,294)
Range: 17,443.50 - 17,691.93
Range: 17,443.50 - 17,691.93
5,005.08 -61.94 (-1.22%)
Volume: 395,742,640 (below average of 466,898,089)
Volume: 395,742,640 (below average of 466,898,089)
Range: 5,004.46 - 5,062.49
2,045.97 -29.03 (-1.40%)
Volume: 573,865,000 (below average of 653,918,934)
Range: 2,045.66 - 2,072.29
The indices just broke lower as they did not have enough strength to stay above their respective resistance level on Wednesday. DOW broke below its 200MA and approaching the 61.8% Fib level at around 17,300. NASDAQ went down to meet the support level at 5,000 and also it is not far from its 200MA. S&P went under its 200MA and likely to test its support at the 61.8% Fib level at 2,040 area. We have seen some extent of correction and as the indices are getting near to the support level, I think we might see some short covering soon.
Currencies
Dollar Retreats
- The U.S. Dollar Index fell 0.32% to 98.70, slipping against all the majors. The dollar index has had a 5+% run since mid-October on the improved performance of the U.S. economy and indications of imminent liftoff from the Fed. Breaking through the March high of the index may require more confirmation of the fundamentals
- EUR/USD: +0.18% to $1.0783
- In the eurozone, industrial production fell by a worse-than-expected 0.3% m/m in September after declining an upwardly revised 0.4% in August
- France's harmonized index of consumer prices (HICP) grew 0.1% m/m in October after falling 0.4% in September. The October reading was in line with estimates
- Germany's consumer price index was unchanged m/m in October, in line with estimates and September's reading
- GBP/USD: -0.03% to $1.5222
- The U.K.'s RICS House Price Balance jumped to 49% in October from 44% in September, showing that 49% more chartered surveyors saw rising prices rather than falling
- Respondents expected U.K. home prices to rise 25% over the next five years
- The U.K.'s RICS House Price Balance jumped to 49% in October from 44% in September, showing that 49% more chartered surveyors saw rising prices rather than falling
- USD/CHF: -0.19% to 1.0015
- USD/JPY: -0.16% to 122.65
- Japan's Consumer Goods Price Index fell 0.6% m/m in October. Economists had forecast a decline of 0.4% and the CGPI fell 0.5% in September
- Core Machinery Orders rose a better-than-expected 7.5% m/m in September, reversing a 5.7% fall in August
- USD/CAD: +0.23% to 1.3286
- Canada's New Housing Price Index rose 0.1% m/m in September, just shy of estimates and the 0.3% growth in August
- AUD/USD: +0.19% to $0.7126
- Australia's economy added 58.6K jobs in October, well ahead of expectations and better than September's fall of 0.8K jobs
- The unemployment rate fell to 5.9% in October from 6.2% in September
- NZD/USD: -0.27% to $0.6539
- New Zealand's Business NZ PMI fell to 53.3 in October from 55.4 in September
- The Food Price Index fell by 1.2% in October, more than both forecasts and September's fall of 0.5%
- USD/RUB: +1.95% to 66.60
- Russian GDP fell 4.1% y/y in the third quarter according to preliminary data, better than estimates and the 4.6% decline in output in Q2
Bonds
Treasuries Tread Water on Lack of Fed Clarity
- U.S. Treasuries edged higher today as equities and commodities sold off and several Fed speakers made public remarks. As Lacker and Bullard will almost clearly be in favor of liftoff at the December meeting and Evans will almost surely be against, Fed Chair Yellen and New York Fed President Dudley were the only speakers of real consequence. Fed Chair Yellen refrained from commenting on monetary policy, and Treasuries spurted higher afterwards. Dudley said that the conditions for liftoff could soon be met. The $16 bln 30-year auction was met with strong demand despite (or perhaps because of) significant weakness in Treasuries since late October. Friday will see the release of October's producer price indices and retail sales
- Yield Check:
- 2-yr: unch at 0.88%
- 5-yr: unch at 1.72%
- 10-yr: -1 bp to 2.32%
- 30-yr: -1 bp to 3.10%
- News:
- Initial jobless claims were unchanged at 276K for the week ending 11/7, missing the Briefing.com consensus for a decline to 269K
- Continuing jobless claims rose to 2174K from the prior reading of 2169K (revised up from 2163K). The Briefing.com consensus was for 2155K
- St. Louis Fed President James Bullard (not a current FOMC voter but will vote in 2016) said that the Fed should begin normalizing rates. He also said that low rates may be paradoxically keeping inflation low, which certainly separates him ideologically from most of the FOMC
- Richmond Fed President Lacker (FOMC voter, dissented at past two meetings in favor of rate hikes) said that the Fed should hike rates from current levels whether or not there is a strong Phillips Curve relationship between interest rates and inflation
- Chicago Fed President Evans (FOMC voter) said that Fed funds could be below 1.00% at the end of 2016
- The $16 bln 30-year Treasury auction was met with strong demand, stopping through by 1.5 basis points
- High yield: 3.070%
- Bid-to-cover: 2.41
- Indirect bid: 60.2%
- Direct bid: 10.2%
- New York Fed President Dudley (permanent FOMC voter) said that there is some risk that the strong dollar will temper economic growth; quite possible that liftoff will occur soon
- As expected, the Treasury Budget for October showed the new fiscal year starting with a deficit. Specifically, the deficit was $136.5 billion, which was slightly worse than the Briefing.com consensus estimate, which called for a deficit of $130.0 billion
- Initial jobless claims were unchanged at 276K for the week ending 11/7, missing the Briefing.com consensus for a decline to 269K
- Commodities:
- WTI crude: -2.89% to $41.69/bbl.
- Gold: -0.14% to $1,083.40/troy oz.
- Copper: -2.21% to $2.169/lb.
- Currencies:
- EUR/USD: +0.25% to $1.0791
- USD/JPY: -0.14% to 122.68
- Data out Friday:
- October PPI and Core PPI (08:30 ET)
- October Retail Sales and Retail Sales ex-auto (08:30 ET)
- November Michigan Sentiment (10:00 ET)
- September Business Inventories (10:00 ET)
- Natural Gas Inventories for the week ending 11/7 (10:30 ET)
- Fed Speaker:
- Cleveland Fed President Mester (non-FOMC voter, will vote in 2016) (12:30 ET)
Treasury Yields:
- 2 Year Note 0.89% +0.02
- 5 Year Note 1.73% +0.01
- 10 Year Note 2.32% UNCH
- 30 Year Bond 3.09% -0.01
2/30 Spread: 220 bps ( -3 ) … 2/10 Spread: 143 bps ( -2 )
Preview for Friday 13 Nov, 2015
Friday (13 Nov) :
- PPI : 0.1% (Prior -0.5%)
- Core PPI : 0.1% (Prior -0.3%)
- Retail Sales : 0.3% (Prior 0.1%)
- Retail Sales ex-auto : 0.4% (Prior -0.3%)
- Michigan Sentiment : 92.0
- Business Inventories : 0.0% (Prior 0.0%)
- Natural Gas Inventories : (Prior 52 bcf)
Earnings Highlights
Friday (13 Nov) :
BMO - BERY CRME EPC JCP JYNT MTLS PFNX TYC
AMC - WGL
AMC - WGL
Summary
A trading session with various FOMC members and Fed Chair Yellen speaking gave the market some reason to sell down. I think we have saw how far have the market went down this week and I reckon we might see some short-covering tomorrow if the support is strong. Otherwise the market is still likely to get beaten down.
The question I am asking on Friday is whether the buyers are coming in at the support?
A trading session with various FOMC members and Fed Chair Yellen speaking gave the market some reason to sell down. I think we have saw how far have the market went down this week and I reckon we might see some short-covering tomorrow if the support is strong. Otherwise the market is still likely to get beaten down.
The question I am asking on Friday is whether the buyers are coming in at the support?
Direction for Friday 13 Nov, 2015: Up
2015 Daily Directional Accuracy: 116/180 (64.44%)
2015 Weekly Directional Accuracy: 25/41 (60.98%)
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