Updated: 10-31-2014

The Market at 08:32AM ET

Moving the Market

Bank of Japan boosts annual asset purchases to JPY80 trillion from JPY60-70 trillion: dollar/yen surges past 111.50

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08:32AM ET
[BRIEFING.COM] S&P futures vs fair value: +21.40. Nasdaq futures vs fair value: +59.00. The S&P 500 futures trade 21 points above fair value.

September personal income increased 0.2%, while the Briefing.com consensus expected an uptick of 0.3%. Meanwhile, personal spending slipped 0.2%, while the consensus expected an uptick of 0.1%.

Core PCE prices rose 0.1%, which is what the Briefing.com consensus expected.

Separately, the Q3 Employment Cost Index rose 0.7%, while the Briefing.com consensus expected an increase of 0.5%.

08:00AM ET
[BRIEFING.COM] U.S. equity futures trade sharply higher amid upbeat action overseas. The S&P 500 futures hover 22 points above fair value with the gain coming after the Bank of Japan boosted its asset purchasing program to JPY80 trillion from JPY60-70 trillion. The move weighed on the yen, sending the dollar/yen pair into the 111.70 area after trading near 108.80 at the end of yesterday's cash session. The news has boosted global equity markets with Japan's Nikkei surging 4.8% to lead the way.

Treasuries are modestly lower with the 10-yr yield up two basis points at 2.33%.

September Personal Income (Briefing.com consensus 0.3%), Personal Spending (consensus 0.1%), Core PCE Prices (expected 0.1%), and the Q3 Employment Cost Index (expected 0.5%) will all be released at 8:30 ET while the Chicago PMI report for October (consensus 60.0) will cross the wires at 9:45 ET. The day's data will be topped off with the final release of the Michigan Sentiment survey for October (expected 86.4).

In U.S. corporate news of note:
  • Anheuser-Busch InBev (BUD 109.04, -0.97): -0.9% following disappointing results. 
  • Citigroup (C 52.60, -0.55): -1.0% after adjusting its Q3 results to reflect a $600 million legal charge. 
  • Expedia (EXPE 83.40, +2.67): +3.3% in reaction to better than expected earnings and revenue. 
  • GoPro (GPRO 78.70, +10.45): +15.3% after beating expectations and issuing strong guidance. 
  • Groupon (GRPN 6.50, +0.51): +8.5% after beating estimates and guiding lower. 
  • LinkedIn (LNKD 214.30, +11.40): +5.6% after beating earnings and revenue estimates.
  • ON Semiconductor (ONNN 8.98, +0.97): +12.1% after better than expected revenue and above-consensus revenue guidance overshadowed a one-cent miss. 
  • Starbucks (SBUX 74.40, -2.92): -3.8% after its cautious earnings guidance overshadowed a bottom-line beat. 
Reviewing overnight developments:
  • Asian markets ended higher. Japan's Nikkei +4.8%, Hong Kong's Hang Seng +1.3%, and China's Shanghai Composite +1.2% 
    • In economic data: 
      • Japan's National CPI rose 3.2% year-over-year while Core CPI increased 3.0%. Both figures matched expectations. Tokyo CPI rose 2.5% (consensus 2.7%; prior 2.9%) and Tokyo Core CPI also increased 2.5%, as expected. Separately, Household Spending fell 5.6% year-over-year (expected -4.3%; previous -4.7%) and the Unemployment Rate ticked up to 3.6% from 3.5%, as expected. Finally, Housing Starts fell 14.3% year-over-year (consensus -17.5%; prior -12.5%). 
      • New Zealand's Building Consents fell 12.2% month-over-month (expected 1.0%; last -0.8%) 
      • Australia's PPI ticked up 0.2% quarter-over-quarter, as expected, while the year-over-year reading rose 1.2% (consensus 2.6%; last 2.3%) 
      • Singapore's Unemployment Rate ticked down to 1.9% from 2.0% (expected 2.0%) 
    • In news: 
      • In addition to boosting its asset purchases to JPY80 trillion, the Bank of Japan said it will now target average maturities between seven and ten years (up from 7 years) and buy ETFs up to an annual amount of JPY3 trillion (up from JPY1 trillion).
  • Major European indices trade higher across the board. Great Britain's FTSE +1.4%, Germany's DAX +2.2%, and France's CAC +2.4%. Elsewhere, Italy's MIB +2.0% and Spain's IBEX +2.0% 
    • Participants received several data points: 
      • Eurozone CPI ticked up to 0.4% from 0.3% while the Unemployment Rate held at 11.5%. Both figures matched expectations. 
      • Germany's Retail Sales fell 3.2% month-over-month (expected -1.0%; prior 1.5%) while the year-over-year reading rose 2.3% (consensus 0.8%; previous -0.7%)
      • French PPI came in at 0.5% (consensus -0.1%; previous -0.3%) while Consumer Spending slipped 0.8% month-over-month (expected -0.3%; last 0.9%) 
      • Italy's Monthly Unemployment Rate ticked up to 12.6% from 12.5% (expected 12.4%) while CPI increased 0.1% year-over-year (expected -0.2%; previous -0.2%). Separately, PPI fell 1.7% year-over-year (expected -2.0%; prior -1.7%) 
    • Among news of note: 
      • The IMF cautioned Greece against a premature exit from its bailout program, which remains in effect for another year. This comes after yesterday's reports from Germany suggested Greece may not be allowed to apply for another round of bailout funds.

06:54AM ET
[BRIEFING.COM] S&P futures vs fair value: +21.50. Nasdaq futures vs fair value: +57.50.

06:54AM ET
[BRIEFING.COM] Nikkei...16,413.76...+755.60...+4.80%.  Hang Seng...23,998.06...+296.00...+1.20%.

06:54AM ET
[BRIEFING.COM] FTSE...6,535.36...+71.80...+1.30%.  DAX...9,266.31...+151.40...+1.70%.

04:20PM ET
[BRIEFING.COM] The major averages ended the Thursday session on a higher note with the Dow Jones Industrial Average (+1.3%) spending the entire day in the lead. However, the strength among blue chips masked the underperformance of high-beta chipmaker and transport stocks. Furthermore, defensively-oriented health care (+1.8%) and utilities (+2.1%) finished in the lead, suggesting a lack of strong conviction.

Shortly before the open, the advance reading of Q3 GDP revealed growth of 3.5% while the Briefing.com consensus expected an increase of 3.0%. The news contributed to a rebound in the futures market, which had been pressured by early weakness in European equities. However, markets across Europe were able to erase their losses before ending for the day.

The Dow held the lead from the start thanks to a surge in its top-weighted component. Shares of Visa (V 236.65, +21.99) soared 10.2% in reaction to a bottom-line beat and news of a $5 billion buyback.

Visa's peer, MasterCard (MA 83.13, +7.14), also had a strong showing, spiking 9.4%, after it too surpassed earnings estimates. However, the two names were unable to push the technology sector (+0.2%) ahead of the broader market as other influential components like Apple (AAPL 106.98, -0.36), Facebook (FB 74.11, -1.75), and Microsoft (MSFT 46.05, -0.57) underperformed. Chipmakers also lagged with the PHLX Semiconductor Index falling 1.2%.

The high-beta group slumped after ending yesterday's session on its 50-day average (623.74). The complex widened its October loss to 3.4% with its largest component-Intel (INTC 32.58, -1.34)-plunging 4.0%.

Elsewhere among cyclical sectors, the materials space (+0.7%) had the strongest showing while energy (-0.3%) spent the day in the red. Crude oil, which fell 1.4% to $81.10/bbl, contributed to the weakness, while Chevron (CVX 117.20, +0.06) and ExxonMobil (XOM 94.45, -0.14) ended little changed ahead of their quarterly reports.

Also of note, industrials (+0.4%) could not catch up to the broader market due to the weakness among transports. The Dow Jones Transportation Average slid 1.2% with Con-way (CNW 42.35, -2.81) diving 6.2% despite beating bottom-line estimates. Meanwhile, peer C.H. Robinson (CHRW 69.22, -2.88) tumbled 4.0% in reaction to a Credit Suisse downgrade to 'Underperform' from 'Neutral.'

Meanwhile on the countercyclical side, consumer staples (+0.55%) and telecom services (+0.3%) slipped behind the market in the afternoon while health care (+1.8%) and utilities (+2.1%) finished in the lead.

The health care sector was boosted by strong results from AmerisourceBergen (ABC 84.84, +5.10) and Cigna (CI 97.10, +3.10). As for biotechnology, the iShares Nasdaq Biotechnology ETF (IBB 296.70, +6.07) settled higher by 2.1%.

Treasuries notched their highs right after the GDP report before spending the session in a steady retreat. The 10-yr yield slipped one basis point to 2.31%.

Today's participation was ahead of average with 730 million shares changing hands at the NYSE.

Economic data was limited to GDP and Initial Claims:
  • According to the advance estimate, GDP grew at an annualized rate of 3.5% during the third quarter while the Briefing.com consensus expected the reading to come in at 3.0%
    • Real final sales jumped 4.2%, which was the largest spike since Q4 2010 
    • The export deficit narrowed to $409.90 billion from $460.40 billion, boosting GDP growth by 1.32 percentage points 
    • Government spending surged 4.6%, representing the sharpest increase since Q2 2009 
  • Weekly Initial Claims increased to 287,000 from a revised rate of 284,000 (from 283,000) while the Briefing.com consensus called for a reading of 284,000 
    • Claims have held below the 300,000 mark for the past several weeks, suggesting payroll gains should surpass 200,000 
    • Continuing claims increased to 2.384 million from an upwardly revised 2.355 million (from 2.351 million) 
Tomorrow, September Personal Income (Briefing.com consensus 0.3%), Personal Spending (consensus 0.1%), Core PCE Prices (expected 0.1%), and the Q3 Employment Cost Index (expected 0.5%) will all be released at 8:30 ET while the Chicago PMI report for October (consensus 60.0) will cross the wires at 9:45 ET. The day's data will be topped off with the final release of the Michigan Sentiment survey for October (expected 86.4).
  • Nasdaq Composite +9.3% YTD 
  • S&P 500 +7.9% YTD 
  • Dow Jones Industrial Average +3.7% YTD 
  • Russell 2000 -0.7% YTD
Dow: +221.11… | Nasdaq: +16.91… | S&P: +12.35…
NASDAQ Adv/Dec 1757/1081. …NYSE Adv/Dec 1961/1118.

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