Updated: 10-15-2018

The Market at 04:25PM ET
Dow: -89.44… | Nasdaq: -66.15… | S&P: -16.34…
NASDAQ Vol: 2.10 bln… Adv: 1592… Dec: 1439…
NYSE Vol: 825 mln… Adv: 1763… Dec: 1183…

Moving the Market

Relative weakness of the information technology sector weighs on the broader market; Financials also lag in lackluster response to Bank of America earnings

Industrials sector gets lift from L3 Technologies, Harris Corp. all-stock merger

The S&P 500 fails to maintain posture above 200-day moving average (2766.54), which is seen as a key technical level

Sector Watch
Strong: Real Estate, Consumer Staples, Utilities, Industrials
Weak: Information Technology, Energy, Health Care, Financials, Consumer Discretionary

04:25PM ET

[BRIEFING.COM] U.S. stocks oscillated around the S&P 500's flat line on Monday before whipping noticeably lower in the final hour of trading. Renewed weaknesses in the information technology (-1.6%) and financials (0.5%) sectors coupled with ongoing concerns about the global economic growth outlook kept follow-through buying interest from Friday's rally in check. 

The S&P 500 lost 0.6% and closed below its 200-day moving average (2766.54), which is considered to be a key technical level.  The tech-heavy Nasdaq Composite lost 0.9% and the Dow Jones Industrial Average lost 0.4%. Meanwhile, the small-cap Russell 2000 outperformed, climbing 0.6%.

The struggling tech sector, which has been a bull market leader, has been a primary laggard during the market's recent setback.  Investors who dumped their riskier tech assets last week have yet to come back with conviction.  There were a few attempts in today's session, yet the buying interest waned each time as investors continued to trade out of some of the largest and most widely-held stocks. The heavily-weighted S&P 500 sector is down 7.5% for the month.

Notable information technology components that were down on Monday included Apple (APPL 217.36, -4.75, -2.1%), Microsoft (MFST 107.60, -1.97, -1.8%), Visa (V 137.23, -2.83, -2.0%), and MasterCard (MA 200.32, -3.90, -1.9%).

Additionally, the financials sector was unable to impress investors again after an underwhelming response to Bank of America's (BAC 27.92, -0.54, -1.9%) better-than expected earnings report. Charles Schwab (SCHW 47.64, -1.37, -2.8%) also fell after reporting earnings that were in-line with top and bottom estimates.

Bank of America reportedly fell because of some disappointment over the performance of its investment banking business, yet there were general concerns hanging over the sector that banks might be close to, or at, peak earnings growth. The rate-sensitive sector is now down 4.6% this month and 5.8% this year, despite interest rates nearing multi-year highs.

Treasury yields remained near their starting levels.  The 2-yr note yield ticked one basis point higher to 2.85%, and the 10-yr note yield rose two basis points to 3.16%.

Separately, United States-Saudi Arabia tensions brewed over the weekend following the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi. In response, President Trump threatened to impose sanctions on the world's largest oil producer if it was found to be guilty; however, President Trump said today that Saudi King Salman strongly denied to him any involvement in Mr. Khashoggi's disappearance.

Despite some underlying angst that the Saudi Arabian situation could boil over and potentially impact oil supplies, WTI crude prices were relatively subdued on Monday, settling 0.6% higher at $71.83/bbl.

In other corporate news, L3 Technologies (LLL 220.91, +25.13) rose 12.8% after announcing an all-stock merger of equals with Harris Corp. (HRS 173.25, +18.38, +11.9%). The combined company, L3 Harris Technologies, will be the 6th largest defense company in the U.S. and a top 10 defense company globally.

That merger news contributed to the relative strength of the industrials sector (+0.2%), which joined with the defensive-oriented consumer staples (+0.6%), real estate (+0.5%), and utilities (+0.4%) sectors to buck Monday's weakness in the broader market.

Separately, retailer Sears Holding (SHLD 0.31, -0.10, -23.8%) filed for Chapter 11 bankruptcy.  That was not a surprise to the market, as it had been widely speculated, yet the news itself generated a sentimental story line given the retailer's storied operating history.

Reviewing Monday's flurry of economic data, which included Retail Sales for September, the Empire State Manufacturing Survey for October, total business inventories for August, and the Treasury Budget for September:

  • Retail sales were up just 0.1% in September (Briefing.com consensus +0.6%) after increasing 0.1% in August. Excluding autos, sales declined 0.1% (Briefing.com consensus +0.4%).
    • The key takeaway from the report is that core retail sales, which factor into GDP growth models, were up a solid 0.5%. Hence, the headline numbers were disappointing, yet this report will still factor favorably for Q3 real GDP growth prospects.
  • The Empire State Manufacturing Survey for October checked in at 21.1 (Briefing.com consensus 18.0), up from 19.0 in September.
    • The key takeaway from the report is that the strength was led by upticks in the indexes for new orders and shipments, which reflects good demand.
  • Total business inventories increased 0.5% in August, in-line with the Briefing.com consensus estimate, after increasing an upwardly revised 0.7% (from 0.6%) in July. Total business sales also increased 0.5% after increasing 0.2% in July.
    • The key takeaway from the report is that business sales continued to outpace inventory growth year-over-year, which is a favorable trend that carries the potential to lead to a better pricing environment for businesses.
  • The Treasury Budget for September showed a surplus of $119.1 billion versus a surplus of $7.9 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the September surplus cannot be compared to the $214.1 billion deficit for August.
    • The budget deficit for fiscal 2018 totaled $779.0 billion versus $665.8 billion in fiscal 2017.

On Tuesday, investors will receive the Industrial Production report for September, the JOLTS - Job openings survey for August, the NAHB Housing Market Index for October, and Net Long-Term TIC Flows for July.

  • Nasdaq Composite +7.6% YTD
  • S&P 500 +2.9% YTD
  • Dow Jones Industrial Average +2.2% YTD
  • Russell 2000 +1.3% YTD
Dow: -89.44… | Nasdaq: -66.15… | S&P: -16.34…
NASDAQ Adv/Dec 1592/1439. …NYSE Adv/Dec 1763/1183.

03:30PM ET
[BRIEFING.COM]
  • Commodities started the week higher as the Bloomberg Commodity Index rose 1%. 
  • November Crude Oil futures rose $0.42 (0.59%) to $71.83/barrel. Rising tensions between the US and Saudi Arabia could cause risk to the upside for oil prices.
  • November Natural Gas settled $0.09 higher (2.85%) at $3.25/MMBtu
  • November RBOB Gasoline settled flat at $1.94/gallon
  • November Heating oil futures settled flat at $2.323/gallon
  • Taking a look at metals, December gold futures settled up $8.30 (0.7%) at $1230.30/oz.
  • December silver settled up $0.092 (0.6%) at $14.727/oz.
  • December copper settled down $0.012 (0.4%) at $2.7885/lb.
Dow: +43.03… | Nasdaq: -26.20… | S&P: -2.26…
NASDAQ Adv/Dec 1808/1235. …NYSE Adv/Dec 1955/977.

03:00PM ET

[BRIEFING.COM] The major indices have burst to their highs for the day.  The S&P 500 now trades 0.3% higher. The tech-heavy Nasdaq, which was down 1.3% at its low this morning, has climbed out of that hole and is now down 0.1%.  The Dow trades up 0.5%.

Overshadowed by the headlines surrounding the tech sector's weakness is the outperformance of the less volatile stocks, namely those in the real estate (+1.3%), consumer staples (1.1%), and utilities (+0.9%) sectors. Notable strong performers in each respective sector include American Tower (AMT 144.13, +2.08, +1.5%), Altria (MO 62.01, +1.95, +3.23%), and Southern (44.56, +0.98, +2.3%).

Interestingly, utilities is the only S&P 500 sector with monthly gains (+1.5%).

Separately, the U.S. dollar is down 0.3% against the Japanese yen to 111.84, hovering around a one-month low. The U.S. Dollar index is down 0.2%.

Dow: +120.78… | Nasdaq: -7.81… | S&P: +6.75…
NASDAQ Adv/Dec 1798/1190. …NYSE Adv/Dec 2055/871.

02:25PM ET

[BRIEFING.COM] Following the September treasury budget data, released at the top of the hour, the major averages retreated off highs.

The Treasury Budget for September showed a surplus of $119.1 billion versus a surplus of $7.9 billion for the same period a year ago. The Treasury Budget data is not seasonally adjusted, so the September deficit cannot be compared to the $214.1 billion deficit for August.

Total receipts of $343.6 billion for September were $5.2 billion less than the year-ago period. Total outlays in September were $224.4 billion, $116.4 billion less than the year-ago period.

The fiscal year-to-date deficit is $779.2 billion versus $665.6 billion at the same point in fiscal 2017.

Dow: -0.54… | Nasdaq: -38.49… | S&P: -2.23…
NASDAQ Adv/Dec 1668/1312. …NYSE Adv/Dec 1908/990.

02:00PM ET

[BRIEFING.COM] Since our last update the major averages made new session highs, though the Nasdaq Composite failed to break above Friday's close. The S&P 500 and the Dow Jones Industrial Average hold gains of 0.2% and 0.3% apiece.

Gold futures settled 0.6% higher at $1,229.20/oz, registering their highest settle since late July as global tensions have given the yellow metal a boost.

The U.S. Dollar Index sits about 0.1% lower at 95.10.

Dow: +85.44… | Nasdaq: -4.34… | S&P: +5.82…
NASDAQ Adv/Dec 1783/1175. …NYSE Adv/Dec 2022/882.

01:35PM ET

[BRIEFING.COM] The market continues to sway back and forth.  The S&P 500 ticks 0.1% below its flat line after trading higher slightly higher a short time ago. Tech weakness remains, as the tech-heavy Nasdaq now trades lower by 0.5%, and the Dow remains higher by 0.1%.

A look inside the Dow shows Walt Disney (DIS 114.55, +1.95) and Walgreens Boots Alliance (WBA 75.07, +1.57) sporting comfortable gains of 1.7% and 2.1%, individually. Pivotal Research Group raised its price target for Walgreens based on a positive outlook for the company.

The Dow is currently down 4.1% this month, though still better than the S&P 500 (-5.1%) and Nasdaq (-7.3%).

Looking ahead, Dow components Goldman Sachs (GS 215.23, +1.36), Johnson & Johnson (JNJ 134.62, +0.70), UnitedHealth (UNH,  261.27, +1.70), and IBM (IBM 141.56, +0.71) will report earnings tomorrow.

Dow: +45.93… | Nasdaq: -26.77… | S&P: +0.56…
NASDAQ Adv/Dec 1625/1317. …NYSE Adv/Dec 1900/994.

01:00PM ET

[BRIEFING.COM] The stock market has traded in a whippy fashion today, unable to find a definitive course as it continues to wrestle with concerns about rising interest rates, tariff issues, diplomatic tension with Saudi Arabia, and worries about earnings growth being at, or near, a peak. Additionally, it has been stymied by the renewed underperformance of the information technology (-0.8%) and financial (-0.3%) sectors.

Currently, the S&P 500 is down 0.1% after having been down 0.7% at its intraday low around 10:15 a.m. ET and up 0.2% at its intraday high around 11:30 a.m. ET.  That price movement has seen the S&P 500 gyrate around a key technical level at its 200-day moving average (2766.54).

It is fair to say that many participants were expecting more out of today's market given the rebound effort on Friday, which culminated with a rally into the close.  There was no follow-through buying interest at the open, however.

Instead, the major indices succumbed to renewed selling interest that was targeted on the heavily-weighted information technology sector without any specific news to account for the move.  

Investor confidence was weakened somewhat by some surprisingly weak retail sales results for September, as well as the scandalous allegations implicating Saudi Arabia in the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi.

Those allegations have kicked up a good bit of diplomatic dust, as there has been some talk that the U.S. could punish Saudi Arabia if it is found guilty of the aforementioned allegations.  Saudi Arabia for its part has reportedly threatened to retaliate if it is hit with any penalties, which some participants think could take the form of cutting oil supplies to drive up oil prices and hurt economic growth.

The king of Saudi Arabia, however, spoke to President Trump and reportedly denied any knowledge of Mr. Khashoggi's disappearance.

Oil prices have been held in check for the most part, underscoring a prevailing belief at this juncture that this issue won't blow up and fuel a spike in oil prices.

The latter point notwithstanding, the stock market has lacked conviction, getting little mileage out of the announcement that defense technology companies Harris Corp. (HRS 170.28, +15.41, +10.0%) and L3 Technologies (LLL 217.42, +21.64, +11.1%) will be tying up in an all-stock merger of equals.  That news has lifted the industrials sector (+0.4%), yet it hasn't been a precipitating catalyst for broader buying interest.

Similarly, the better-than-expected earnings report from Bank of America (BAC 27.96, -0.50, -1.8%) hasn't ignited broad buying efforts either.  The response to the report has been underwhelming, as investors have reportedly been bothered by the relatively weak showing from Bank of America's investment banking unit, as well as general concerns that the banks might be close to, or at, peak earnings growth.

The latter view is debatable, yet it is clear that the financial sector is being held back at a time when it was thought it might lead.

In another notable corporate development, retailer Sears Holdings (SHLD 0.32, -0.09, -22.6%) filed for Chapter 11 bankruptcy, as had been widely speculated. 

Looking at today's economic reports:

  • Retail sales were up just 0.1% in September (Briefing.com consensus +0.6%) after increasing 0.1% in August. Excluding autos, sales declined 0.1% (Briefing.com consensus +0.4%).
    • The key takeaway from the report is that core retail sales, which factor into GDP growth models, were up a solid 0.5%. Hence, the headline numbers were disappointing, yet this report will still factor favorably for Q3 real GDP growth prospects.
  • Total business inventories increased 0.5% in August, in-line with the Briefing.com consensus estimate, after increasing an upwardly revised 0.7% (from 0.6%) in July. Total business sales also increased 0.5% after increasing 0.2% in July.
    • The key takeaway from the report is that business sales continued to outpace inventory growth year-over-year, which is a favorable trend that carries the potential to lead to a better pricing environment for businesses.
  • The Empire State Manufacturing Survey for October checked in at 21.1 (Briefing.com consensus 18.0), up from 19.0 in September
    • The key takeaway from the report is that the strength was led by upticks in the indexes for new orders and shipments, which reflects good demand.

(Editor's note: The original version indicated the crown prince of Saudi Arabia spoke to President Trump, but it was the king of Saudi Arabia who spoke to the president.  The comment has been corrected).

Dow: +21.91… | Nasdaq: -30.05… | S&P: -2.72…
NASDAQ Adv/Dec 1607/1337. …NYSE Adv/Dec 1837/1059.

12:35PM ET

[BRIEFING.COM] This morning's rebound effort ran into some resistance as the S&P 500 tried to reclaim a posture above its 200-day moving average (2766.54).  Accordingly, there has been some backtracking, yet today's overall losses remain modest in scope. The S&P 500 is currently trading lower by 0.2% while the tech-heavy Nasdaq is down 0.5%.

Several sectors are down in late morning trading with information technology (-1.0%) continuing to lead the retreat. Top weighted Apple (APPL 217.93, -4.26, -1.9%) and Microsoft (108.22, -1.38, -1.3%) weigh heavily on the sector. 

Conversely, the real estate (+0.9%) and consumer staples (+0.8%) sectors shine as this morning's strong performers. The two sectors have held up better than most sectors this month, losing 4.7% and 2.0%, respectively.

Separately, gold and silver are both sporting modest gains of 0.7% at $1230.2/oz and $14.72/oz, respectively. 

Dow: -36.89… | Nasdaq: -41.52… | S&P: -7.06…
NASDAQ Adv/Dec 1475/1446. …NYSE Adv/Dec 1772/1106.

12:05PM ET

[BRIEFING.COM] The S&P 500 has slid 0.3%. The Dow outperforms, trading close to its flat line, while the Nasdaq is down 0.8%.

The Dow Jones Transportation Average trades 0.5% higher. The average, often seen as a leading indicator of the health of the U.S. economy, has been slumping in October, evidenced by its 7.3% monthly loss. Standout performances include American Airlines (AAL 32.02, +1.11) and Southwest Air (LUV 57.95, +0.54) with respective gains of 3.5% and 1.0%.

In Europe, the major indices closed mostly higher after a rough stretch last week. Germany's DAX added 0.8%, UK's FTSE increased 0.5%, and France's CAC remained unchanged.

Dow: -57.60… | Nasdaq: -60.84… | S&P: -11.95…
NASDAQ Adv/Dec 1325/1585. …NYSE Adv/Dec 1582/1276.

11:30AM ET

[BRIEFING.COM] The S&P 500 has recovered today's losses, aided by an uptick across most sectors.  That uptick, though, has been bolstered by a recovery try in the S&P 500 information technology sector, which is down 0.4% now after being down as much as 1.7% earlier in the day.

The influential financials sector (+0.04%) is trying to mount a comeback, too, but is still trailing the action following a relatively lackluster response to Bank of America (BAC 27.77, -0.69, -2.4%) beating earnings expectations. Reportedly, there was some disappointment in the performance of Bank of America's investment banking unit. At the same time, there are underlying concerns about the banks in general being at, or near, peak earnings growth. The sector is now down roughly 6% since last Monday. 

Separately, the 2-yr yield remains at 2.84% while the benchmark 10-yr yield is up two basis points to 3.16%. The 10-yr note yield is currently 10 basis points shy of its seven-year high it reached last Tuesday.

Dow: +38.03… | Nasdaq: -29.00… | S&P: -1.12…
NASDAQ Adv/Dec 1508/1376. …NYSE Adv/Dec 1819/1022.

11:00AM ET

[BRIEFING.COM] The S&P 500 is down 0.2% and the tech-heavy Nasdaq continues to underwhelm, trading 0.7% lower.

The information technology (-1.1%) and consumer discretionary (-0.4%) sectors lead the broader market retreat. The two sectors have struggled mightily in October with respective losses of 7.2% and 8.2% this month. Top-weighted tech component Apple (AAPL 218.55, -3.52) and top-weighted consumer discretionary component Amazon (AMZN 1751.63, -35.98) are dragging down their respective sectors today with losses of 1.5% and 2.2% apiece. 

Conversely, the industrials sector is showing relative strength, up 0.4%, after defense technologies companies L3 Technologies (LLL 216.63, +21.00, +9.7%) and Harris Corp. (HRS 169.00, +14.13, +8.1%) announced an all-stock merger of equals. The combined company will be the sixth largest defense contractor in the U.S.

Separately, oil prices briefly turned negative following President Trump's comments to reporters regarding Saudi Arabia in which he said King Salman of Saudi Arabia strongly denied any involvement with the disappearance and alleged murder of Washington post columnist Jamal Khashoggi. WTI crude is currently trading 0.1% higher at $71.39/bbl.

Dow: +3.39… | Nasdaq: -63.08… | S&P: -6.24…
NASDAQ Adv/Dec 1182/1681. …NYSE Adv/Dec 1479/1349.

10:30AM ET

[BRIEFING.COM] Commodities are mostly higher to start the week. The Bloomberg Commodity Index is up 0.5%.

Crude oil futures are little changed this morning. November crude oil futures are slightly lower at $71.31/barrel, down $0.03. Iran oil exports continue to fall ahead of US sanctions, which go into effect on November 4.

Natural gas futures are strong after hitting a nine-month high last week. November natural gas futures are up $0.07 or 2.3% at $3.23/MMBtu.

Precious metals are up ~1%. December gold futures are up $11 or 0.9% at $1233/oz while December silver futures are up $0.14 or 1% at $14.78/oz

Dow: -18.63… | Nasdaq: -69.77… | S&P: -10.28…
NASDAQ Adv/Dec 1175/1614. …NYSE Adv/Dec 1480/1351.

10:00AM ET

[BRIEFING.COM] Stocks are still slightly lower with the S&P 500 trimming 0.3%.

Just in, Business Inventories rose 0.5% in August (Briefing.com consensus +0.5%). The July reading was revised to +0.7% from +0.6%.

Dow: -9.44… | Nasdaq: -43.85… | S&P: -8.04…
NASDAQ Adv/Dec 1369/1416. …NYSE Adv/Dec 1684/1033.

09:45AM ET

[BRIEFING.COM] The major averages slip in the opening minutes of today's session with the S&P 500 trading 0.2% lower. The blue-chip Dow Jones Industrial Average is lower by 0.2%, and the tech-heavy Nasdaq Composite is down 0.8%.

Early sector standings show the consumer staples (+0.4%) and real estate (+0.3%) sectors atop the leaderboard and the heavily-weighted information technology sector (-1.0%) dragging on the broader market. Microsoft (MSFT 108.31, -1.24), Visa (V 138.40, -1.64), and MasterCard (MA 201.68, -2.78) weigh on the tech sector with respective losses of 1.4%, 1.5%, and 1.6%.

Separately, the U.S. Dollar Index, which tracks the dollar against six major currencies, is down 0.2% to 94.73, nearing a two-week low.

Dow: -4.78… | Nasdaq: -44.49… | S&P: -5.92…
NASDAQ Adv/Dec 1239/1515. …NYSE Adv/Dec 1522/1137.

09:16AM ET
[BRIEFING.COM] S&P futures vs fair value: -6.00. Nasdaq futures vs fair value: -26.50.

The S&P 500 futures remain slightly lower, trading six points, or 0.2%, below fair value.

Tensions between the United States and Saudi Arabia over the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi have made headlines over the weekend over possible U.S. sanctions on Saudi Arabia. The news has yet to bolster WTI crude prices to any meaningful degree, though, as they have only increased 0.6% to $71.72/bbl.

On the earnings front, Bank of America (BAC 28.72, +0.26) and Charles Schwab (SCHW 49.50, +0.49) are both trading 1.0% higher in pre-market trading after reporting earnings this morning. Bank of America reported above-consensus earnings, and Charles Schwab reported top and bottom lines as expected.

Additionally, investors received September Retail Sales and the New York Fed's Empire State Manufacturing Index for October earlier this morning:

  • September retail sales rose 0.1% (Briefing.com consensus +0.6%) following an unrevised 0.1% increase in August. Excluding autos, retail sales decreased 0.1% in September (Briefing.com consensus +0.4%) after increasing a downwardly revised 0.2% (from 0.3%) in August.
  • The Empire Manufacturing Index for October increased to 21.1 (Briefing.com consensus 18.0) from the prior month's unrevised reading of 19.0.

08:51AM ET
[BRIEFING.COM] S&P futures vs fair value: -6.00. Nasdaq futures vs fair value: -26.50.

The S&P 500 futures are trading six points, or 0.2%, below fair value.

Equity indices in the Asia-Pacific region began the week on a mostly lower note. The People's Bank of China Governor Yi Gang said the PBoC is considering a range of risks in its current policy and that there is ample room for adjustments to monetary policy. He added that policy will remain neutral with a focus on guiding expectations. Press reports from Japan indicate Prime Minister Shinzo Abe intends to raise Japan's sales tax in October 2019. Bank of Japan Governor Haruhiko Kuroda said the BoJ will use interest rates to signal its exit from ultra-easy monetary policy.

  • In economic data:
    • Japan's August Industrial Production +0.2% month-over-month (expected 0.7%; last 0.7%) and Capacity Utilization +2.2% (expected 0.1%; last -0.6%). October Reuters Tankan Index 28 (last 26)
    • South Korea's September trade surplus $9.57 billion (last surplus of $9.70 billion). September Imports -1.6% year-over-year (last -2.1%) and September Exports -8.2% year-over-year (last -8.2%)
    • India's September trade deficit $13.98 billion (expected deficit of $17.03 billion; last deficit of $17.39 billion). September WPI Inflation +5.13% year-over-year (expected 4.90%; last 4.53%). WPI Fuel +16.65% year-over-year (last +17.73%)

---Equity Markets---

  • Japan's Nikkei lost 1.9%, approaching its September low. Softbank slid 7.3% amid concerns about the company's ties to Saudi Arabia. Fast Retailing surrendered 4.5% while Daikin Industries, Terumo, Okuma, Taisei, Toyota Motor, Trend Micro, TDK, TOTO, Konami, Kyocera, and Komatsu surrendered between 1.8% and 3.4%.
  • Hong Kong's Hang Seng fell 1.4%. AAC Technologies slumped 7.6% while Country Garden Holdings, China Resources Land, Tencent Holdings, China Overseas, China Construction Bank, ICBC, HSBC, and China Life Insurance lost between 1.9% and 6.7%.
  • China's Shanghai Composite ended lower by 1.5%. ENN Ecological Holdings, Dr. Peng Telecom & Media, BAIC BluePark New Energy, Phenix Optical, and Qingdao Haier slid between 7.8% and 9.2%.
  • India's Sensex added 0.4% despite losses in more than half of its components. Infosys, Tata Consultancy, and Wipro gained between 1.4% and 3.0% while ITC, Sun Pharma, HDFC Bank, and Tata Motors rose between 0.5% and 2.5%.

Major European indices trade near their flat lines. Brexit negotiators from the EU and Britain paused their discussions until a Wednesday summit after failing to make progress over the weekend. Leaders from the 27 EU states and Britain will attend a dinner in Brussels on Wednesday. A failure to make progress this week would shift the attention to a crisis summit, which has been tentatively scheduled for November 17-18. In Germany, the Bavarian state election held over the weekend saw a big drop in support for CSU, the sister part of Angela Merkel's CDU, while support for fringe parties increased, with Alternative fur Deutschland (10.2%) making it into parliament for the first time.

  • Economic data was limited:
    • Swiss September PPI -0.2% month-over-month (expected 0.1%; last 0.0%); +2.6% year-over-year (expected 3.0%; last 3.4%)

---Equity Markets---

  • France's CAC has shed 0.1%. Consumer names like Kering, Hermes, Louis Vuitton, Pernod Ricard, L'Oreal, and Accor hold losses between 0.4% and 2.5%. On the upside, Sanofi has climbed 1.5%.
  • UK's FTSE has added 0.2%. Taylor Wimpey, Dixons Carphone, Associated British Foods, InterContinental Hotels, Marks & Spencer, Persimmon, Burberry, Next, and Kingfisher have given up between 1.3% and 2.4%.
  • Germany's DAX is higher by 0.4%. Volkswagen leads with a gain of 3.3% while Bayer, Deutsche Bank, BMW, Merck, Adidas, and Siemens are up between 0.4% and 2.2%. Lufthansa is the weakest performer, falling 3.2%.

08:35AM ET
[BRIEFING.COM] S&P futures vs fair value: -4.00. Nasdaq futures vs fair value: -16.00.

The S&P 500 futures are currently trading four points, or 0.1%, below fair value.

Just in, September retail sales rose 0.1% (Briefing.com consensus +0.6%), while the August increase was unrevised at 0.1%. Excluding autos, retail sales decreased 0.1% in September (Briefing.com consensus +0.4%), and the August increase was revised to 0.2% from 0.3%.

Separately, the Empire Manufacturing Survey for October increased to 21.1 (Briefing.com consensus 18.0) from the prior month's unrevised reading of 19.0.


08:00AM ET
[BRIEFING.COM] S&P futures vs fair value: -4.00. Nasdaq futures vs fair value: -17.80.

U.S. futures are pointing to slight losses at the open following last week's sharp downturn. The S&P 500 futures are currently trading four points, or 0.1%, below fair value.

Investors remain cautious about a U.S.-China trade war and rising bond yields crimping economic growth. On a related note, the benchmark 10-yr yield is up two basis points to 3.16%, and the Fed-sensitive 2-yr yield is up two basis points to 2.86%, both nearing this month's multi-year highs.

Separately, U.S. and Saudi Arabia tensions have been brewing over the disappearance and suspected death of Saudi journalist Jamal Khashogg. Over the weekend, President Trump in a 60 Minutes interview vowed 'severe punishment' if Mr. Khashoggi was murdered by the Saudis. Saudi Arabia retorted that it will retaliate if the US imposed additional sanctions. 

Oil prices have risen amid the geopolitical concerns. WTI crude is up 0.8% at $71.89/bbl, though still lower from its four-year high it reached earlier this month at $76.90/bbl.

Separately, investors will pay heed to the September Retail Sales report (Briefing consensus 0.6%) and the New York Fed's Empire State manufacturing reading for October (Briefing.com consensus 18.0) at 8:30 a.m. ET.  The August Business Inventories report will be released at 10:00 AM ET.

In addition, the earnings-reporting season continues today and will pick up as the week progresses. Bank of America (BAC 28.63, +0.17, +0.6%) reported in-line revenues and better-than-expected earnings.

In U.S. Corporate news:

  • Bank of America (BAC 28.76, +0.30): +1.1% after posting better-than-expected third quarter earnings
  • L-3 (LLL 207.28, +11.50): +4.8% after beating third quarter earnings estimates and announcing an all-stock merger with Harris Corporation (HRS)
  • Sears Holdings (SHLD 0.32, -0.083): -20.3% following the company and certain of its subsidiaries filing voluntary petitions for relief under Chapter 11.

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region began the week on a mostly lower note. Japan's Nikkei -1.9%, Hong Kong's Hang Seng -1.4%, China's Shanghai Composite -1.5%, India's Sensex +0.4%
    • In economic data:
      • Japan's August Industrial Production +0.2% month-over-month (expected 0.7%; last 0.7%) and Capacity Utilization +2.2% (expected 0.1%; last -0.6%). October Reuters Tankan Index 28 (last 26)
      • South Korea's September trade surplus $9.57 billion (last surplus of $9.70 billion). September Imports -1.6% year-over-year (last -2.1%) and September Exports -8.2% year-over-year (last -8.2%)
      • India's September trade deficit $13.98 billion (expected deficit of $17.03 billion; last deficit of $17.39 billion). September WPI Inflation +5.13% year-over-year (expected 4.90%; last 4.53%). WPI Fuel +16.65% year-over-year (last +17.73%)
    • In news:
      • The People's Bank of China Governor Yi Gang said the PBoC is considering a range of risks in its current policy and that there is ample room for adjustments to monetary policy. He added that policy will remain neutral with a focus on guiding expectations.
      • Press reports from Japan indicate Prime Minister Shinzo Abe intends to raise Japan's sales tax in October 2019.
      • Bank of Japan Governor Haruhiko Kuroda said the BoJ will use interest rates to signal its exit from ultra-easy monetary policy.
  • Major European indices trade near their flat lines. France's CAC -0.1%, UK's FTSE -0.1%, Germany's DAX +0.4%.
    • In economic data:
      • Swiss September PPI -0.2% month-over-month (expected 0.1%; last 0.0%); +2.6% year-over-year (expected 3.0%; last 3.4%)
    • In news:
      • Brexit negotiators from the EU and Britain paused their discussions until a Wednesday summit after failing to make progress over the weekend. Leaders from the 27 EU states and Britain will attend a dinner in Brussels on Wednesday.
      • A failure to make progress this week would shift the attention to a crisis summit, which has been tentatively scheduled for November 17-18.
      • In Germany, the Bavarian state election held over the weekend saw a big drop in support for CSU, the sister part of Angela Merkel's CDU, while support for fringe parties increased, with Alternative fur Deutschland (10.2%) making it into parliament for the first time.

06:59AM ET
[BRIEFING.COM] S&P futures vs fair value: -14.00. Nasdaq futures vs fair value: -60.50.

06:59AM ET
[BRIEFING.COM] Nikkei...22271...-423.40...-1.90%.  Hang Seng...25445...-356.40...-1.40%.

06:59AM ET
[BRIEFING.COM] FTSE...6995.54...-0.40...0.00%.  DAX...11537.60...+13.80...+0.10%.

04:30PM ET

[BRIEFING.COM] Stocks rebounded on Friday, recouping a good chunk of their weekly losses in a volatile day of trading. The S&P 500 added as much as 1.7% at the start of the session, but nearly wiped it all out intraday before rallying to finish higher by 1.4%.

The Dow Jones Industrial Average advanced 1.2%, and the tech-heavy Nasdaq Composite outperformed, finishing higher by 2.3%. Small caps underperformed, though, leaving the Russell 2000 with a slim gain of 0.1%. For the week, the four indices lost between 3.7% and 5.2%.

This week's sharp sell-off propagated a belief that the major indices had gotten oversold on a short-term basis and were due for a rebound. Friday's upward movement also found some technical support from the S&P 500's 200-day moving average (2766.17), which the index closed just slightly above at 2767.13.

The third quarter earnings season began on a mixed note on Friday morning when big banks JPMorgan Chase (JPM 106.95, -1.18, -1.1%), Citigroup (C 69.84, +1.46, +2.1%), and Wells Fargo (WFC 52.11, +0.67, +1.3%) reported before the opening bell. JPMorgan and Citigroup both beat earnings estimates, but Wells Fargo came up short. In the company's conference call, JPMorgan CEO Jamie Dimon expressed optimism in the global economy, although he did note that trade tensions present some risks going forward.

On a related note, PNC (PNC 124.26, -7.35) tumbled 5.6% despite beating bottom-line estimates.

The financials sector added as much as 1.6% following bank earnings, but eventually rolled over, bringing the broader market with it. The group did rebound in the final stretch though, closing higher by 0.1%. 10 of 11 sectors finished in the green, and information technology was the top performer with a gain of 3.2%.

Within the tech sector, giants Apple (AAPL 222.11, +7.66, +3.6%) and Microsoft (MSFT 109.57, +3.66, +3.5%) outperformed, as did chipmakers, evidenced by a 2.0% jump in the Philadelphia Semiconductor Index. Meanwhile, in the communication services sector (+2.1%), Netflix (NFLX 339.56, +18.46) rallied 5.8% after Citigroup said its recent tumble represents a buying opportunity.

Away from equities, U.S. Treasuries finished roughly flat on Friday, with the benchmark 10-yr yield ticking up one basis point to 2.14%. Meanwhile, the U.S. Dollar Index rebounded from a more than two-week low, climbing 0.3% to 94.96, and WTI crude climbed 0.6% to $71.41/bbl. Crude finished solidly lower for the week though, dropping 3.9%.

Also of note, the CBOE Volatility Index (VIX) fell 14.3% on Friday, retreating from its highest level since February.

Reviewing Friday's economic data, which included September Import/Export Prices and the preliminary reading of the University of Michigan Consumer Sentiment Index for October:

  • Export prices were flat in September after declining 0.2% in August and import prices were up 0.5% after being down 0.4% in August. Excluding agricultural exports, export prices increased 0.2% after declining 0.2% in August. Excluding fuel, import prices were unchanged after declining 0.2% in August.
    • The key takeaway from the report is rooted in the understanding that nonfuel import prices are being held in check, which is helpful in terms of easing some of the market's inflation angst.
  • The preliminary University of Michigan Index of Consumer Sentiment for October checked in at 99.0 (Briefing.com consensus 100.0) versus the final reading of 100.1 for September.
    • The key takeaway from the report is that it revealed some budding concerns about inflation crimping real income expectations, which is something to be watched closely considering spending is driven more by income growth than consumer confidence.

Looking ahead, investors will receive September Retail Sales on Monday.

  • Nasdaq Composite +8.6% YTD
  • S&P 500 +3.5% YTD
  • Dow Jones Industrial Average +2.5% YTD
  • Russell 2000 +0.7% YTD

Week In Review: An Ugly Week on Wall Street

Stocks sold off sharply this week, sending the S&P 500 lower by 4.1%. Fears over potentially weakening economic and earnings growth helped fuel the selling, which left stocks at three-month lows going into the third quarter earnings season. The Dow Jones Industrial Average lost 4.2% this week, and the tech-heavy Nasdaq Composite fell 3.7%.

The International Monetary Fund (IMF) cut its 2018 and 2019 global growth outlook to 3.7% from 3.9% on Tuesday, citing trade uncertainties that include tariffs between the U.S. and China, a pending Brexit deal, and the new trilateral agreement between the U.S., Canada, and Mexico that's supposed to replace NAFTA.

On a related note, President Trump and Chinese leader Xi Jinping have reportedly agreed to meet at next month's G-20 summit with hopes of resolving their trade conflict.

A third quarter earnings warning from specialty chemicals company PPG Industries (PPG) weighed on sentiment this week, dampening hopes of another strong quarter. Financial giants JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) kicked off the Q3 earnings season on Friday with mixed results; JPM and C beat bottom-line estimates, but WFC missed. The financial sector initially had a positive reaction to the earnings results on Friday, but later rolled over to close the week with a total loss of 5.6%. A curve-flattening trade in the bond market didn't bode well for lenders, which depend on the interest-rate differential between what they pay for deposits and what they make on loans.

The yield on the benchmark 10-yr Treasury note, which spiked to a seven-year high last week, hovered between 3.12% and 3.26% before eventually settling Friday at 3.14% -- nine basis points below last Friday's close. Meanwhile, the yield on the more Fed-sensitive 2-yr Treasury note fell four basis points to 2.84%, leaving the 2-10 spread with a five bps point loss for the week.

President Trump blamed this week's selling on the Federal Reserve, which he says has "gone crazy" with its rate hikes. The Fed has raised rates three times this year with the most recent hike coming in September, and it appears to be on track to raise rates again at its December meeting. The CME FedWatch Tool places the chances of a December rate hike at 79.7%; that's down slightly from 80.0% last Friday.

The S&P 500 got into technical trouble this week, breaching its 50-day moving average on Wednesday and then its 200-day moving average on Thursday. The benchmark index tried to reclaim its 200-day moving average on Friday, but closed right at the key technical mark. The Dow Jones Industrial Average and the Nasdaq Composite breached their 200-day moving averages as well; the Dow eventually reclaimed the key technical level, but the Nasdaq did not.

Also of note, the CBOE Volatility Index (VIX), often referred to as the "investor fear gauge," touched its highest level since late March (28.64) before pulling back a bit on Friday. Still, the VIX finished the week roughly 40% higher.

In other news, Hurricane Michael made landfall in the Florida Panhandle on Thursday as a Category 4 storm. The storm has devastated the region, causing billions of dollars in damages and killing at least 13 people. Many oil producers in the Gulf of Mexico halted operations in anticipation of the storm, but WTI crude fell this week nonetheless, dropping 3.9% to $71.41/bbl, and the S&P 500's energy sector lost 5.4%.

Looking ahead, earnings season will ramp up next week with Bank of America (BAC), Charles Schwab (SCHW), UnitedHealth (UNH), Johnson & Johnson (JNJ), Morgan Stanley (MS), Goldman Sachs (GS), IBM (IBM), Netflix (NFLX), Travelers (TRV), American Express (AXP), PayPal (PYPL), Procter & Gamble (PG), and a host of others scheduled to report their quarterly results.

In addition, investors will receive September Retail Sales, Industrial Production and Capacity Utilization, Housing Starts and Building Permits, Existing Home Sales, and the minutes from the September FOMC meeting.

Dow: +287.16… | Nasdaq: +167.83… | S&P: +38.76…
NASDAQ Adv/Dec 1835/1215. …NYSE Adv/Dec 1711/1280.

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