The Market at 11:30AM ET
| Nasdaq: +11.90…
| S&P: +5.66…
NASDAQ Vol: 598 mln…
NYSE Vol: 189 mln…
Moving the Market
Follow through from Friday rally
Gains in energy, consumer staples, and financial sectors
Waiting on several Fed speakers: Richmond Fed President Lacker (12:50 ET), St. Louis Fed President Bullard (13:05 ET), Dallas Fed President Fisher (13:15 ET)
Sector Watch 11:30AM ET
Strong: financial, technology, materials, health care
Weak: utilities, telecom services
[BRIEFING.COM] The major indices are all positive, which belies an otherwise lackluster position internally. To that end, the Advance-Decline line at the NYSE is close to even and it favors decliners at the Nasdaq by a 7-to-5 margin.
What it boils down to then is that price gains in a select group of influential stocks are making the difference for the major indices. Google
(GOOG 1080.60, +10.73) and Apple
(AAPL 567.88, +7.86) are standard bearers in that respect along with ExxonMobil
(XOM 96.07, +0.42), Chevron
(CVX 123.57, +1.28), and Goldman Sachs
(GS 168.23, +1.02).
With the unanswered question about the Fed's tapering timeline, it is possible that today's participants are gravitating toward large-cap stocks for the liquidity they provide, which makes it easier to get in and out of those stocks based on prevailing market conditions.
[BRIEFING.COM] Market is plodding along with modest gains, underpinned by a steady performance from the financials (+0.4%) today and the continued interest in owning large-cap technology stocks.
The Nasdaq 100 is up 0.5%, which puts it ahead of the pack in today's trading. Conversely, the Russell 2000 (-0.3%) is a notable laggard as small-cap issues feel the pinch of profit taking and perhaps some tax-loss selling interest that tends to pick up this time of year.
In fitting with the broader tone, Goldman Sachs
(GS 168.03, +0.82) is a leader in the Dow. McDonald's
(MCD 95.48, -1.32), meanwhile, is a notable laggard after reporting a 0.5% increase in global comparable sales for November that was accented by a disappointing 0.8% decline in its US business.
[BRIEFING.COM] Commodities are mostly higher this morning, while the dollar index is modestly lower.
Energy is in the red, except for natural gas futures, which is adding to its 4% gain last week, largely driven by unfavorable weather conditions in the U.S. Front-month natural gas futures (Jan contract) rose as high as $1.7% to $4.18/MMBtu and is now +1.6% at $4.18/MMBtu.
Jan crude oil is currently -0.1% at $97.52/barrel.
Metals are higher this morning with gold and silver futures hitting new session highs in recent trade, which follows losses last week. Feb gold is currently +0.5% at $1235.60/oz, Mar silver is +1.1% at $19.75/oz. Mar copper futures are +0.2% at $3.26/lb.
[BRIEFING.COM] The major indices continue to hold a winning edge, the sharpest of which belongs to the Nasdaq. The latter has risen 0.4% today and it is easy to see why with both Google
(GOOG 1080.27, +10.40) and Apple
(AAPL 563.46, +3.44) posting early gains. Facebook
(FB 48.28, +0.34), Twitter (TWTR 47.53, +2.58) and LinkedIn
(LNKD 235.71, +2.72) are some other luminaries still attracting buying interest.
Overall, there simply hasn't been a rush to take profits from Friday's rally. The S&P 500 is roughly two points away from a new, all-time intraday high with some influential support from the financial (+0.5%) and energy (+0.4%) sectors in the early-going.
The Dow Jones Industrial, which saw every component end higher on Friday, is more mixed today.
(Editor's Note: Original comment indicated S&P 500 was at a new all-time high, which wasn't the case.)
[BRIEFING.COM] The major indices started today's session on a slightly higher note as presaged by the action in the futures market. The upside bias has been driven by follow-through buying activity from Friday's broad-based rally.
The telecom services (-0.5%) and the utilities (-0.4%) sectors are the early laggards, which seems fitting given the more offensive-minded nature of the market recently. It can't be said, however, that rising rates today are diminishing interest in those rate-sensitive areas. The 10-yr note is +3/32 with its yield at 2.85%.
The financial (+0.3%), energy (+0.3%), and consumer staples (+0.2%) sectors are early standouts on the winning side of things.
[BRIEFING.COM] S&P futures vs fair value: +5.50. Nasdaq futures vs fair value: +13.00.
Markets across Asia were generally higher with Japan's Nikkei (+2.3%) leading the way. The strong gains came as Japan's Q3 Final GDP missed estimates (0.3% QoQ actual v. 0.4% QoQ expected) and the country's current account balance posted a surprise JPY0.06 bln deficit (+JPY1.2 bln expected). Both Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda made headlines overnight, suggesting 'Abenomics' is here to stay. Meanwhile, China's Shanghai Composite (+0.1%) and Hong Kong's Hang Seng (+0.3%) eked out gains after the latest trade data from the Middle Kingdom pointed to a larger than expected trade surplus ($33.8 bln actual v. $21.3 bln expected, $31.1 bln previous) on a jump in exports (12.7% actual v. 7.0% expected). Chinese CPI was also released, slowing to 3% YoY (3.2% YoY previous). Elsewhere, India's Sensex (+1.6%) rallied to all-time highs after results from the latest state elections saw a clean sweep by the opposition party ( Bharatiya Janta Party), which is viewed as more business friendly. Finally, Thailand's SET (+0.4%) edged up after Prime Minister Yingluck dissolved parliament amid anti-government protests.
Across the pond, the European markets are mixed. Spain's IBEX (+0.7%) is out in front while Germany's DAX (+0.4%) trails just behind. The gains in Germany come despite both industrial production (-1.2% MoM actual v. 0.8% MoM expected) and trade balance (EUR16.8 bln actual v. EUR17.4 bln expected, EUR18.7 bln previous) figures missing estimates. Small losses have both Britain's FTSE (-0.1%) and France's CAC (-0.2%) lagging the region. Peripheral yields are lower with the Italian and Spanish 10y both off four basis points at 4.140%.
[BRIEFING.COM] S&P futures vs fair value: +3.80. Nasdaq futures vs fair value: +10.80.
The futures market is working to maintain a positive disposition coming off Friday's broad-based rally. It has been successful so far as the S&P futures continue to point to a slightly higher start for the market when trading begins.
There isn't any economic data for the US today, but there is a lineup of Fed speakers, including Richmond Fed President Lacker (12:50 ET), St. Louis Fed President Bullard (13:05 ET), and Dallas Fed President Fisher (13:15 ET), all of whom will be addressing the economy in today's speeches. Mr. Bullard is an FOMC voter this year, Mr. Fisher will be an FOMC voter in 2014. Mr. Lacker does not have an FOMC vote this year and won't in 2014 either.
[BRIEFING.COM] S&P futures vs fair value: +3.80. Nasdaq futures vs fair value: +10.00.
The cash market is on track to start the session on a slightly higher note. Most foreign markets have traded higher on Monday, aided in part by Wall Street's rally on Friday.
Some individual movers of note at this juncture are Sysco
(SYY 44.39, +10.08), which is soaring in pre-market action after announcing an agreement to acquire US Foods for a total consideration (equity and debt) of $8.2 bln, and McDonald's (MCD 96.15, -0.65), which is down 0.7% after posting a 0.5% global comparable sales increase for November that was softened by a weak 0.8% decline in its US business.
[BRIEFING.COM] S&P futures vs fair value: +3.00. Nasdaq futures vs fair value: +9.00.
U.S. equity futures are trading slightly above fair value, leaving the cash market on course for a slightly higher open.
Reviewing overnight developments:
- Asian markets ended mostly higher. Japan's Nikkei +2.30%, Hong Kong's Hang Seng +0.3%, China's Shanghai +0.1%.
- Investors received several economic data points:
- China's trade surplus widened to 33.8 billion from 31.1 billion as imports grew 5.3% (7.2% forecast, 7.6% prior) and exports increased 12.7% (7.1% forecast, 5.6% previous). Separately, CPI declined 0.1% month-over-month (0.0% forecast, 0.1% prior) while the year-over-year reading decreased to 3.0% (3.2% forecast, 3.2% prior). Also of note, PPI fell 1.4% year-over-year (-1.4% forecast, -1.5% previous).
- Japan's GDP rose 0.3% quarter-over-quarter (0.4% forecast, 0.5% last) while the year-over-year reading climbed 1.1% (1.6% forecast, 1.9% previous). Separately, the current account surplus was JPY -0.128 tln trillion (JPY 0.153 tln forecast) versus prior JPY 0.587 tln and bank lending increased 2.2% (2.0% prior). Also of note, the Economy Watchers Current Index increased to 53.5 (52.3 forecast, 51.8 prior).
- New Zealand's Manufacturing Sales rose 4.7% quarter-over-quarter (-1.2% prior).
- In news:
- Yen trades close to six-month low after weaker-than-expected GDP data
- Major European indices...
- Economic data was limited:
- Eurozone Sentix Investor Confidence ticked down to 8.0 from 9.3.
- Germany's industrial production fell 1.2% month-over-month (0.8% consensus, -0.7% prior) and the trade surplus narrowed to EUR16.8 billion from EUR18.7 billion.
- Swiss retail sales increased 1.2% (2.1% forecast, 1.0% prior) while the unemployment rate held steady at 3.2%.
- Looking at news:
- Greece approved a 2014 budget deal with more than 3 bln euro of austerity cuts; Greece expects its economy to grow 0.6% in 2014
In U.S. corporate news:
- Walt Disney (DIS 71.46): reports say company plans to purchase Indiana Jones rights from paramount
- Kraft Foods (KRFT 54.42, +0.88): upgraded to Overweight from Equal Weight at Morgan Stanley
[BRIEFING.COM] S&P futures vs fair value: +1.50. Nasdaq futures vs fair value: +5.00.
. Hang Seng
[BRIEFING.COM] A solid November employment report translated into a solid day of gains for the major averages. While there was some talk that the encouraging job growth raised the odds of the Fed announcing a tapering at its December meeting, the message of the markets today was either that it didn't believe there would be a tapering this month or that it doesn't fear a tapering this month.
It was just one day, yet there was ample meaning wrapped up in the connection that the 10-yr Treasury note (+3/32, 2.87%) and the stock market both pushed higher. Gold prices and the US Dollar Index, meanwhile, were little changed.
The headlines for the employment data were reassuring on just about every front.
- Nonfarm payrolls increased by 203,000 (Briefing.com consensus 188,000) and were revised up for September (to 175,000 from 163,000) and down slightly for October (to 200,000 from 204,000)
- Nonfarm private payrolls increased by 196,000 (Briefing.com consensus 200,000)
- The unemployment rate fell to 7.0% from 7.3%
- Average hourly earnings increased by 0.2% (Briefing.com consensus 0.2%) while aggregate earnings increased 0.6% (a good portent for consumer spending)
- The average workweek edged up 0.1 to 34.5 hours (Briefing.com consensus 34.5) and factory overtime increased 0.1 to 3.5 hours
The employment report drowned out the Personal Income and Personal Spending report for October, which was released at the same time. That report was mixed with personal income declining 0.1% (Briefing.com consensus 0.3%) and personal spending rising 0.3% (Briefing.com consensus 0.3%).
There was nothing mixed, however, about the stock market action. It was decidedly positive throughout the day and featured broad-based participation that saw every S&P sector finish higher, every Dow component finish higher, and all major indices gain at least 0.7%.
Remarkably, the S&P 500 made up almost the entirety of the ground it lost in its five-session losing streak and came within a whisker of ending higher for the ninth straight week.
The consumer staples (+1.5%), industrials (+1.5%), financial (+1.4%), materials (+1.4%), and health care sectors (+1.4%) led today's winners. The energy sector, which gained 0.5%, was the weakest performer -- but it wasn't weak.
Weak areas were few and far between today. A number of retailers, though, were caught in the selling crosshairs after issuing disappointing guidance. Big Lots
(BIG 32.50, -4.63), American Eagle Outfitters
(AEO 14.85, -1.55), and Five Below
(FIVE 45.30, -2.45) were such offenders. J.C. Penney
(JCP 8.09, -0.76), meanwhile, got hit hit hard after a 10Q filing revealed an SEC request for information regarding the company's liquidity, cash position, and debt and equity financing.
Another area of notable weakness was the CBOE Volatility Index
(VIX 13.81, -1.27). It dropped 8.5% as portfolio protection bets were taken off in the risk-on advance.
Today's gains came on lighter-than-expected volume. To that point, NYSE volume totaled 671 mln shares versus 700 mln on Thursday.
- Nasdaq +34.5% YTD
- Russell 2000 +32.9% YTD
- S&P 500 +26.6% YTD
- DJIA +22.1% YTD