Briefing.com

Stock Market Update

Updated: 20-Sep-17

The market at 16:30 ET
Dow: +41.79...
Nasdaq: -5.28... S&P: +1.59...
NYSE Vol: 837.0 mln.. Adv: 1612.. Dec: 1283
Nasdaq Vol: 2.04 bln.. Adv: 1449.. Dec: 965
Moving the Market Sector Watch


Fed announces balance sheet normalization process will begin in October; dot plot forecasts a third rate hike in 2017

Apple (AAPL) slides amid rumors of softer-than-expected iPhone 8 demand

Transports rally following FedEx (FDX) earnings
Strong: Financials, Consumer Discretionary, Industrials, Energy, Materials, Health Care, Telecom Services

Weak: Technology, Consumer Staples, Utilities, Real Estate
16:30 ET Dow +41.79 at 22412.59, Nasdaq -5.28 at 6456.04, S&P +1.59 at 2508.24

[BRIEFING.COM] The stock market settled at a new record high once again on Wednesday, but the victory was far from convincing and looked improbable after the latest FOMC policy directive prompted a mild sell off. Both the Dow and the S&P 500 finished at new all-time highs, adding 0.2% and 0.1%, respectively. However, the tech-heavy Nasdaq slipped 0.1% as technology stocks struggled.

As expected, the FOMC unanimously voted to keep the fed funds target range at 1.00%-1.25% and announced that it will begin unwinding its balance sheet in October. Meanwhile, the Fed's so-called "dot plot" was unchanged from the one released in June, showing that the median FOMC member anticipates an additional rate hike in 2017 and three rate hikes in 2018.

The feds funds futures market now places the chances of a December rate hike at 67.8%, up from 57.7% on Tuesday and from 48.7% last week.

U.S. Treasuries were trading flat ahead of the FOMC announcement, but then moved lower in a curve-flattening trade. The 2-yr yield, which is more sensitive to changes in monetary policy, jumped five basis points to 1.44%, finishing at a nine-year high. Meanwhile, the benchmark 10-yr yield climbed four basis points to 2.28%.

The U.S. Dollar Index (92.25, +0.63) settled with a gain of 0.7% after holding a loss of 0.2% prior to the FOMC release.

In the equity market, the two heaviest sectors--technology (-0.5%) and financials (+0.6%)--finished at opposite ends of the leaderboard. Apple (AAPL 156.07, -2.66) weighed on the tech space, dropping 1.7%, following rumors of softer-than-expected demand for the new iPhone 8, which was unveiled last week.

Elsewhere within the tech space, chipmakers underperformed, sending the PHLX Semiconductor Index (-1.4%) lower for the first time in eight sessions. Adobe Systems (ADBE 149.96, -6.64) also exhibited notable weakness (-4.2%), despite reporting above-consensus earnings and revenues. 

As for financials, the space got off to a mild start, but moved sharply higher following the FOMC policy announcement. Financials' win--which marks the eighth in the last nine sessions--was a team effort as nearly all of the sector's components finished in positive territory. 

The energy sector (+0.7%) also outperformed, thanks in part to an increase in the price of crude oil; WTI crude jumped 1.5% to $50.70/bbl.  The EIA's weekly crude inventory report was disappointing, showing a bigger-than-expected build of 4.6 million barrels (+3.5 million consensus).

However, the Iraqi oil minister said OPEC and non-OPEC producers are considering extending, or even deepening, last year's supply-cut agreement, which is currently set to expire in March 2018. That news helped the commodity overcome the EIA inventory report and climb to its highest level in four months.

It's also worth noting that transports outperformed on Wednesday, pushing the Dow Jones Transportation Average higher by 1.6%. FedEx (FDX 220.50, +4.50) was one of the DJTA's strongest components (+2.1%), despite issuing below-consensus guidance on Tuesday evening. 

In politics, reports indicate that Senate Majority Leader Mitch McConnell (R-KY) intends to put a new health care bill on the floor next week. In order to avoid an overlap with the vote, reports indicate that Congress may delay releasing a tax reform outline until the first week of October.

Reviewing Wednesday's economic data, which included August Existing Home Sales and the weekly MBA Mortgage Applications Index:

  • Existing home sales for August decreased 1.7% from July to an annualized rate of 5.35 million units while the Briefing.com consensus expected a reading of 5.42 million. The prior month's reading was left unrevised at 5.44 million.
    • The key takeaway from the report is that notable supply constraints remain, which will continue to act as a drag on overall sales due to the limited inventory and the high prices on available inventory that is crimping affordability.
  • The weekly MBA Mortgage Applications Index decreased 9.7% to follow last week's 9.9% rise.

On Thursday, investors will receive several economic reports, including the weekly Initial Claims Report (Briefing.com consensus 310K) at 8:30 ET, the September Philadelphia Fed Index (Briefing.com consensus 17.1) also at 8:30 ET, and the July FHFA Housing Price Index at 9:00 ET. 

  • Nasdaq Composite +19.9% YTD
  • S&P 500 +12.0% YTD
  • Dow Jones Industrial Average +13.4% YTD
  • Russell 2000 +6.5% YTD
..NYSE Adv/Dec 1612/1283. ..NASDAQ Adv/Dec 1449/965.
15:35 ET Dow +8.62 at 22379.42, Nasdaq -13.79 at 6447.53, S&P -1.26 at 2505.39
[BRIEFING.COM]
  • Commodities felt some pressure following a surge in the dollar index post-Fed
  • Gold, silver, copper and natural gas are near today's lows in current trade, holding the Fed-driven weakness
  • By settlement, Nov crude oil was up $0.75 at $50.70/barrel, while Oct natural gas was down $0.03 at $3.09/MMBtu
  • Moving over to the metals space...
  • Dec gold settled $6.10 higher at $1316.60/oz and Dec silver was up $0.06 at $17.34/oz
  • However, this was before the Fed release. Gold is now ~$1,304.49/oz, while silver is $17.16/oz
  • Dec copper settled unchanged at $2.97/lb, but is now $2.96
..NYSE Adv/Dec 1609/1313. ..NASDAQ Adv/Dec 1599/1293.
15:00 ET Dow +3.70 at 22374.5, Nasdaq -23.95 at 6437.37, S&P -3.53 at 2503.12

[BRIEFING.COM] The major averages have bounced back a bit in recent action, with the S&P 500 trimming its loss to 0.1%. Meanwhile, the Dow (unch) hovers at its flat line, looking to register its seventh-consecutive record high close.

Moving into the final stretch, six sectors are trading in the green--financials (+0.9%), energy (+0.7%), telecom services (+0.5%), industrials (+0.5%), materials (+0.2%), and consumer discretionary (+0.2%)--while five groups are trading in the red--health care (-0.1%), real estate (-0.5%), technology (-0.9%), utilities (-1.0%), and consumer staples (-1.2%).

U.S. Treasuries have slipped from their flat lines following the FOMC policy announcement, sending the 2-yr yield to its highest level in nearly nine years; the 2-yr yield is currently up five basis points at 1.44%. Meanwhile, the benchmark 10-yr yield is up four basis points at 2.28%.

..NYSE Adv/Dec 1579/1315. ..NASDAQ Adv/Dec 1498/1087.
14:30 ET Dow -42.66 at 22328.14, Nasdaq -42.49 at 6418.83, S&P -8.57 at 2498.08

[BRIEFING.COM] The stock market has continued to slide in the wake of the latest FOMC policy decision, which was released at the top of the hour. The S&P 500 is now down 0.4%.

As expected, the Fed announced that it will begin unwinding its balance sheet in October, using the normalization program it introduced back in June. What was somewhat surprising, however, was the so-called "dot plot," which showed that the median FOMC member anticipates another rate hike before the end of the year. In addition, the U.S. central bank projects that it will raise rates three times in 2018.

The fed funds futures market now puts the chances of a December rate hike at 66.9%, up from 57.7% yesterday. 

Fed Chair Janet Yellen will kick off her post-decision press conference shortly.

..NYSE Adv/Dec 1444/1428. ..NASDAQ Adv/Dec 1387/1273.
14:05 ET Dow +6.41 at 22377.21, Nasdaq -22.19 at 6439.13, S&P -1.86 at 2504.79

[BRIEFING.COM] As expected, the FOMC voted to keep the fed funds target range at 1.00%-1.25% and announced that its balance sheet normalization process will begin in October.

Equities are lower following the announcement with the S&P 500 showing a loss of 0.2%; the benchmark index was flat going into the release. 

Meanwhile, Treasuries have moved lower after trading flat ahead of the decision; the 2-yr yield is up five basis points at 1.43% while the 10-yr yield is up two basis points at 2.26%.

The U.S. Dollar Index (91.72, +0.10) was down 0.2%, but now sports a gain of 0.1%.

..NYSE Adv/Dec 1702/1147. ..NASDAQ Adv/Dec 1590/1138.
13:30 ET Dow +1.35 at 22372.15, Nasdaq -14.64 at 6446.68, S&P -1.14 at 2505.51

[BRIEFING.COM] The major U.S. indices continue to bounce around their base levels ahead of today's FOMC rate decision, due out at the bottom of the hour. 

A look inside the Dow Jones Industrial Average shows that Pfizer (PFE 35.93, +0.48), McDonald's (MCD 159.37, +1.94), & Boeing (BA 255.11, +2.65) are outperforming. Pfizer is leading the Dow after being upgraded to Overweight from Equal-Weight at Morgan Stanley.

Conversely, Apple (AAPL 155.73, -3.00) is the worst-performing Dow component following cautious comments from Rosenblatt Securities regarding lower-than-expected iPhone 8 pre-orders, as well as negative reviews for the newest Apple Watch, which are tied to complaints about LTE connectivity issues. 

At current levels, the DJIA is up 0.47% this week. 

..NYSE Adv/Dec 1797/1046. ..NASDAQ Adv/Dec 1637/1103.
13:00 ET Dow +19.92 at 22390.72, Nasdaq -5.64 at 6455.68, S&P +1.53 at 2508.18

[BRIEFING.COM] The stock market's recent rally has been put on hold today, keeping the major indices near their flat lines, as investors await the latest FOMC policy decision, which is due at 14:00 ET. The Dow (+0.1%) and the S&P 500 (+0.1%) sport slim gains while the Nasdaq (-0.1%) holds a modest loss. Small caps show relative strength, sending the Russell 2000 higher by 0.3%.

Apple (AAPL 155.59, -3.14) has been a burden on the broader market today following rumors that iPhone 8 pre-orders were softer-than-expected. The tech titan has come up from the seven-week low it posted earlier in the session, but still shows a sizable loss of 1.9%. Unsurprisingly, the top-weighted technology sector (-0.4%) hovers at the bottom of today's leaderboard.

Elsewhere within the tech group, Adobe Systems (ADBE 151.52, -5.07) has dropped 3.3%, despite beating both top and bottom line estimates, and chipmakers show notable weakness, putting the PHLX Semiconductor Index (-1.5%) on track for its first loss in eight sessions.

Only two of the ten remaining sectors are trading in the red this afternoon--utilities (-0.3%) and consumer staples (-0.2%). The utilities space has been the weakest sector this month, with today's decline extending its month-to-date loss to 1.3%.

For consumer staples, General Mills (GIS 52.18, -3.21) has been a bearish influence, dropping 5.8%, after reporting worse-than-expected earnings earlier this morning. Today's decline puts GIS shares at their worst level since March 2015.

On the flip side, the energy sector (+0.7%) is hovering at the top of the sector standings, thanks in part to a rally in the crude oil futures market; WTI crude is currently up 2.0% at $50.93/bbl. The EIA's weekly inventory report was disappointing, showing a bigger-than-expected build of 4.6 million barrels (+3.5 million consensus).

However, the Iraqi oil minister said OPEC and non-OPEC producers are considering extending, or even deepening, last year's supply-cut agreement, which is currently set to expire in March 2018. That news has helped the commodity overcome the EIA inventory report and climb to its highest level in four months. 

The industrial sector also shows relative strength (+0.6%), underpinned by transports, which have sent the Dow Jones Transportation Average higher by 1.3%. FedEx (FDX 220.18, +4.18) is one the the DJTA's strongest components (+1.9%) despite issuing below-consensus guidance yesterday afternoon. 

In the bond market, Treasuries are relatively flat ahead of this afternoon's FOMC policy statement. The benchmark 10-yr yield is unchanged at 2.24% while the 2-yr yield is down one basis point at 1.38%. Meanwhile, the U.S. Dollar Index (91.47, -0.15) is off 0.2%.

A rate hike is not on the table this afternoon, but the Fed is expected to announce a start date for its balance sheet normalization process and provide its latest rate-hike projections via the so-called "dot plot." Fed Chair Janet Yellen will hold a press conference 30 minutes after the policy statement is released.

Reviewing Wednesday's economic data, which included August Existing Home Sales and the weekly MBA Mortgage Applications Index:

  • Existing home sales for August decreased 1.7% from July to an annualized rate of 5.35 million units while the Briefing.com consensus expected a reading of 5.42 million. The prior month's reading was left unrevised at 5.44 million.
    • The key takeaway from the report is that notable supply constraints remain, which will continue to act as a drag on overall sales due to the limited inventory and the high prices on available inventory that is crimping affordability.
  • The weekly MBA Mortgage Applications Index decreased 9.7% to follow last week's 9.9% rise.
..NYSE Adv/Dec 1840/989. ..NASDAQ Adv/Dec 1688/1059.
12:25 ET Dow +20.95 at 22391.75, Nasdaq -10.58 at 6450.74, S&P +1.29 at 2507.94

[BRIEFING.COM] Equities have crept higher as of late, pushing the S&P 500 (+0.1%) a tick above its flat line.

The heavily-weighted financial sector (+0.2%) is on track to post its eighth win in nine sessions this afternoon, extending its month-to-date advance to 2.9%. Within the sector, JPMorgan Chase (JPM 94.58, +0.64) shows relative strength, climbing 0.7%, while Bank of America (BAC 24.81, -0.06) exhibits relative weakness, dropping 0.2%.

In the bond market, Treasuries are relatively flat ahead of this afternoon's FOMC policy statement, which will be released at 14:00 ET. The benchmark 10-yr yield is unchanged at 2.24% while the 2-yr yield is down one basis point at 1.38%. Meanwhile, the U.S. Dollar Index (91.50, -0.12) is off 0.1%.

..NYSE Adv/Dec 1820/1013. ..NASDAQ Adv/Dec 1638/1089.
11:55 ET Dow +16.40 at 22387.2, Nasdaq -20.20 at 6441.12, S&P +0.22 at 2506.87

[BRIEFING.COM] The major averages have not changed since the last update.

Transports are outperforming today, evidenced by the Dow Jones Transportation Average (+1.4%), following FedEx's (FDX 221.66, +5.66) latest earnings report. The company was trading lower in pre-market action on the heels of some disappointing guidance, but shook off the early weakness to advance to a new all-time high; FDX shares are up 2.5% from yesterday's close.

American Airlines (AAL 45.42, +1.04) also shows particular strength (+2.3%) after its shares were upgraded to 'Outperform' from 'Market Perform' at Raymond James. 

All 20 of the DJTA's components are trading in the green, extending the price-weighted average's month-to-date gain to 3.4%. For comparison, the S&P 500 is up 1.4% for the month. The Dow Jones Transportation Average is considered a leading indicator, meaning it typically does well when the outlook for the economy is favorable.

The industrial sector, which houses transport names, sports a gain of 0.6%.

..NYSE Adv/Dec 1753/1048. ..NASDAQ Adv/Dec 1577/1158.
11:25 ET Dow +14.09 at 22384.89, Nasdaq -19.80 at 6441.52, S&P -0.60 at 2506.05

[BRIEFING.COM] Equity indices have largely maintained their recent levels, except for the tech-heavy Nasdaq (-0.3%), which has slipped into the red.

Apple (AAPL 154.28, -4.45) has dropped 2.8% this morning, hitting a fresh seven-week low, as investors take some profits at the tail end of yet another solid quarter for the tech titan--AAPL shares hold a quarter-to-date gain of 7.5%. Unsurprisingly, the top-weighted technology sector (-0.8%) is trading at the bottom of today's sector standings.

The consumer staples space (-0.3%) has also struggled today, with General Mills (GIS 52.52, -2.85) leading the retreat. GIS shares have plunged 5.2% after the company reported below-consensus earnings earlier this morning. Only two other spaces currently trade in negative territory--utilities (-0.1%) and real estate (-0.1%).

..NYSE Adv/Dec 1714/1041. ..NASDAQ Adv/Dec 1590/1132.
10:55 ET Dow +1.11 at 22371.91, Nasdaq -7.73 at 6453.59, S&P -0.14 at 2506.51

[BRIEFING.COM] The major U.S. indices continue trending sideways near their unchanged marks as investors await the latest FOMC policy decision, which will be released at 14:00 ET.

Crude oil has dropped from its best mark of the day after the Energy Information Administration (EIA) released its weekly inventory report, which showed a bigger-than-expected build of 4.6 million barrels (consensus +3.5 million) for the week ended September 15. Conversely, gasoline inventories decreased by 2.1 million barrels last week.

WTI crude held a gain of 1.6% going into the EIA release, but has trimmed that gain to 0.8% in the aftermath. The commodity currently trades at a price of $50.31/bbl.

On a positive note, the Iraqi oil minister said OPEC and non-OPEC producers are considering extending, or even deepening, last year's supply-cut agreement, which is currently set to expire in March 2018. The energy sector, which typically moves in tandem with the price of crude oil, is up 0.4%, hovering behind the industrials (+0.5%) and telecom services (+0.5%) groups at the top of the leaderboard.

..NYSE Adv/Dec 1647/1079. ..NASDAQ Adv/Dec 1581/1147.
10:35 ET Dow +1.59 at 22372.39, Nasdaq -3.44 at 6457.88, S&P 0.12 at 2506.77
[BRIEFING.COM]
  • Commodities are beginning the day higher
    • Overall, commodities, as measured by the Bloomberg Commodity Index, are currently or +0.7% at 85.4577
  • Dollar index is currently -0.1% at 91.53
  • Looking at energy...
    • Dec WTI crude oil futures are now +$0.51 at $50.41/barrel
    • In other energy, Oct natural gas is +$0.01 at $3.13/MMBtu
  • Moving on to metals...
    • Dec gold is currently +$6.04 at $1316.64/oz, while Sept silver is +$0.07 at $17.35/oz
    • Dec copper is now +$0.01 at $2.96/lb
..NYSE Adv/Dec 1591/1087. ..NASDAQ Adv/Dec 1410/1199.
10:00 ET Dow -2.41 at 22368.39, Nasdaq -4.31 at 6457.01, S&P +0.43 at 2507.08

[BRIEFING.COM] Equity indices continue drifting near their unchanged marks.

Just in, existing home sales for August decreased 1.7% from July to an annualized rate of 5.35 million units while the Briefing.com consensus expected a reading of 5.42 million. The prior month's reading was left unrevised at 5.44 million.

..NYSE Adv/Dec 1598/1005. ..NASDAQ Adv/Dec 1398/1212.
09:45 ET Dow +1.57 at 22372.37, Nasdaq +3.02 at 6464.34, S&P +1.87 at 2508.52

[BRIEFING.COM] The major averages opened Wednesday's session just a tick above their flat lines.

Most sectors are trading in positive territory, but gains have been limited thus far; the energy sector hovers at the top of the leaderboard with a gain of 0.5%. On the flip side, the heavily-weighted technology (-0.1%) and health care (unch) groups are trading lower, acting as a drag on the broader market. The consumer staples space also underperforms, showing a loss of 0.2%.

Treasuries are flat ahead of today's last economic report--August Existing Home Sales (Briefing.com consensus 5.42 million)--which will be released shortly at 10:00 ET.

..NYSE Adv/Dec 1601/929. ..NASDAQ Adv/Dec 1386/1163.
09:16 ET Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +1.30. Nasdaq futures vs fair value: -2.10.

The market is in wait-and-see mode ahead of today's FOMC announcement, which will cross the wires this afternoon at 14:00 ET. The S&P 500 futures currently trade one point above fair value.

A rate hike is not on the table this afternoon, but the Fed is expected to announce a start date for its balance sheet normalization process and provide its latest rate-hike projections via the so-called "dot plot." Fed Chair Janet Yellen will hold a press conference 30 minutes after the policy statement is released.

Ahead of today's FOMC announcement, the market believes the chances of a December rate hike sit at 56.9%--according to the CME FedWatch Tool.

In earnings news, investors have received quarterly reports from a number of notable companies since yesterday's close, including Adobe Systems (ADBE 152.30, -4.30), FedEx (FDX 214.75, -1.25), General Mills (GIS 52.00, -3.38), and Bed Bath & Beyond (BBBY 23.26, -3.77). All four names are trading lower in pre-market action.

Bed Bath & Beyond has plunged 13.5% after missing both top and bottom line estimates and issuing below-consensus guidance. Meanwhile, General Mills is down 5.9% after missing bottom-line estimates and FedEx is off 0.6% after issuing below-consensus guidance. Conversely, Adobe Systems actually beat top and bottom line estimates, but has still dropped 3.3% nonetheless.

Crude oil has climbed 1.1% to $50.46/bbl this morning, hitting a four-month high, after the Iraqi oil minister said that OPEC and non-OPEC producers are considering extending, or even deepening, last year's supply-cut agreement, which is currently set to expire in March 2018.

On the data front, the weekly MBA Mortgage Applications Index decreased 9.7% to follow last week's 9.9% rise. Today's last economic report--August Existing Home Sales (Briefing.com consensus 5.42 million)--will be released at 10:00 ET.

08:50 ET Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +1.00. Nasdaq futures vs fair value: -1.40.

The S&P 500 futures trade one point above fair value.

Equity indices in the Asia-Pacific region ended Wednesday on a mixed, but generally quiet, note as participants awaited the latest policy update from the FOMC, which will be released this afternoon. China Securities Journal said that the steady downtrend in the yuan is over and that two-way fluctuations are more likely going forward. This comes after more than a week of daily gains for the dollar against the Chinese currency, but the yuan is still up 5.3% against the dollar for the year. South Korea's President Moon Jae-in said that the warning President Trump delivered to North Korea, during yesterday's UN appearance, was firm and in-line with previous remarks.

  • In economic data:
    • Japan's August trade surplus JPY370 billion (expected surplus of JPY410 billion; last surplus of JPY360 billion). August Imports +15.2% year-over-year (expected 11.8%; last 16.3%) and August Exports +18.1% year-over-year (consensus 14.7%; prior 13.4%)
    • New Zealand's Q2 Current Account deficit NZD7.49 billion year-over-year (expected deficit of NZD8.08 billion; last deficit of NZD8.13 billion)
    • Australia's MI Leading Index -0.1% month-over-month (last 0.1%)

---Equity Markets---

  • Japan's Nikkei added 0.1%, inching to another fresh high for the year. Pioneer, Softbank, Nikon, Dentsu, Haseko, JFE Holdings, Nitto Denko, Sumitomo Electric Industries, NKSJ Holdings, and Yahoo Japan rose between 1.0% and 3.9%.
  • Hong Kong's Hang Seng gained 0.3%. Geely Automobile continued its rally, jumping 5.7% to bring its 2017 gain to nearly 225.0%. Energy-related names like China Shenhua Energy and CNOOC gained 2.5% and 0.4%, respectively, while financials and property names were mixed. Hang Seng Bank, Ping An Insurance, and Bank of China all gained near 0.3% while Bank of East Asia, SHK Properties, Link Reit, and China Overseas lost between 0.4% and 1.9%.
  • China's Shanghai Composite rose 0.3%. Datang Telecom Technology, Shanghai Belling Co, Beijing Urban Construction Investment & Development, YTO Express, and Sichuan Western Resources Holding added between 5.6% and 6.9%.
  • India's Sensex settled just below its flat line. Hero MotoCorp, Tata Motors, and Bajaj Auto surrendered between 0.7% and 2.3% while Dr. Reddy's Labs outperformed following positive analyst commentary, jumping 3.3%.

Major European indices trade near their flat lines while Spain's IBEX (-1.2%) underperforms. Spanish equities could be starting to show stress due to the growing conflict between the country's federal government and officials in Catalonia. El Periodico reported that 14 arrests have been made in Catalonia today as Madrid steps up the frequency of raids aimed at halting the independence referendum planned for October 1. Catalan First Minister Carles Puigdemont has vowed to push on, saying the regional government "will not retreat."

  • In economic data:
    • Germany's August PPI +0.2% month-over-month (expected 0.1%; last 0.2%); +2.6% year-over-year (consensus 2.5%; last 2.3%)
    • UK's August Retail Sales +1.0% month-over-month (expected 0.2%; last 0.6%); +2.4% year-over-year (consensus 1.1%; last 1.4%). August Core Retail Sales +1.0% month-over-month (expected 0.2%; last 0.7%); +2.8% year-over-year (consensus 1.1%; last 1.4%)

---Equity Markets---

  • France's CAC is up 0.1% with around half of its components trading in the green. Growth-sensitive names like Publicis Groupe, Total, Accor, Schneider Electric, and Renault show gains between 0.1% and 0.9%.
  • UK's FTSE hovers near its flat line as consumer stocks appear on both sides of the leaderboard. Kingfisher has spiked 5.9% in reaction to upbeat earnings while Babcock International, ITV, Marks & Spencer, Dixons Carphone, and Next are up between 1.7% and 6.1%. On the flip side, Diageo is down 2.3% after providing a trading update. Burberry, Imperial Brands, and Paddy Power are down between 0.5% and 0.9%.
  • Germany's DAX is off 0.1% amid losses in most components. Deutsche Bank and Commerzbank are down 1.5% and 1.1%, respectively, while Lufthansa, Adidas, Allianz, BMW, and Volkswagen show losses between 0.4% and 1.4%.
  • Spain's IBEX is down 1.2% with Banco Sabadell, Caixabank, Santander, BBVA, Bankia, and Bankinter losing between 1.0% and 3.4%.
08:25 ET Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +1.30. Nasdaq futures vs fair value: -0.10.

The S&P 500 futures trade one point above fair value.

According to the CME FedWatch Tool, the market currently believes that there is a 58.3% chance that the Fed will decide to raise interest rates one additional time this year. However, that figure will surely be adjusted this afternoon when the U.S. central bank releases its latest "dot plot"--which anonymously captures Fed officials' individual rate-hike projections.

The Fed forecasted three rate hikes in 2017, but, with one more rate hike to go, persistently tepid inflation data has put that projection in doubt.

08:03 ET Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +0.60. Nasdaq futures vs fair value: -2.40.

The major U.S. indices inched to new record highs on Tuesday, marking yet another victory for the stock market, which has been rallying for over a week. Investors have hit pause this morning, however, ahead of the latest FOMC policy directive, which will be released this afternoon at 14:00 ET. The S&P 500 futures currently trade just one point above fair value.

A rate hike is not on the table this afternoon, but the Fed is expected to announce a start date for its balance sheet normalization process. Investors are also eager to get their hands on the latest "dot plot," which shows the rate-hike projections of the FOMC members.

In addition, Fed Chair Janet Yellen will hold a press conference at 14:30 ET.

U.S. Treasuries are mostly higher ahead of the FOMC decision, bouncing back from over a week of weakness; the benchmark 10-yr yield is down one basis point at 2.23% while the 2-yr yield is flat at 1.39%. Meanwhile, the U.S. Dollar Index (91.48, -0.14) is down 0.2%, which places it at its lowest level in more than a week.

Crude oil has climbed 1.1% to $50.47/bbl, hitting a four-month high, after the Iraqi oil minister said that OPEC and non-OPEC producers are considering extending, or even deepening, last year's supply-cut agreement, which is currently set to expire in March 2018.

On the data front, today's most notable economic report--August Existing Home Sales (Briefing.com consensus 5.42 million)--will be released at 10:00 ET. The weekly MBA Mortgage Applications Index, which crossed the wires earlier this morning, decreased 9.7% to follow last week's 9.9% rise. Investors will not receive any other economic data.

In U.S. corporate news:

  • Adobe Systems (ADBE 152.30, -4.30): -2.8% despite reporting better-than-expected earnings and revenues.
  • FedEx (FDX 213.00, -3.00): -1.4% after issuing below-consensus guidance.
  • General Mills (GIS 52.50, -2.88): -5.2% after reporting worse-than-expected earnings.
  • Bed Bath & Beyond (BBBY 23.10, -3.93): -14.5% after missing both top and bottom line estimates and issuing below-consensus guidance. 
  • Western Digital (WDC 86.00, -3.92): -4.4% following reports that Toshiba (TOSBF 2.89, 0.00) may not select WDC in a bid for its chipmaking unit. 

Reviewing overnight developments:

  • Equity indices in the Asia-Pacific region ended Wednesday on a mixed, but generally quiet, note as participants awaited the latest policy update from the FOMC. Japan's Nikkei +0.1%, Hong Kong's Hang Seng +0.3%, China's Shanghai Composite +0.3%, India's Sensex unch.
    • In economic data:
      • Japan's August trade surplus JPY370 billion (expected surplus of JPY410 billion; last surplus of JPY360 billion). August Imports +15.2% year-over-year (expected 11.8%; last 16.3%) and August Exports +18.1% year-over-year (consensus 14.7%; prior 13.4%)
      • New Zealand's Q2 Current Account deficit NZD7.49 billion year-over-year (expected deficit of NZD8.08 billion; last deficit of NZD8.13 billion)
      • Australia's MI Leading Index -0.1% month-over-month (last 0.1%)
    • In news:
      • China Securities Journal said that the steady downtrend in the yuan is over and that two-way fluctuations are more likely going forward. This comes after more than a week of daily gains for the dollar against the Chinese currency, but the yuan is still up 5.3% against the dollar for the year.
      • South Korea's President Moon Jae-in said that the warning President Trump delivered to North Korea, during yesterday's UN appearance, was firm and in-line with previous remarks.
  • Major European indices trade near their flat lines while Spain's IBEX underperforms. France's CAC +0.2%, UK's FTSE unch, Germany's DAX -0.1%, Spain's IBEX -0.9%.
    • In economic data:
      • Germany's August PPI +0.2% month-over-month (expected 0.1%; last 0.2%); +2.6% year-over-year (consensus 2.5%; last 2.3%)
      • UK's August Retail Sales +1.0% month-over-month (expected 0.2%; last 0.6%); +2.4% year-over-year (consensus 1.1%; last 1.4%). August Core Retail Sales +1.0% month-over-month (expected 0.2%; last 0.7%); +2.8% year-over-year (consensus 1.1%; last 1.4%)
    • In news:
      • Spanish equities could be starting to show stress due to the growing conflict between the country's federal government and officials in Catalonia. El Periodico reported that 14 arrests have been made in Catalonia today as Madrid steps up the frequency of raids aimed at halting the independence referendum planned for October 1. Catalan First Minister Carles Puigdemont has vowed to push on, saying the regional government "will not retreat."
05:55 ET Market is Closed
[BRIEFING.COM] S&P futures vs fair value: +1.10. Nasdaq futures vs fair value: -0.80.
05:55 ET Market is Closed
[BRIEFING.COM] Nikkei...20310.5...+11.10...+0.10%.  Hang Seng...28128...+76.40...+0.30%.
05:55 ET Market is Closed
[BRIEFING.COM] FTSE...7276.51...+1.30...+0.00%.  DAX...12569.84...+8.10...+0.10%.
16:30 ET Dow +39.45 at 22370.8, Nasdaq +6.68 at 6461.32, S&P +2.78 at 2506.65

[BRIEFING.COM] Equities moved higher once again on Tuesday, but conviction was weak ahead of the latest FOMC policy statement, which will be released on Wednesday afternoon. The S&P 500 (+0.1%), the Nasdaq (+0.1%), and the Dow (+0.2%) closed at new record highs, but the small-cap Russell 2000 (-0.1%) lagged a bit, settling just below its unchanged mark.

Wireless names were in focus on Tuesday following reports of renewed merger talks between Sprint (S 8.20, +0.52) and T-Mobile US (TMUS 65.42, +3.62). The two companies spiked 6.8% and 5.9%, respectively, and helped the S&P 500's telecom services sector (+2.3%) finish at the top of the day's sector standings--by a comfortable margin.

Financials also outperformed, sending the influential financial sector (+0.8%) to its seventh win in eight sessions, thanks in part to a slight steepening of the yield curve--which bodes well for lenders. The yield on the 2-yr Treasury note finished flat at 1.39% while the benchmark 10-yr yield climbed one basis point to 2.24%.

Conversely, health care stocks sold off on Tuesday with providers like UnitedHealth (UNH 194.65, -3.54) and Aetna (AET 156.04, -4.96) getting hit the hardest; the two companies dropped 1.8% and 3.1%, respectively. The health care sector (-0.8%) finished near the bottom of the sector standings, surpassed only by the real estate group (-1.0%).

On the earnings front, AutoZone (AZO 535.19, -28.21) plunged 5.0% after its better-than-expected bottom-line results failed to justify its recent four-week rally; AZO shares advanced over 10.0% from August 18 to yesterday's close. The S&P 500's consumer discretionary sector (-0.1%), which houses automotive retailers, finished lower for the fourth session in a row.

Also of note, firearm stocks spiked in late-afternoon action following a Daily Mail report that President Trump is looking to ease industry export restrictions. Names like Sturm Ruger (RGR 54.35, +6.55), American Outdoor Brands (AOBC 15.70, +1.44), and Vista Outdoor (VSTO 23.00, +0.70) settled higher by 13.7%, 10.1%, and 3.1%, respectively.

In politics, President Trump made his U.N. debut on Tuesday, taking a hard stance against North Korea and the Iran nuclear deal. Also, reports indicate that Senate Majority Leader Mitch McConnell (R-KY) is seriously considering a Senate vote on a new health-care reform bill.

Reviewing Tuesday's batch of economic data, which included August Housing Starts, August Import/Export Prices, and the Current Account Balance for the second quarter:

  • Housing starts decreased to a seasonally adjusted annualized rate of 1.180 million units in August (Briefing.com consensus 1.170 million), down from a revised 1.190 million units in July (from 1.155 million). Building permits increased to a seasonally adjusted 1.300 million in August (Briefing.com consensus 1.212 million) from a revised 1.230 million in July (from 1.223 million).
    • The key takeaway from the report is that the pace of single-family starts isn't quick enough to alleviate the supply pressures in the housing market that are crimping affordability for prospective homeowners. That isn't expected to improve next month either when the force of the impact from Hurricanes Harvey and Irma weighs on housing starts activity.
  • Import prices excluding oil rose 0.3% in August after declining 0.1% in July. Export prices excluding agriculture increased 0.7% in August after rising 0.3% in July.
    • The key takeaway from the Import-Export Price Index report for August is that it will keep the possibility of a December rate hike on the table.
  • The current account deficit for the second quarter totaled $123.1 billion (Briefing.com consensus -$115.1 billion). The first quarter deficit was revised to $113.5 billion from $116.6 billion.

On Wednesday, investors will receive just two economic reports--the weekly MBA Mortgage Applications Index and the August Existing Home Sales Report (Briefing.com consensus 5.42 million)--at 7:00 ET and 10:00 ET, respectively. In addition, the FOMC will release its latest policy directive at 14:00 ET.

  • Nasdaq Composite +20.0% YTD
  • Dow Jones Industrial Average +13.2% YTD
  • S&P 500 +12.0% YTD
  • Russell 2000 +6.1% YTD
..NYSE Adv/Dec 1522/1374. ..NASDAQ Adv/Dec 1278/1389.

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