On the Market, Know and Digest This “the Bulls are in Charge”

On the Market, Know and Digest This “the Bulls are in Charge”

#Bulls #Summary #markets

$DIA $SPY $QQQ $RUTX $VXX

Summary

US stocks closed flat to unchanged Monday despite strength in the tech sector. US Treasures advanced, sending 10-yr yields down 2 bpts. USD declined modestly Vs the G-10 basket, with the AUS pacing gains. Gold strengthened more than 2%. Asian equity futures are higher. US corporate investment-grade issuance reached a record $1.346-T Monday, surpassing Y 2017’s full-year total in less than 8 months amid strong investor demand following the Fed’s unprecedented steps to bolster liquidity.

US equities finished mostly higher in very quiet, range bound Monday trade.

S&P 500 ended just off the 19-February record close (at 3386.15), thought NAS Comp posted another record.

Growth and momentum outperformed, consumer discretionary boosted by autos and homebuilders record sentiment, tech helped by semis and software, healthcare was boosted by medtech, pharma, industrials underperformed with airlines a drag.

Financials worst performer with banks a laggard on the Buffett/13F headlines.

Treasuries mixed with curve flattening following last week’s Bear steepening move.

USD weaker on the major crosses. Gold finished up 2.5%. WTI Crude Oil settled up 2.1%, near best marks.

Not a lot of catalysts at play

Economic data mixed, with a miss from the August Empire manufacturing index but homebuilder sentiment matched a record high as housing remains a recovery bright spot.

Political debate about USPS and election security still raging, as Speaker Pelosi called House back from recess to address the crisis. 

Some positive comments on US-China trade from The Trump Administration this morning, but also further restrictions on Huawei.

Mixed-to-better coronavirus headlines with US daily count lowest in almost 7 wks, more concerns about testing, FDA approval new rapid test and NY Times report on how herd immunity could be closer than thought.

Nothing incremental in the last few days regarding a 5th coronavirus aid/relief/stimulus bill.

Market still expects a deal worth $1.5-T+, but combination of such conviction and better economic data has also dampened the urgency to compromise.

Market was underpinned by the usual suspects, including central bank liquidity tailwind, expectations for Fed policy framework shift, big earnings beats and upward revisions, positive economic surprise momentum, and vaccine optimism.

Not much corporate news though this week brings a flurry of July Q retail reporters that will be closely scrutinized for comments on spending patterns with the waning stimulus tailwind.

Digest

Consumer discretionary the leader on strength from homebuilders record NAHB homebuilder sentiment and auto names

Tech beat the tape with support from semis and software. 

Healthcare outperformed, boosted by biotech. Consumer staples supported by discount retailers and grocers. Materials in line with precious metals miners, scattered paper and packaging names better, but chemicals a bit of a drag. Communication services a slight underperformer as media weakness offset some gains across internet names. Industrials lower, weighed down by airlines, A&D. Energy weaker with E&Ps, integrateds among worst groups. Financials broadly lower outside the exchanges. Banks a big drag, with Buffett’s 13F disclosures Friday showing he sold some of WFC, JPM stakes.

Speaker Pelosi calls House back into session to deal with unfolding crisis at the US Postal Service

Democrats to call for $25-B in funding with bill expected out of committee Tuesday. Last week, the USPS warned 46 states and DC it cannot guarantee all ballots cast by mail for the November election will arrive in time to be counted. House is expected to vote on a bill that would prohibit the Postal Service from making changes to operations it had in place at the beginning of the year. It may also vote on some economic measures, including enhanced unemployment benefits.

The Trump Administration has cut funding and made operational changes to the Postal Service that Democrats say could impede voting and delay critical mail service across the country

There was nothing incremental in the weekend press regarding a fifth coronavirus aid/relief bill. Reports last week discussed how it looks increasingly unlikely that anything may get done until late September. Additional state and local government aid and enhanced unemployment benefits remain the big sticking points, while USPS funding has been another meaningful complication.

At the same time, the stalemate in the negotiations has not been an overhang for the market. However, such conviction, along with the continued run of better-than-expected economic data and President Trump’s recent executive actions, has dampen Republican urgency to move much beyond their initial $1-T ‘no Pork’ marker.

WS-J noted US daily C-19 coronavirus cases the lowest in nearly 7 wks.  FDA granted emergency use authorization for a rapid, cheap test that uses spit instead of swabs In addition, a NY-Ts article noted threshold for herd immunity may be much lower than originally thought at 50% or even less. Some concerns about renewed uptick in infections in Europe. Italy ordered nightclubs to close and made masks mandatory in some outdoor areas. Spain also ordered nightclubs to close as outbreaks there triggered new travel warnings in Europe.

Americans are staying home and motoring around the country this Summer.

August NY Fed Empire manufacturing survey of 3.7, below consensus and July reading of 17.3. New orders and shipments followed a similar reversal of recent improvements while number of employees rose to slightly positive marks and average employee workweek dipped a bit more negative. Delivery times near neutral while inventories moved negatively. Prices paid held at high levels while prices received moved positive. Expectations fell a bit but remained in expansion. Capital spending plans were slightly positive.

Elsewhere

August NAHB index rose to 78 from revised 72 in July with strength in most segments except Midwest region which was little changed. Index for current sales conditions up 6 pts to 84, index for sales expectations over the next 3 months rose 3 pts to 78, and the traffic index jumped eight points to record 65.

S&P 500 Sector Performance

Outperformers: Consumer Disc. +1.21%, REITs +0.95%, Tech +0.67%, Healthcare +0.58%, Consumer Spls. +0.56%, Materials +0.38%

Underperformers: Financials (1.54%), Energy (0.63%), Industrials (0.50%), Utilities (0.14%), Communication Svcs. +0.10%

Monday, the major US stock market indexes finished at: DJIA -86.11 to 27844.91, NAS Comp +110.42 at 11129.80, S&P 500 +9.14 at 3381.99

Volume: Trade on the NYSE came in light at 745-M/shares exchanged

HeffX-LTN’s overall technical analysis of the major US stock market indexes is Very Bullish in here

  • NAS Comp +24.0% YTD
  • S&P 500 +4.7% YTD
  • DJIA -2.4% YTD
  • Russell 2000 -5.0% YTD

Looking Ahead: Investors will receive Housing Starts and Building Permits for July Tuesday.

Have a healthy day, Keep the Faith!

The following two tabs change content below.

Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.