Equity Market Insight from Nasdaq MID - September 5, 2017

Tuesday, September 5, 2017, 11:00 AM, EST

  • NASDAQ Composite -0.53% Dow -0.75% S&P 500 -0.48% Russell 2000 -0.1%
  • NASDAQ Advancers: 816 Decliners: 1414
  • Today’s Volume (100 day avg) -9%

After a holiday weekend, the US markets returned this morning to a renewed missile threat from North Korea, pushing stocks lower for the first time in over a week. Crude Oil’s initial reaction to Hurricane Harvey was to downside, but started its reversal last Thursday and the barrel price is now on pace for its best 3-day rally since late July. The recent advance in Oil is putting the S&P Energy Index (+0.7%) atop the sector performers this morning, and the lone group in the green.

  • Today’s headline would suggest a risk-off trade, but the Russell 2000 is outpacing the other major indices. Insmed Inc is the leading R2000 component, up more than 110% after announcing positive Phase 3 trail results, CONVERT, an inhalable amikacin for their lung disease treatment.
  • The long Labor Day Weekend saw aflurry of M&A activity to start the week. United Technologies (UTX) has agreed to buy Rockwell Collins (COL) for over $30 billion in cash and stock deal. In an all stock deal valued at $2.2 billion, France's Schneider Electric SE will merge its industrial software business with UK-based engineering software firmAVEVA Group PLC.Nasdaq (Nasdaq: NDAQ) will acquire privately held eVestment Inc. for $705 million. YTD, announced, proposed or completed M&A deals have totaled $3.8 trillion globally and nearly $1.7 trillion in North America.
  • Oil refiners are coming back on line post Hurricane Harvey, which will help ease the price of gasoline in the U.S while giving crude a boost. Valero Energy (VLO) says its 293K bbl/day Corpus Christi refinery and 225K bbl/day Texas City refinery have recovered to pre-hurricane levels of operation while VLO’s Port Arthur refinery continues their storm damage evaluation. Currently WTI is trading up 2.7% to $48.58 while Gasoline slips 3.4% to $1.6895 per gallon.

Technical Take

The major US equity indices are lower across the board today due in part to continued rising tensions on the Korean peninsula. And while the S&P 500 and Nasdaq Composite indices are less than 1% from their all-time highs, safe havens continue to catch a bid. Three rate hikes since December has kept the short end of the curve relatively elevated, however the long end has been falling with the 10-Year Treasury yield now on pace to make its lowest close since the day following the US election. The 10yr-2yr spread is today making new YTD lows at 0.80%, down 54bps from its 52-week high of 1.34% made in December. The belly of the curve, represented by the 5yr-3month spread, began its steep decline in mid-March when it broke down from a four-month descending triangle pattern. This spread has declined 88bps from its December high, 1.57%, to its current level of 0.69%. A flattening curve is an immediate drag on bank’s margins and largely explains the performances of the Regional Bank ETF (KRE) and the Nasdaq ABA Community Bank Index which are down (6.2%) and (8%) YTD.

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Nasdaq's Market Intelligence Desk (MID) Team includes:

Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.

Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.

Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.

Christopher Dearborn is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Chris has over two decades of equity market experience including floor and screen based trading, corporate access, IPOs and asset allocation. Chris is responsible for providing timely, accurate and objective market and trading-related information to Nasdaq-listed companies.

Annie O'Callaghan is Director on the Market Intelligence Desk (MID) at Nasdaq. Annie has worked for NASDAQ in a variety of roles including support of Nasdaq C-level management in client retention and customer service. Annie also served as a Sales Director in Nasdaq’s Transactions Services business. Prior to joining Nasdaq, Annie worked at AX Trading, managing accounts for its Alternative Trading System and served on Credit Suisse's trading desk as an Electronic & Algorithmic Sales Trading Analyst.

Brian Joyce, CMT has 16 years of trading desk experience. Prior to joining Nasdaq Brian executed equity orders and provided trading ideas to institutional clients. He also contributed technical analysis to a fundamental research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Airline companies among others understand the trading in their stock. Brian is a Chartered Market Technician.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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