Markets Pause Ahead of Jackson Hole
- NASDAQ Composite -0.14% Dow -0.19% S&P 500 -0.27% Russell 2000 -0.26%
- NASDAQ Advancers: 917 / Decliners: 1303
- Today's Volume (vs. Monday) -8.5%
- Crude $55.51 -$0.40, Gold $1502.10 +$1.70, VIX 16.91 +0.03
Market Movers
- U.S. Redbook retail sales increased +4.9% Y/o/Y
- Redbook retail sales declined 1.7% M/o/M
- Retail Economist/Goldman Sachs weekly U.S. chain store sales declined -0.2% vs. -2.7% prior
- Sales increased +0.4% Y/o/Y vs. +1.7% reported last week
- Reaction to earnings: BIDU +8%, HD +5%, MDT +4%, KSS -4%, TJX -3%
Chris’ Commentary
Yesterday the markets posted a broad-based rally as all the major indexes closed up over 1% for the day. Both the S&P 500 and Dow closed higher for the 3rd day in a row. Monday's trading session was similar to Friday's in that the markets opened higher and trended higher over the course of the day. Also, the day’s trading volumes were lighter on the consolidated tape (which is generally a sign of lower volatility) and there were few negative macro headlines to dampen the mood. China and German put forth talk of stimulus plans which also gave the markets a boost to start the day. None of the headlines were really anything new. Perhaps the lack of volatile headlines helped calm the seas and continue the rally from the short-term, oversold condition we saw last Wednesday.
Today, we are trading mixed to flat at midday after opening lower. Perhaps a breather is needed after the last two weeks of headlines and volatile trading… Since last year, the major indexes are up only about 2% for the continuous 52 week period and the small cap Russell 2000 index is actually down over 11% for the same period.
Currently, only four of 11 S&P 500 sectors are trading higher. Consumer Discretionary and Tech are the best performers while Materials and Energy are faded. Crude oil is down nearly 1% while Gold climbs back above the $1500 level. The dollar is lower while the yield on the 10-yr slips to 1.56%.
The FDIC and the Office of the Comptroller of the Currency have both approved changes to the Volker Rule. If approved by the other three regulators (SEC, FED & Commodity Futures Trading Commission), the rule will ease controversial trading regulations for banks, specifically proprietary or “prop” trading. According to Bloomberg, “The changes seek to provide lenders a much clearer picture of what trades are prohibited, giving firms confidence to engage in transactions without fear of violating the rule … The Volcker rewrite marks a victory for Wall Street, especially Goldman Sachs Group Inc., which has lobbied aggressively to weaken the rule for years. But the changes are more marginal than major, raising questions about how much they might revive trading. Without action by Congress, Volcker’s prohibition on proprietary trading -- the practice of banks making market bets with their own money -- stands. And lenders still face restrictions on investing in private equity and hedge funds. A response to the 2008 financial crisis, Volcker was meant to address concerns that some bank trading desks behaved like hedge funds before the meltdown, using their firms’ balance sheets to finance risky wagers. Former Federal Reserve Chairman Paul Volcker, its key advocate, said such trading could sink banks and threaten the broader economy. The rule was included in the 2010 Dodd-Frank Act, with regulators putting it in place three years later.”
Sector Recap
Brian’s Technical Take
This weekend’s 45th G7 summit will be held in Biarritz, France and should be filled with plenty of drama and flare headlined with the debut of UK PM Boris Johnson and the return of U.S. President Donald Trump. Trump and Johnson will reportedly meet before seeing any other leaders and the two are expected to advance talks on a bilateral trade deal that could potentially go into effect immediately after Britain leaves the European Union at the October 31st Brexit deadline.
The 2016 Brexit vote drove the sterling to 30+ year lows not seen since the mid-1980’s. This led to an extreme risk-off reaction throughout the global capital markets resulting in massive coordinated central bank intervention. Sterling rebounded the next two years into the summer of 2018 but stalled at a clearly defined resistance zone, 1.35 – 1.44 (horizontal red dotted line on the below quarterly-period chart), which previously represented a clearly defined, long-term support zone from 1993 to 2016.
Since last summer sterling has resumed its downtrend and is now bracing for its first retest of those 2016 lows which, technically speaking, is an expected support level.
Nasdaq's Market Intelligence Desk (MID) Team includes:
Charles Brown is Associate Vice President on The Market Intelligence Desk with over 20 years of equity capital markets experience. Charlie has extensive knowledge of equity trading on both floor and screen based marketplaces. Charlie assists with the management of The Market Intelligence Desk and works with Nasdaq listed companies providing them with insightful objective trading analysis.
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.
Brian Joyce, CMT is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq’s Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).
Michael Sokoll, CFA is Associate Vice President 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.
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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