Tuesday, July 3, 2018, 10:20 AM, EST
- NASDAQ Composite +0.03% Dow +0.38% S&P 500 +0.26% Russell 2000 +0.66%
- NASDAQ Advancers: 1303 Decliners: 832
- Today’s Volume (100 day avg) -34.9%
The markets opened higher this morning, continuing yesterday’s modest rally that was led by Tech and Russell 2000 stocks. Market sentiment shifted mid-afternoon after Trump said the US will meet with European counterparts to ‘work something out’ on trade and tariffs. Building on that theme comes word that China is stepping in to support the yuan along with a pledge that the currency won’t be used as a weapon in the trade war. On that European markets are mostly higher while Asia was mixed, and back in the US most sectors are higher with Energy (+1.8%) outperforming as WTI crude oil tops the $75 level for the first time November 2014, but Tech (-0.2%) is seeing some profit-taking. Otherwise the news flow is quiet ahead of the holiday tomorrow and markets close early today at 1PM EDT.
- The people’s Bank of China said that it “will keep the yuan exchange rate stable at a reasonable and balanced level.” The Yuan has recently shown some recent weakness and is the worst performing currency over the past three week period in Asia. A failure to contain the decline would feed speculation that Chinese officials are purposely depreciating the currency to defend against the effects of trade tariffs.
- According to Street Account, Corporate buybacks hit a record in Q2, with $433.6B in share repurchases announced during the three month period, nearly double the previous record of $242.1B in Q1 this year. Companies also issued a record $111.6B in dividends in the quarter, with year-to-date dividend growth of 7.8% compared to the same period last year. M&A activity for the three months ended 31-May was more than double the same period a year before.
- As trading resumes on Thursday, investors will sift through a good bit of data. ADP Employment stats are expected show an improvement from May with about 190k private positions added, ISM Non-Manufacturing is expected to show a slight softening from May, and that afternoon investor will also get to peruse the FOMC Meeting Minutes. On Friday analysts expect Nonfarm Payrolls will closely mirror ADP and show about 195k new positions added in May and a steady national unemployment rate at 3.8%.
Technical Take:Gold Looks Poised for a Bounce
Gold has been having a tough 2018 due in large part to the resurgence in the US dollar. YTD gold is down 3.9% and came into this week with weekly declines in four of the prior five weeks. Gold started this week in the red with a “healthy” 0.8% decline in yesterday’s session. After initial weakness early in today’s session, gold has reversed sharply highly and is currently forming a bullish engulfing candlestick on the daily period time frame. Today’s lows came within $1 of the $1.237 pivot low made back in December. This level coincides with the rising trend line connecting the December 2015 and December 216 lows, establishing a cluster of technical support. Although it is still early in the week, the weekly candlestick is currently forming a bullish dragonfly doji reversal pattern. Daily momentum bottomed last Thursday at an oversold 27 level suggesting continued near term weakness through that cluster of technical support is unlikely in the near term.
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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.
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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 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.
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