- NASDAQ Composite +0.02% Dow +0.11% S&P 500 +0.04% Russell 2000 -0.36%
- NASDAQ Advancers: 989 Decliners: 1433
- Today’s Volume (vs. Tuesday) +2.4%
- Crude $57.20 +$0.40, Gold $1463.20 +$9.50, VIX 13.20 +0.52
- Fed Chair Powell addresses the Joint Economic Committee of Congress at 11am today
- October CPI better at +0.4% vs +0.3% expected growth
- October Core CPI (ex-food, ex-energy) rose +0.2%, in-line with expectations
- Y/o/Y CPI in-line at +1.8%, slightly better than expectations
- Y/o/Y Core CPI +2.3%, slightly below estimates
- Weekly MBA Mortgage Application Index +9.6% vs -0.1% decrease last week
- Reaction to earnings: DDOG +17%, LK +13%, ENR +11%, TECD + 4%, ADT +3%, SWKS -1.7%
Markets are trading flat to lower as FOMC Chairman Powell answers questions up on the Hill. He is fielding questions on fiscal policy and inflation prospects. In his prepared remarks, Chair Powell reiterated the Fed’s policy stance. Fed Fund Futures predicts a 95% chance of rates remaining steadfast at the FOMC December meeting.
Yesterday the market closed essentially flat to slightly higher. The Dow was unchanged from the Monday, something that hasn’t happened in years. The Nasdaq Composite, S&P 500 and the Russell 2000 all closed slightly higher. Yesterday’s trading volumes were still below average, though better than Veterans’ Day anemic showing.
Currently, five of the 11 major S&P 500 sectors are trading higher. Utilities and Real Estates are both up over 1% while Financials and Consumer Discretionary lag. Crude oil is up +0.6%, Gold also trades higher. The dollar is up again and the yield on the 10-yr sits at 1.90%.
U.S. Consumer Price Index (CPI) increased 0.4% in October, slightly better than polled expectations, driven mostly by higher energy costs. Core CPI which excludes food and energy increased by +0.2%, in-line with expectations. Year-over-year CPI increased 1.8%, up from +1.7% previously reported in September. Core Y/o/Y CPI increased +2.3% down 0.1% from September. Real average hourly earnings increased +1.2% in October. Weekly wages increased by 0.9%. The consumer price index (CPI) measures the change in prices paid by consumers for goods and services and thus is a crucial measure of inflation. Consumer inflation data is a focal point for the Federal Reserve and the capital markets.
President Trump’s comments yesterday at the Economic Club of New York didn't deliver any new specifics on China Trade developments. He did say a "significant Phase One" deal could happen soon, but reiterated that the U.S. will “substantially” raise tariffs on Chinese goods if no agreement is struck between the two countries.
Brian’s Technical Take
Last Thursday 11/7 we highlighted the 10YR UST yield and said it was at a key inflection point. While price action had been constructive price action over the prior three months with the long yield making series of higher lows and its shorter term 20-day and 50-day moving averages reversing to the upside, longer term forces still needed to be reckoned with. The 100-day, 150-day, and 200-day moving averages remained in a downtrend as the yield was entering a clearly defined resistance zone in the 1.90% - 2%.
Sure enough the 10YR UST yield peaked at 1.97% and three sessions later is down a modest 10bps to 1.87%. What it does from here is key and I will be watching the 20-day and 50-day moving averages, now 1.81% and 1.72%, as expected support if the three month uptrend is going to continue.
Accordingly as long rates correct lower, the Utilities is today leading all eleven GICS sectors with a gain of +1.5%. Just two days ago we noted that Utilities was the worst performing sector so far in Q4 but we felt the pendulum had swung too far the other way and the group was ready for a rebound. Price had pulled back to a cluster of technical support as momentum (32 daily RSI) had reached oversold levels. For the XLU ETF, a key test is just above at the $63 level which previously acted as support and now has the potential to be formidable resistance.
The battle lines are clear and thus the risk levels are measurable.
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.