Stocks Little Changed as Trade Talks Continue
- NASDAQ Composite -0.15% Dow +0.21% S&P 500 +0.17% Russell 2000 +0.36%
- NASDAQ Advancers: 1375 Decliners: 1003
- Today’s Volume (vs yesterday) +20%
- Crude $58.85 +$0.72, Gold $1503.00 +$3.50, VIX 13.59 -0.46
Market Movers
- The NY Fed conducts another $75 billion repurchase, the 4th this week
- The NY Fed announced they will continue to keep the window open through October 10th
- After 10/10 the NY Fed will revert back to conducting operations “as necessary”
- Reaction to earnings: SCS +9%, SCHL +5%
Chris’ Commentary
Equity markets in the U.S. closed relatively flat yesterday. Positive economic data released this week along with comments from FED Chairman Powell saying that despite a slowing global economy, they see no sign of recession and helped calm markets. For the week, all major indexes are essentially flat with the SPX up 0.2%, the Dow down 0.2%, the Nasdaq Composite up 0.25% and the Russell 2000 Index down 0.75%. With the exception of Monday’s sell off, equity trading volumes this week have been well below average, a sign of investor complacency. Yesterday’s trading volume of 6.25 billion shares was the lightest day for the month.
Today, we are slightly higher to start the day, but with no clear catalyst or major economic data releases this morning, expect markets to waffle near unchanged today without leadership. The Dow and S&P 500 have closed higher week-over-week for the past 3 weeks. Today at midday, the S&P seems poised to continue with its gains to close higher for a 4th week in a row. Meanwhile, the Dow needs to gain an additional 50 points to achieve this record. For the month of September, the Dow Jones Industrial average has only closed lower 3 of the 14 trading sessions.
Currently, 9 of the 11 of the S&P 500 sectors are trading higher with Healthcare, Energy and Consumer Staples leading. Crude oil is slightly higher for the 2nd day in a row. Gold trades higher and still sits near $1500 level. The dollar is slightly higher while the yield on the 10-yr stands at 1.78%.
Today is the S&P quarterly rebalance and “quad-witch” options expiration. This quarterly event occurs on the third Friday of March, June, September and December. The four legs of the “quadruple witching” expirations are equity options, index options, index futures, and single-stock futures. Concurrently with quad-witch the S&P will rebalance certain indexes including the S&P 500 (large cap), S&P 400 (mid cap) and S&P 600 (small cap) as well as new listings being added to the Russell Family of Indexes. All of these items will result in elevated trading volumes including increased block trades for the opening and closing crosses, including the afterhours, for stocks affected by these events.
China - U.S. deputy-level trade talks continue today are largely expected to focus on agriculture purchases. In another move to help U.S. companies and potential the next stage of negotiations, the Trump Administration announced they will temporarily exempt a large number of Chinese products including Christmas lights, plastic straws and pet supplies from a planned 25% tariff hike. Politico reported yesterday that, “the Trump administration has excluded…hundreds of …products from a 25 percent duty… imposed on $250 billion worth of Chinese goods, according to three notices set to be published in the Federal Register on Friday. The move comes as the United States and China are preparing for another round of high-level trade talks in early October.”
Sector Recap
Brian’s Technical Take
Brian is out today and the task of creating something interesting for the Technical Take fell to me. So, one item I continue to look at here on the desk is market breadth. Market breadth measures the number of advancing stock in a particular index versus its decliners to calculate the index’s next price movement.
Essentially we are looking to validate trends or more importantly look for signals of reversal. Typically, when a breadth indicator is rising, so is the index and vice-versa. This means the price direction (up or down) is more likely to continue.
We have spoken about the S&P 500 Index this week. The S&P 500 has rebounded nicely form the 6 % decline we saw in the middle of August from the July highs. In fact the SP 500 is less than 0.5% away from breaking its all-time record. Over 70% or 352 members of the S&P 500 Index members are higher today. More than 75 companies are trading above their 50 day simple moving average and 5 member have made new 52 week highs today.
The chart below shows the breadth as measure the number of new 52 week highs and lows. You can see the graphs on the bottom of the chart that when the index is making more 52 week lows, the Index sells-off (like last December) and when there is a lack of new lows, not necessarily a glut of new highs, the Index creeps higher. As it did over the summer and has done since late August through today. A leading indicator of potential higher highs? Not necessarily. But definitely an indicator of a more constructive investing environment which could lead to new highs.
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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