Stocks Mixed on Weak Retail Sales
- NASDAQ Composite -0.20% Dow +0.07% S&P 500 -0.05% Russell 2000 +0.21%
- NASDAQ Advancers: 1309 Decliners: 1066
- Today’s Volume (vs. yesterday) -10%
- Crude $53.50 +$0.69, Gold $1481.40 +$3.80, VIX 13.81 +0.27
Market Movers
- US September Retail Sales -0.3% vs. consensus +0.3%
- August revised higher to +0.6% from +0.4%
- September Ex-Autos Sales -0.1% vs. +0.2%
- August ex-Autos also revised higher to +0.2% from 0.0%
- Weekly MBA Mortgage Application Index +0.5% vs +5.2% increase last week
- NAHB Homebuilders Index rises to 71 above 68 expected, highest since Feb’18
- Business Inventories flat M/o/M vs +0.2% expected growth
- Reaction to earnings: JBHT +2.7%, SNBR -1.5%, UAL +2.5%, ABT +1.25%, BAC +2.25%, BK +1.5%, CMA -.0.5%, PGR -4.5%, PNC +0.5%, USB + 2%
Chris’ Commentary
Markets opened mixed to flat today following yesterday’s broad based rally. Tuesday, stocks closed near the highs of the day on lower than average daily trading volume. Earnings strength along with a positive tone to the macro-economic environment helped sustain yesterday’s rally. Trading volumes continue to be a concern as below average trading volumes seem to be the norm. The old trader’s adage of “volume validates the move" comes to mind here. As long as trading volumes on the consolidated tape continue to trend below average, market direction will lack conviction.
Today, a mixed bag of economic data, trade talks concerns and a lack of a formal Brexit deal are all points of concerns. Corporate earnings are also contributing to a lack of direction for equities this morning.
Currently six of 11 major S&P 500 sectors are trading higher. Materials are up over ¾ of a percent while Tech is down about the same. Crude oil is higher reversing a 2 day slide. Gold trades slightly higher as a hedge to equities. The dollar trades lower while the yield on the 10-yr stands at 1.76%.
September retail sales in the US declined for the first time in seven months. The top-line number showed a decline of -0.3% which missed economist expectations of +0.3% growth month-over-month. Core retail sales (excluding autos and fuel) were flat and also missed expectations of a +0.3% increase. The retail sales control group was also flat compared to August. What is interesting is that all of August’s numbers, which were positive, were revised higher across the board. So the misses, though disappointing, come on the back of revised higher comps. All in all, the print does not seem as bad as the headline numbers, but still shows that the consumer was a bit more cautious with their pocketbook in September.
Consumer spend has been the one bright spots for the economy. Today’s retail sales data showed a slowdown in September spend, however August’s upward revision offset some of the initial print’s concerns. Consumer spend accounts for a large chunk of US GDP. Today’s release could have implications for the Fed. To that effect the Fed Funds Futures now shows an 85% chance of a rate cut at their October meeting. That number stood at 70% last Friday.
Sector Recap
Brian’s Technical Take
European and British leaders are reportedly making positive strides on Brexit talks which potentially could see the framework for a deal in place before this week’s European Summit. The smart money seems to be on board as the British pound has gained 5.3% over the last five trading session, equaling its 3rd largest 5-day move since 1985, or 34 years!
We last covered the pound two months ago in the August 20th MIDDAY Update and noted then it was testing a major support at the ~1.20 level. This represented the lows following the Brexit vote in 2016, which then formed a classic “double bottom” price pattern, and a level not seen since… 1985. This week’s gains has seen price push above the 40-week moving average, as well as the declining trend line from the 2018 highs, which then formed a “double top.”
Whether or not the “breakout” is sustainable will likely depend on whether or not a Brexit deal is consummated. If so this week’s surge in the pound may just be the appetizer. A Brexit deal could also bode very well for the EURUSD pair, which correlations suggest will spill over into global assets (i.e. commodities and emerging markets) in general.
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.
Other Topics
Stocks
The Market Intelligence Desk Team
Nasdaq
Nasdaq’s Market Intelligence Desk (MID) is designed to provide critical touch-points for timely trading analysis and market information.
MarketInsite
Nasdaq
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio