Monday, March 5, 2018, 10:26 AM, EST
- NASDAQ Composite -0.51% Dow -0.37% S&P 500 -0.37% Russell 2000 -0.30%
- NASDAQ Advancers: 830 Decliners: 1316
- Today's Volume (100 day avg) -2.9%
Stocks begin the week lower with concerns over a trade war still dominating the news. European markets are fractionally higher after a governing coalition is formed in Germany and despite Italian elections resulting in parliamentary stalemate. Most sectors are lower with Industrials (-0.8%) and Tech (-0.5) the weakest while REITs (+0.8) and Utilities (+0.7) catch a bid as some investors move toward safety. Treasuries are also firmer in safety bid, gold is off 0.2%, and crude oil higher by about 0.6%.
- Service industries account for about 90% of the US economy and continued expanding in February. ISM Non-Manufacturing came in at 59.5, down slightly from January but still above expectations. Business activity rose to a near one-year high, new orders rose to the highest since 2005, and export orders hit the highest mark since mid-2011.
- The International Energy Agency writes in it 'Oil 2018 Report' that production growth from the US will cover about 80% of world demand growth for the next three years . Leading the way higher is the Permian Basin, which will double output by 2023 making the US the world's top producer according to the report. However they also offer a word of caution - global investment in production has yet to recover from the 2015-2016 drought and that might hamper supply growth after 2020.
- Merger Monday is back as M&A activity grabs headlines globally. XL Group has (XL) has agreed to be acquired by AXA SA (AXAHY) for $57.60 a share in cash, valuing the deal at $15.3 billion, creating the world's largest Property & Casualty commercial line insurance platform globally. YTD we have seen $918.2 billion of announced or proposed deals globally which is down nearly 20% from this point last year. North America has seen $476.3 billion in deals year-to-date which is down only 16.2% from 2017.
- We have a fair amount of U.S. economic data out this week that may impact markets including factory orders, international trade data, EIA Petroleum Status Report, MBA mortgage applications, Fed's Beige Book, ADP National Employment Report, new and continuing jobless claims and on Friday the U.S. Department of Labor's non-farm payroll report for February.
Technical Take : Will Friday's Job # Buck the Trend of Recent Economic Misses?
At the end of the week the BLS is set to release its monthly jobs report. Forecasters are expecting the unemployment rate to fall to 4% from last month's 4.1%, and a steady MoM change in both nonfarm and private payrolls, 200k and 196k. While the economy remains on solid footing, recently there has been a clear trend of releases coming in below expectations. The second estimate of Q4 GDP was revised down to 2.5%, modestly below the initial 2.6% announced in late January which then fell short expectations of 3% GDP. The latest consumer spending release remained unchanged at 3.8%, with weak durables offset by an increase in service spending. Meanwhile pending home sales declined 4.7% which fell well below forecasts of a 0.5% increase, however the miss was attributed to low inventories. The solid yet "underperforming" economic data is best visualized by the below chart of the Citigroup Economic Surprise Index which peaked in December and has since been in decline.
Nasdaq's Market Intelligence Desk (MID) Team includes:
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.
Jeffrey LaRocque is a Director on the Market Intelligence Desk (MID) at Nasdaq, covering U.S. equities with over 10 years of experience having learned market structure while working on institutional trading desks and as a stock surveillance analyst. Jeff's diverse professional knowledge includes IPOs, Technical Analysis and Options Trading.
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.
Annie O'Callaghan is Director on the Market Intelligence Desk (MID) at Nasdaq. Annie has worked for NASDAQ in a variety of roles including support of Nasdaq C-level management in client retention and customer service. Annie also served as a Sales Director in Nasdaq's Transactions Services business. Prior to joining Nasdaq, Annie worked at AX Trading, managing accounts for its Alternative Trading System and served on Credit Suisse's trading desk as an Electronic & Algorithmic Sales Trading Analyst.
Brian Joyce, CMT is a 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).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.