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Month: September 2017

Nasdaq end at records, as stocks extend quarterly win streaks

Nasdaq end at records, as stocks extend quarterly win streaks

U.S. stocks wrapped up the week, the month and the quarter on a high note, with the S&P 500, Nasdaq Composite and Russell 2000 hitting all-time highs on Friday. All the main indexes posted weekly, monthly and quarterly gains.

How did stock indexes perform?

The S&P 500 index SPX, +0.37% gained 9.30 points, or 0.4%, to 2,519.36, closing at a record for the 39th time this year. The benchmark index gained 0.7% over the week and 1.9% over the month. The S&P has risen for eight consecutive quarters, gaining 3.9% since July.

The Nasdaq Composite Index COMP, +0.66% closed at a record for a 50th time this year, adding 42.51 points, or 0.7%, to 6,495.96. The tech-heavy index rose 1.1% over the week and is up 1% over the month, while its quarterly gain is 5.8%.

The Dow Jones Industrial Average DJIA, +0.11% rose 23.89 points, or 0.1%, to 22,405.09, missing its own record by about 7 points. The blue-chip index barely rose over the week—up 0.3%, but posted solid monthly and quarterly gains. Over the past month, the Dow is up 2.1% while over the quarter it rose 4.9%.

The Russell 2000 RUT, +0.14% closed at a record for a 21st time in 2017, rising 2.08 points, or 0.1%, to 1,490.86. The small-cap index climbed by 2.8% over the week and 6.1% over the month. Over the quarter, it is up 5.4%.

What did market participants say?

“The fundamental headlines in terms of market weakness don’t seem to be there right now, but valuations look a little stretched and investors may take a pause from the momentum we’ve been seeing,” said Sean Lynch, co-head, global equity strategy at Wells Fargo Investment Institute. He said the S&P 500 could retreat 5% or 6% through the rest of the year before rebounding in 2018.

“The initial move so far this year has been on pretty good earnings and pretty good fundamentals. However, a lot of stocks have had great runs and look very expensive now.” He singled out small-cap stocks as ones that “seem especially risky.”

Dow Futures Tick Higher as Markets Await Trump Tax Plan

Dow Futures Tick Higher as Markets Await Trump Tax Plan

U.S. stock futures pointed to a small rise at the open on Wednesday morning, as investors took positions ahead of an expected roll-out of the Trump administration’s plan for tax cuts.

U.S. President Donald Trump is expected to unveil his tax reform plan during a speech in Indianapolis at 3:00PM ET (1900GMT).

The plan has been developed over several months by six White House and congressional Republicans working behind closed doors and with no input from Democrats.

Republicans, who control the White House and both chambers of Congress have been unable to deliver a significant legislative win on any topic since Trump took office in January.

The blue-chip Dow futures inched up 3 points, or around 0.1%, by 6:30AM ET (1030GMT), the S&P 500 futures added 2 points, or about 0.1%, while the tech-heavy Nasdaq 100 futures added 9 points, or roughly 0.2%.

Wall Street ended mostly flat on Tuesday, but the tech sector pushed higher after four sessions of declines.

On the data front, Wednesday’s calendar includes August durable goods orders at 8:30AM ET (12:30GMT). At 10AM ET, the U.S. will release a report on pending home sales.

Besides the data, the Fed is keeping itself in the market’s sights, with several officials scheduled to speak during the day.

Minneapolis Fed President Neel Kashkari is due to give opening remarks at a conference at his bank at 9:15AM ET (1315GMT), and St. Louis Fed President James Bullard is on tap to speak at Missouri’s Truman State University at 1:30PM ET (1730GMT).

Later on, Fed Governor Lael Brainard is scheduled to take part in a Kansas City Fed forum at 2PM ET (1800GMT), and Boston Fed President Eric Rosengren is slated to talk at New York University at 7PM ET.

Odds for a December rate hike mounted after Federal Reserve Chair Janet Yellen said Wednesday that the central bank needs to continue gradual rate hikes despite broad uncertainty about the path of inflation.

Interest rate futures are now pricing in about an 80% chance of a December Fed rate hike according to Investing.com’s Fed Rate Monitor Tool, up from under 40% just a few weeks ago.

Among active pre-market movers, Nike (NYSE:NKE)’s shares dropped around 3% after the sneakers giant late Tuesday posted fiscal first-quarter earnings that beat forecasts, but its revenue was slightly below expectations.

On the upside, shares of Micron Technology (NASDAQ:MU) rose around 3% after the company posted better-than-expected fourth quarter results and guidance that exceeded estimates.

Meanwhile, Twitter (NYSE:TWTR) is set to have an up-day following the company’s announcement that it is testing out 280-character tweets, double the current max.

Elsewhere, European stocks climbed to a 10-week high, led by gains for Alstom (PA:ALSO) and Siemens (DE:SIEGn) after the two agreed to merge their rail operations. Earlier, in Asia, markets ended on a mixed note.

In currencies, the dollar built on the prior session’s gains to reach a one-month high against the other major currencies, boosted by the Fed’s hawkish rate hike outlook.

Looking to commodities, oil prices were stuck in a holding pattern, as investors looked ahead to the Energy Department’s weekly supply report at 10:30AM ET (1430GMT).

Gold prices under pressure as dollar rebounds

Gold prices under pressure as dollar rebounds

Base metals traded on the London Metal Exchange are mainly firmer this morning, Wednesday September 27, with gains averaging 0.6%. Volume has been average with 6,713 lots traded as of 06:48 BST.

This after a generally weak performance on Tuesday when the complex closed down by an average of 0.6%, with copper, aluminium and nickel’s performances looking quite bearish, while the others seemed to consolidate their positions more.

Precious metals prices are up an average of 0.4% this morning with gains seen across the board, led by a 0.7% climb in platinum prices, while gold prices are up 0.1% at $1,295.13 per oz. This after a down day on Tuesday when gold, silver and platinum prices closed off by an average of 1.6% as they gave back the gains seen following North Korea’s hydrogen bomb rhetoric, while palladium was little changed.

Precious metals prices are up an average of 0.4% this morning with gains seen across the board, led by a 0.7% climb in platinum prices, while gold prices are up 0.1% at $1,295.13 per oz. This after a down day on Tuesday when gold, silver and platinum prices closed off by an average of 1.6% as they gave back the gains seen following North Korea’s hydrogen bomb rhetoric, while palladium was little changed.

On the Shanghai Futures Exchange (SHFE) this morning, aluminium and copper prices are down 0.2% and 0.1%, respectively, with copper prices at 50,450 yuan ($7,608) per tonne, while the rest are up by between 0.3% and 0.6%.

Spot copper prices in Changjiang are down by 0.7% at 50,390-50,590 yuan per tonne and the London/Shanghai copper arb ratio has edged higher to 7.79. The fact spot prices are showing a bigger loss than the futures highlights that the spot prices were set earlier in the day and futures prices have gone on to rebound.

The recent spell of weakness in iron ore and steel rebar prices seems to be over as January iron ore prices are up by 0.7% this morning at 471.5 yuan per tonne on the Dalian Commodity Exchange, while SHFE steel rebar prices are up by 0.9%. Gold and silver prices on the SHFE are down by 0.3% and 0.5%, respectively.

In international markets, spot Brent crude oil prices are up by 0.3% at $58.73 per barrel and have been near their highest since July 2015 and the yield on US ten-year treasuries is firmer at 2.26%, while the German ten-year bund yield is weaker at 0.42%.

Asian equities are on divergent paths this morning with the Nikkei, ASX 200 and Kospi down by between 0.1% and 0.3%, while the Hang Seng is up by 0.3% and CSI 300 is off slightly. This follows a slightly weaker session on Tuesday, where in the USA, the Dow closed down by 0.05% at 22,284.32, while in Europe, the Euro Stoxx 50 dipped by 0.04% to 3,536.38. US markets are likely to be anxious today as they await news of the proposed US tax changes.

The dollar is on the rise and was recently quoted at 93.38, the rally seems to be fuelled by US Federal Reserve chair Janet Yellen’s comments supporting a gradual rise in US interest rates. The euro at 1.1746 is under pressure, as are sterling at 1.3367, the yen at 112.76 and the Australian dollar at 0.7847.

The Chinese yuan continues to weaken, it was recently quoted at 6.6373, while all of the emerging currencies we follow are similarly weaker as the dollar rebounds.

Data out today includes EU M3 money supply and private loans, UK CBI realised sales, with US data including durables goods orders, pending home sales and crude oil inventories. In addition, US Federal Open Market Committee member Lael Brainard is speaking.

The base metals are split into two camps with copper, aluminium and nickel looking vulnerable, while lead, zinc and tin prices look to be consolidating and well placed to push higher. We see the vulnerable group as correcting recent gains and looking for the level where buying re-emerges. We are not too bearish on these metals, but feel prices had run ahead of the fundamentals. We would let the pullbacks run their course, before looking to buy again.

Gold prices have been correcting recent gains, the pullback tested the break-up level at $1,295 per oz and it gave way, which is a sign of weakness. Bouts of haven buying have since given prices some lift, but the gains have not been held on to, which suggests a market that is getting tired of the ongoing rhetoric but lack of progress over North Korea. In addition, the stronger dollar is proving to be a negative for gold prices and may well be prompting stale long liquidation. We expect the North Korean saga to lead to scale-down buying.

U.S. stocks close higher for second day as financials extend rally

U.S. stocks close higher for second day as financials extend rally

U.S. stocks rose for a second session Tuesday as financial shares extended their rally in the wake of comments from Treasury Secretary Steven Mnuchin that he hopes to see a tax overhaul by the end of the year. Mnuchin also hinted that the administration may consider backdating the tax reform to the start of 2017. The S&P 500 SPX, +0.34% rose 8 points, or 0.3%, to close at 2,496. The Dow Jones Industrial Average DJIA, +0.28% climbed 62 points, or 0.3%, to end at 22,119 while the Nasdaq Composite Index COMP, +0.34% advanced 22 points, or 0.3%, to close at 6,454.

S&P 500, Nasdaq and Dow close at records after interest rates jump, Mnuchin talks up tax reform

S&P 500, Nasdaq and Dow close at records after interest rates jump, Mnuchin talks up tax reform

Nasdaq and S&P 500 close at record high on Tuesday 12 Hours Ago | 01:04

U.S. stocks rose to all-time highs on Tuesday as financials received a boost from rising yields. Wall Street also digested comments from Treasury Secretary Steven Mnuchin on tax reform.

The S&P 500 gained 0.3 percent, notching intraday and closing records. The index closed the session at 2,496.48.

The Dow Jones industrial average finished at 22,118.86, eking out a record close. Goldman Sachs contributed the most to the gains, while DowDuPont was among the best-performing stocks in the index, closing 2.5 percent higher.
The Nasdaq composite closed 0.3 percent higher at 6,454.28, a record closing high, after briefly falling.

“The fear trade of North Korea possibly exploding another hydrogen bomb is unwinding and the damage from Hurricane Irma doesn’t seem to be as bad as thought,” said Robert Pavlik, chief market strategist at Boston Private. “That’s pushing out the weaker hands out of the bond market.”

The benchmark 10-year Treasury yield rose to trade at 2.171 percent, building on sharp gains made in the previous session. The yield also hit its highest level since Sept. 1. Financials followed yields higher, with the Financial Select Sector SPDR Fund exchange-traded fund (XLF) jumping 1.1 percent.

These moves “signal that it’s OK for investors to jump back into the deep end of the pool,” said Mark Heppenstall, CIO at Penn Mutual Asset Management. “We’ve been focusing on hurricanes and North Korea recently.”

The Asian nation successfully tested a hydrogen bomb on Sept. 3, sparking outrage from the international community. The U.N. Security Council unanimously voted to cap North Korea’s crude oil imports and ban its textile exports on Monday night.

Meanwhile, damage estimates for Hurricane Irma, a storm that was once a Category 5 hurricane, were broadly lowered.

These factors helped the Dow, S&P and Nasdaq rally on Monday, as they advanced more than 1 percent.

Investors also set their sights on Washington after Treasury Secretary Mnuchin said he was “hopeful” that tax reform would be accomplished by year’s end, adding the administration is thinking about backdating reform to Jan. 1.

Backdating “is still something we are considering and it would be a big boon for the economy,” he said at the Delivering Alpha conference presented by CNBC and Institutional Investor.

Elsewhere, Apple held its annual consumer products event, where it unveiled three new iPhone models and an Apple Watch that doesn’t need an iPhone to work.

Shares of Apple closed 0.4 percent lower, after alternating between gains and losses for most of the session. For the year, the stock has jumped about 40 percent.

Dollar buoyant against yen, pound hits 1-year high on inflation jump

Dollar buoyant against yen, pound hits 1-year high on inflation jump

The dollar was buoyant against the yen on Wednesday, although it was capped against the euro with a potentially supportive spike in U.S. yields neutralized by a similar move by their German counterparts.

The pound reached a one-year high after a robust UK inflation report added pressure on the Bank of England to do more to support the currency.

The dollar was a shade lower at 110.085 yen after rising earlier in the session to 110.295, its highest since Sept. 1.

The greenback had slumped to a 10-month low of 107.320 yen on Friday, when Hurricane Irma threatened Florida and as financial markets braced for the possibility of another missile or nuclear test by North Korea for the Sept. 9 anniversary of its founding.

Since then, risk aversion has ebbed significantly, prompting a drive-up in U.S. Treasury yields to two-week highs and fueling a comeback by the dollar.

Dollar/yen shows the highest correlation to U.S. yields and the pair is benefiting from the latest rise in yields,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities. “Covering of dollar short positions created by macro-driven funds has been rapid and aggressive under such conditions.”

He also said North Korean concerns “are on a lower boil for the moment and the U.S. debt ceiling issue can be put aside now for the rest of this month.

Dollar-negative factors are suddenly decreasing.

While the U.S. 10-year Treasury note yield rose about 5 basis points overnight, its German bund counterpart jumped nearly 7 basis points, helping prevent the dollar from gaining on the euro.

German bund yields have risen as safe-haven government debt came under pressure following a respite in North Korea tensions.

The euro rose to a 2-1/2-year high of $1.2092 last week after a policy meeting by the European Central Bank gave bulls cause for short-term optimism towards potential policy tapering.

However, the surge puzzled some investors as ECB President Mario Draghi had also said after the meeting that the euro’s strength is already weighing on inflation and will be a key factor when it decides next month how to proceed with its massive stimulus program in 2018.

“The euro’s strength is pressuring ECB’s monetary policy and policymakers are also beginning to show concern about the currency appreciating,” said Koji Fukaya, president at FPG Securities in Tokyo.

The inflation jump is seen complicating the job of policymakers in explaining why they are not raising interest rates. The BoE holds a policy meeting on Thursday.

The dollar index against a basket of six major currencies inched down 0.1 percent to 91.807. It has managed to remain above the 2-1/2-year low of 91.011 plumbed on Friday.