KCG Closing Summary:
Today’s S&P 500 Intra-day Chart:
NYSE Volume: 675 million
Sector Performance:
End of Day Summary:
Closing Market Summary: Stocks Post Third Day of Consecutive Gains
The stock market finished the Wednesday session on an upbeat note with the Nasdaq (+1.3%) ending in the lead. The S&P 500 settled higher by 1.1% with all ten sectors posting gains.
The benchmark index spent the entire trading day in the green, rallying to new highs during the last hour of action. The tech-heavy Nasdaq, meanwhile, briefly dipped into the red during morning action, but was able to recover swiftly.
Stocks began the trading day with modest gains after the overnight session featured the release of China’s Q1 GDP. Although the report could be classified as better-than-feared, it did not necessarily produce a clear-cut signal as the year-over-year reading of 7.4% beat estimates (7.3%), while the quarter-over-quarter growth of 1.4% was just below expectations (1.5%).
When the opening bell rang at the New York Stock Exchange, the Dow and S&P 500 maintained relatively narrow ranges through the first two hours of action, while the Nasdaq slipped below its flat line due to weakness among chipmakers. The largest industry player, Intel (INTC 26.93, +0.16), reported a slim earnings beat, but other semiconductor names struggled. The broader PHLX Semiconductor Index shed 0.2%.
Even though chipmakers knocked the Nasdaq into the red, the index was able to overcome that weakness due to the relative strength of biotechnology and recently-battered momentum names. The iShares Nasdaq Biotechnology ETF (IBB 222.79, +5.18) jumped 2.4%, ending just above its 200-day moving average (219.97) after struggling with that level for the past week.
Interestingly, the broader health care (+0.6%) sector did not follow biotech’s lead as several large components weighed. UnitedHealth (UNH 78.19, -1.32) contributed to the underperformance, falling 1.7% after receiving a downgrade from Citigroup ahead of its earnings report, which will be released ahead of tomorrow’s opening bell.
Elsewhere among influential sectors, consumer discretionary (+1.4%), energy (+1.2%), and industrials (+1.5%) provided support to the broader market, while financials (+0.9%) lagged. The economically-sensitive sector was pressured by Bank of America (BAC 16.13, -0.26), which lost 1.6% after missing bottom-line estimates. The financial sector will be in focus once again tomorrow with the market digesting quarterly results from American Express (AXP 87.40, +1.36), Goldman Sachs (GS 157.22, +2.30), and Morgan Stanley (MS 29.89, +0.34).
On the countercyclical side, health care (+0.6%) ended at the bottom of the leaderboard, while consumer staples (+0.9%), telecom services (+0.9%), and utilities (+0.8%) had some difficulty keeping up with the broader market.
Treasuries settled modestly lower following a range bound session. The benchmark 10-yr yield ticked up one basis point to 2.64%.
Participation was below average as 661 million shares changed hands at the NYSE.
Reviewing today’s data:
Housing starts increased 2.4% in March to 946,000 from an upwardly revised 920,000 in February. The Briefing.com consensus expected 955,000 new starts. Overall, the residential construction report was encouraging, but did not provide any evidence that the weakness in January and February was weather related. Starts remained well below 1.00 million, which was the average in the fourth quarter. Had weather factored into the weakness, then there should have been a much stronger bounce from delayed starts. Single-family construction, which languished below 600,000 in January and February, rebounded 6.0% to 635,000. That was more in-line with the trends over the last 12 months. Multifamily starts fell 3.1% to 311,000 in March from 321,000 in February. That was a typical decline from a normally volatile sector.
Industrial production increased 0.7% in March after increasing an upwardly revised 1.2% (from 0.6%) in February. The Briefing.com consensus expected industrial production to increase 0.5%. Manufacturing production increased 0.5% in March, down from an upwardly revised 1.4% (from 0.9%) in February. The March gain was in-line with the ISM production index. Despite a 0.8% decline in motor vehicles and parts production, durable goods manufacturing production increased 0.5%. Nondurable goods manufacturing production increased 0.7%, which was mostly the result of a 3.3% increase in petroleum and coal products production.
Tomorrow, weekly initial claims (Briefing.com consensus 312K) will be reported at 8:30 ET and the Philadelphia Fed Survey for April (consensus 8.6) will be released at 10:00 ET.
S&P 500 +0.8% YTD
Dow Jones Industrial Average -0.9% YTD
Nasdaq Composite -2.2% YTD
Russell 2000 -2.6% YTD
Bond Summary:
Curve Flattest Since October 2009: 10-yr: -03/32..2.637%..USD/JPY: 102.24..EUR/USD: 1.3815
Treasuries finished mixed amid a choppy trade.
The complex held small losses into the U.S. cash open before some light buying emerged in response to the disappointing housing starts (946K actual v. 955K expected) and building permits (990K actual v. 1003K expected) data.
Maturities would slip onto their worst levels of the session following the strong industrial production (0.7% actual v. 0.5% expected) and capacity utilization (79.2% actual v. 78.8% expected) numbers, but failed to see follow through selling.
A choppy trade persisted before Fed Chair Janet Yellen suggested the central bank remains committed to an accommodative policy and that there is greater chance inflation runs below the Fed’s target.
The latest Fed Beige Book indicated “economic activity increased in most regions of the country since the previous report.”
Outperformance at the long end saw the 30y shed -0.6bps to 3.454%. The yield on the long bond closed on session lows, and at a level last seen in June.
The 10y edged up +0.9bps to 2.637%. Traders will continue to monitor the 2.600% level over the coming sessions as that level has held up since early February.
The 5y lagged, finishing +3.7bps @ 1.655%. Selling produced a fourth straight rise in yield, and has action moving towards a test of resistance in the 1.660%/1.700% area.
Today’s mixed trade flattened the yield curve with 5-30-yr spread tightening to 180bps, which was last seen in October 2009.
Precious metals were firm with gold +$2 @ $1302 and silver +0.13 @ $19.62.
Data: Initial and continuing claims (8:30), and Philly Fed (10).
Commodities Summary:
Closing Commodities: Gold Rise 0.3%, Closes Above $1300/Oz, Crude Gains 5 Cents
June gold traded in positive territory for most of today’s pit session. Prices advanced as high as $1307.10 per ounce and dipped to a session low of $1297.90 per ounce in mid-morning action. The yellow metal eventually settled with a 0.3% gain at $1303.40 per ounce.
May silver rose to a session high of $19.81 per ounce shortly after floor trade opened. It then chopped around near the $19.60 per ounce level and settled with a 0.8% gain at $19.64 per ounce.
May crude oil rose to a session high of $104.82 per barrel in early morning floor trade but slipped into negative territory following inventory data that showed a build of 10.0 mln barrels when a smaller build of 1.8-2.3 mln barrels was anticipated.
The energy component managed to inch higher in afternoon action and settled at $103.73 per barrel, or 5 cents above the unchanged line.
May natural gas chopped around in the red today. It touched a session high of $4.57 per MMBtu in early morning action and settled with a 0.9% loss at $4.53 per MMBtu, just above its session low of $4.52 per MMBtu.
NYMEX Energy Closing Prices
May crude oil rose $0.05 to $103.73/barrel
Crude oil rose to a session high of $104.82 in early morning floor trade but slipped into negative territory following inventory data that showed a build of 10.0 mln barrels when a smaller build of 1.8-2.3 mln barrels was anticipated. The energy component managed to inch higher in afternoon action and settled 5 cents above the unchanged line.
May natural gas fell 4 cents to $4.53/MMBtu
Natural gas chopped around in the red today. It touched a session high of $4.57 in early morning action and settled just above its session low of $4.52, booking a loss of 0.9%.
May heating oil rose 2 cents to $3.01/gallon
May RBOB settled unchanged at $3.04/gallon
CBOT Agriculture and Ethanol/ICE Sugar Closing Prices
May corn fell 6 cents to $4.98/bushel
May wheat fell 13 cents to $6.88/bushel
May soybeans rose 17 cents to $15.19/bushel
May ethanol fell 9 cents to $2.17/gallon
July sugar (#16 (U.S.)) rose 0.06 of a penny to 24.40 cents/lbs
The information contained in this communication is not intended as an offer or solicitation for the purchase or sale of any securities, futures, options, or any other investment product. This communication is not research, and does not contain enough information on which to make an investment decision. The information herein has been obtained from various sources including Bloomberg, Wall St. Journal, Briefing.com, Dow Jones, Reuters
Sources: Commentary adapted from Bloomberg, Wall St. Journal, Briefing.com, FT.com, Reuters, and/or Dow Jones NewsPlus.
John Longobardi
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