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LIVE MARKETS U.S.-A bit scruffy

Published 2018-10-02, 04:23 p/m
© Reuters.  LIVE MARKETS U.S.-A bit scruffy
US500
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DJI
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JP225
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BA
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GM
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MMM
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GOOGL
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AMZN
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CME
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* Major averages end mostly red; Dow up, Nasdaq down

* Small caps underperform

* Defensive plays rally

Oct 2 - Welcome to the home for real-time coverage of U.S. equity markets brought to you by Reuters stocks reporters and anchored today by Sinéad Carew. Reach her on Messenger to share your thoughts on market moves: sinead.carew.thomsonreuters.com@reuters.net

A BIT SCRUFFY (0402 PM EDT/2002 GMT)

Despite a new closing high for the Dow Jones Industrial Average .DJI , most major averages finished the session looking rather scruffy. major industrials including Boeing (NYSE:BA) BA.N , 3M (NYSE:MMM) MMM.N and Caterpillar (NYSE:CAT) CAT.N buoyed the DJI. These 3 stocks were responsible for more than half of the blue-chip average's 122-point rise.

The S&P 500 .SPX and Nasdaq Composite .IXIC closed lower. This with small-cap indices underperforming. The Russell 2000 .RUT and S&P 600 Small Cap index .SPCY both closed down more than 1 percent each.

The Dow Jones Transportation Average .DJT fell 1.1 percent, hitting a 4-week low. That index is now off about 3 percent from its mid-September intraday peak.

Seven of 11 major SPX sectors did rise on the day with utilities .SPLRCU and staples .SPLRCS out front.

Consumer discretionary .SPLRCD slid 1.4 percent with Amazon.com AMZN.O the biggest drag on the group. AMZN lost 1.65 percent.

Facebook FB.O was a drag on communication services .SPLRCL . That stock lost 1.9 percent as a security breach weighs on sentiment. is your closing snapshot:

(Terence Gabriel)

*****

POST NAFTA, STOCK INVESTORS HAVE OTHER WORRIES (0305 PM/ 1905 GMT)

While the Dow was up on Tuesday afternoon, investors seemed less sure of themselves than the day before as the defensive utilities sector .SPLRCU was gaining fast and Nasdaq was weighed down by Amazon.com AMZN.O .

"Today people are getting to grips with the nuts and bolts of NAFTA," said Frances Hudson, global thematic strategist at Aberdeen Standard Investments. And they are finding "it doesn't look that different from the last version."

With that fight over, investors now have no choice but to face up to the next trade battle.

"If NAFTA is out of the way its time for people to lift their heads and look at the next problem which is China," said Hudson who sees higher stakes in the U.S. trade war with China.

And on a domestic level, Amazon.com AMZN.O improved its standing among socially-focused investors by increasing its minimum wage to $15/hour but its shares fell 1 percent as others worried about the cost of such a move.

It fueled concerns about wage inflation at a time when unemployment is low and companies such as retailers are preparing for hiring additional seasonal staff for the end-of-year holiday shopping season.

"It's an opening move in a seasonal skirmish," said Hudson. "They're trying to get ahead of the way things are going."

(Sinéad Carew) *****

HINDENBURG OMEN CHATTER FLOATING AROUND (1245 PM EDT/1645 GMT)

"Hindenburg Omen" chatter is intensifying. This according to Jeffrey D. Saut of Raymond James.

In his latest investment strategy note, Saut writes that "last week we received no less than 30 emails about the 10 Hindenburg Omens that have been registered over the past 2 weeks." According to Saut, the omens are being triggered by the selling of interest-rate sensitive ETFs and closed-end bond funds.

The Hindenburg Omen is a composite indicator that typically appears in an uptrend that attempts to highlight when the market has become internally fractured, and, therefore, at risk of a significant, near-term, reversal.

Among its inputs is data on advancing and declining issues as well as new highs and new lows.

The Omen has been criticized for giving off too many false signals. There are slightly different constructions and there is disagreement on what thresholds should be used to trigger an alert.

That said, one construction of the indicator is, indeed, showing a cluster of signals of late. (Refinitiv Eikon data) Since September 1, it has now been triggered 11 times on the NYSE and 14 times on the Nasdaq.

For your perusal, here are charts of the New York Composite .NYA and the Nasdaq Composite .IXIC since 2007 with Omen flashes in red:

(Terence Gabriel)

*****

DOW SCALES NEW HEIGHTS (1223 PM EDT/1623 GMT)

The Dow industrials .DJI are at the top of the heap among the major indexes at the mid-day mark. The blue-chip average is also hitting a fresh all-time intraday high.

Intel INTC.O is a big help to all the major averages. The chipmaker is surging more than 5 percent, leading a broad upswing in semiconductor stocks. The Philadelphia SE Semiconductor index .SOX is rising 1.2 percent.

The information technology sector .SPLRCT is on pace for a record closing high, despite recently losing a few key members including Alphabet GOOGL.O and Facebook FB.O to the newly expanded communications services sector .SPLRCL . the S&P 500 .SPX and Nasdaq .IXIC are gaining after sluggish starts following turmoil in European markets, the small-cap Russell 2000 .RUT is struggling and on pace for a second straight decline.

(Lewis Krauskopf)

*****

INTEREST RATE PRESSURE HURTING AUTO SALES-EDMUNDS (1135 AM EDT/1535 GMT)

September auto sales were stunted by high interest rates that are mirroring rates the industry witnessed prior to the last recession, according to the latest research from Edmunds analysts.

The U.S. Federal Reserve's September rate hike could be "a harbinger of worsening market conditions heading into the fourth quarter," according to the analysts. On top of this trader bets show a 80 percent probability the Fed could raise rates a fourth time for 2018 in December, according to CME Group (NASDAQ:CME) data.

The analysts pointed in a research note to an increase in the average down payment for new vehicles, a steep drop in zero percent finance loans, and a contraction of loan terms as signs of tightening credit conditions for car shoppers.

The trickle-down effect of elevated rates really started hitting car shoppers in September, said Jeremy Acevedo, Edmunds' manager of industry analysis.

“While new vehicle prices continue to rise, favorable credit offerings are growing increasingly more difficult to come by. Buying conditions are far less amenable for consumers than they were before, which might come as a shock for shoppers coming back to the market for the first time in a few years,” he said.

Meanwhile, automaker shares were lower after the companies reported a hefty drop in U.S. vehicle sales for September caused in part by a drop in sales in areas hit by Hurricane Florence and a tough comparison to the previous September when consumers rushed to replace vehicles damaged by Hurricane Harvey. issued production and delivery numbers and also highlighted the impact from a U.S.-China trade war. F.N was last down 0.6 percent. Tesla was down 1.1 percent and General Motors (NYSE:GM) GM.N was down 1.9 percent.

(Sinéad Carew)

*****

WALL STREET LITTLE CHANGED IN EARLY TRADE (1004 AM EDT, 1404 GMT)

Wall Street was a mixed bag on Tuesday as the Dow eked out a small gain while the S&P and Nasdaq edged lower as relief over a NAFTA agreement faded and investors refocused on U.S. trade tensions with China.

Eight of the S&P 500's 11 major sectors were in negative territory. A rebound in the S&P 500's utilities index .SPLRCU , seen as a defensive sector, suggested that investors were looking for safety. Other sectors in positive territory included materials .SPLRCM . Technology .SPLRCT shares zig-zagged between positive and negative territory.

The S&P's biggest drag from a single stock was Amazon.com AMZN.O , which fell 1 percent, after it announced it would raise its minimum wage to $15 per hour for U.S. employees next month, seeking to head off criticism of working conditions.

Its biggest boost was Intel Corp INTC.O , which bounced from the previous day's losses by rising 3 percent.

(Sinead Carew)

*****

S&P 500 INDEX: TRYING TO MAINTAIN ORBIT (0915 AM EDT/1315 GMT)

Monday's rise has allowed the S&P 500 index .SPX to kick off October on track for its 7th straight monthly gain.

However, sputtering thrust continues to warn that the advance off the early-2018 lows may have already burned off most of its fuel.

Indeed, despite registering an all-time high monthly close in September, the RSI remains well shy of its January peak. (Click on chart below)

Divergence can flag topping risks. Of note, major SPX highs in 1998, 2000, 2007 and 2015 were accompanied by stunted momentum.

Watch the SPX vs. the September 2,913.98 close. Weakness below here can threaten to solidify a lower monthly RSI peak. The study then falling below the 70.00 overbought threshold can potentially coincide with the SPX plunging back to earth.

However, even if the study can rise to challenge its extreme reached in January, it will then, once again, be historically overbought.

As was seen, even a setback to alleviate such an overheated condition can be vicious. The SPX plunged nearly 12 percent in just 10 trading days when it reversed from its January peak.

Thus, in any event, volatility may be just over the horizon.

(Terence Gabriel)

*****

STOCK FUTURES POINT TO LOWER OPEN (0900 AM EDT/1300 GMT)

Wall St futures pointed to a lower open on Tuesday, pulling back from the previous day's rally as relief over a reworked NAFTA deal faded and anti-euro comments from an Italian lawmaker reignited investor worries over a euro zone breakup. .N

European shares were lower as banks were under pressure while Asian shares were mostly lower, although the Nikkei .N225 managed a slight gain. U.S. auto industry was scheduled to release data on Tuesday including car and truck sales.

Several Fed officials are scheduled to speak today, including Chairman Powell and Vice Chair for Supervision Randal Quarles. Carew)

*****

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Sinead Carew

https://reut.rs/2PJAj5T U.S. stock futures point to slightly lower open

https://reut.rs/2Owelpd SPX10022018

https://reut.rs/2Ow3xHu Opening levels Oct 2

https://reut.rs/2Qu2fdN Rising car loan rates put pressure in Sept

https://reut.rs/2QmpN47 live markets midday Oct 2 2018

https://tmsnrt.rs/2Ovzlwn HONYSE10022018

https://reut.rs/2OsX8Nl HOIXIC10022018

https://reut.rs/2Ovzm3p Post NAFTA, stock investors have other worries

https://reut.rs/2OulmqB close10022018

https://reut.rs/2Qs4I8t

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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