Intraday Market Update
The news and economic calendar is light again today which is helping US equities from getting knocked down. The S&P 500 has gained +19 points(+1.88%) in early afternoon trading while all of the other major indexes are well over +1.50% higher on the day. Banks (+3.47%) and Oil Services (+3.30%) are the two best performing sectors. All of the indexes are trading near their highs. Stocks in the Asia-Pacific region were mostly lower on Wednesday with the exception of The Shanghai Composite Index which gained +0.49%. Equity markets in Europe overcame early weakness but ended the day higher as most indexes gained more than +1%. Stocks in Spain and Italy gained +3.87% and +3.39%, respectively.
Secondary data helped drive stock prices higher in Europe and US equities have followed. Details about the European bank stress tests appear to be imminent which should provide some clarity as to how they were conducted. Investors have been concerned that the tests were not as stringent as they needed to be to provide a constructive look at the health of the sector. Chatter has been circulating that the stress tests may include a -3% haircut on Spain Government bonds while other PIIGS countries could be in the double digit percentage range.
In US economic news, the ICSC-Goldman weekly chain store sales rose +1% which is the strongest reading since early May. Many retail names are sharply higher this morning. On the other hand, mortgage applications for home purchases have declined -2% week over week (w/w). Purchase applications in June compared to May fell -15% adding to the nose dive from May compared to April which fell -30%. Refinance applications jumped +9.2%. In the end, the demand from consumers in purchase applications continues to decline while the demand by them to refinance and stay in their home is increasing.
Meanwhile, the Baltic Dry Bulk index, which tracks rates to ship dry commodities, continues its record breaking declines with the 29th consecutive drop this morning. The index fell -5.12%. The declines are being attributed to slower iron ore activity and weaker coal imports to China, along with South America's grain season coming to an end.
In equities, retail discounter Family Dollar (FDO) reported earnings that that were in line with expectations but the firm's outlook for next quarter was disappointing. FDO's CEO warned that the recent trends seen will continue into next quarter. Shares of FDO are down -8.5%. Another round of guidance calls is moving disparate stocks this morning. State Street SST is up +9% after offering strong guidance. FTI Consulting (FCN) is down -24% after they revised their full year guidance. The firm said that revenues are expected to be between $1.40-1.45 billion, compared to its previous estimate of between $1.47-1.57 billion. Also, FCN said EPS ex-items are expected to come in between $2.50-2.80, compared to the previous outlook of between $3.00-3.25. FTI Consulting offered a dim view of the financial industry after downgrading its view of industry demand for its services.
Front month crude oil has regained just about all of the losses from yesterday afternoon. Copper is also catching a bid and is now back above the important $3.00 level. Copper futures collapsed from $3.00 in the fall of 2008 hitting a low of $1.255 a few months later. The industrial metal then rallied to $3.68 in April 2010 but has since struggled to hold onto any gains.
Core Sector List:
Overall reading: 16 sectors advancing, 0 sectors declining
Strongest Sectors: Banks, Oil Services, Semiconductors
Weakest Sectors: Biotechnology
S&P 500 - Daily and 30-minute Intraday Charts:
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