Intraday Market Update
Mixed US economic data and weakness in European equities translated to an opening dip in US equities this morning. A disappointing reading in New York manufacturing sent the S&P 500 to new weekly lows, but the dip was immediately bought shortly after the bell. All of the major indexes have recovered and are now posting modest gains being led by small caps and technology. Gold is near the flat line as it consolidates yesterday's big advance, while crude oil has lost -1.50%. The big headline was made overnight as Japan's government intervened in the currency markets for the first time in six years by selling Yen in the open market to stem gains in the currency versus the US Dollar and other major currencies. The Nikkei 225 surged +2.34% on the news led by Japanese exporters on easing concerns regarding the negative impact on their profits from the strong upward momentum in the Yen, which hit a 15 year high versus the US dollar just before the intervention. Japan's actions are being heavily debated with many leaders saying that unilateral action is not an appropriate way of dealing with imbalances in the foreign exchange market. The Shanghai index lost -1.34%, while European markets posted modest losses across the board.
Economic data out of the US manufacturing sector was mixed this morning. The August reading of Industrial Production rose +0.2% m/m which was in-line with estimates, however, July's strong reading of +1.0% was downwardly revised to a +0.6% increase. Elsewhere, the September Empire Manufacturing report unexpectedly fell to 4.14, compared to August's 7.10 reading and estimates calling for an increase to 8.00. The index remains above zero which still indicates growth, but growth is occurring at a decelerating pace. Positives in the report came from the new order sub index which showed a return to growth after August's decline, and the employment sub index improved.
In equities, MasterCard (MA) is up +3% after they announced a share repurchase program of up to $1 billion in open market transactions, effective immediately. The company said the stock repurchase program is a result of a periodic review of its capital structure and is enabled by its strong and consistent cash flow. Steel Dynamics (STLD) has recovered from early losses and is near breakeven despite guiding Q3 earnings lower to $0.05-0.10 from $0.20, which more than -50% lower than previous estimates. The company warned that margins were being hit by lower prices and sales volume. AK Steel (AKS) is off more than -6% after the company said they are seeing higher raw material and operating costs in addition to other costs from an environmental remediation project.
Core Sector List:
Overall reading: 10 sectors advancing, 10 sectors declining
Strongest Sectors: Real Estate, Internet, Healthcare
Weakest Sectors: Home Construction, Coal, Semi's
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