Intraday Market Update
After equities gapped higher at the open and surged to +1% gains in the first 30 minutes of trading, stocks have taken nosedive into the red. Stocks gapped higher on the back of a better than expected jobless claims number, GDP data, and Midwest business conditions, however, it appears institutions are handing off their inventory as they are content with +9% gains in September. In reality, although the aforementioned economic data beat estimates, most of it is simply less bad news which gave traders a reason to sell and lock in profits. All of the major indices have made a significant reversal and are positing solid losses, however, the indexes are off of their lows and still remain above their weekly lows set on Tuesday. After trading to another new all-time high at $1,317 per ounce gold has reversed -$14 and is hovering above $1,300. Crude oil is one of the lone assets performing as it has gained more than +2%. Overseas, the Asia-Pacific region was mixed with the Shanghai Index gaining 1.72%, while the Nikkei Index and Australian ASX-200 losing -1.99% and -1.34%, respectively. The European region gave up late gains to finish mostly lower.
Enthusiasm was rampant in the pre-market after initial jobless claims declined -16,000 to 453,000, compared to estimates calling for a reading of 460,000. The important takeaway is that the four week moving average is down for the fifth straight week to 458,000, which is -30,000 drop from one month ago. However, initial jobless claims remain elevated but are inching closer to pre-crises levels from August 2008.
Adding to the enthusiasm in the pre-market was a better than expected read on Q2 GDP which was revised up to 1.7% from 1.6%, although the gain was centered around an increase in inventories which is probably the last place bulls on economic growth want to see it. After the bell, the Chicago PMI index registered 60.4 which was well above estimates calling for a reading of 56.0. The measure of Midwest business conditions hit multi-year highs in April and has slid lower until this month's up tick. Strength is centered right where it should be with new orders surging more than +6 points to a solid 61.4. Equities immediately sold off after the report was released.
In equities, Manitowoc (MTW) is up more than +11% after the company announced plans to refinance a portion of its term loans under its senior secured credit facility with senior unsecured notes to improve the balance and flexibility of its capital structure. Spice maker McCormick (MKC) is up +2% after beating earnings estimates and offering an upbeat forecast, although the firm fell short on revenue. Business processes firm Synnex (SNX) is up more than +9% after the company crushed earnings estimates and increased guidance for next quarter. The firm said they saw broad based demand for business services in the quarter.
Core Sector List:
Overall reading: 7 sectors advancing, 13 sectors declining
Strongest Sectors: Home Construction, banks, Broker Dealers, Oil
Weakest Sectors: Gold Miners, Internet, Oil Services,
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