Intraday Market Update
Global equity markets and asset classes across the board are rallying in the wake of yesterday's QE announcement from the US Federal Reserve. All of the major indexes are posting gains in the +1.25% to +2.00% range. The DJIA and NASDAQ have broken out to fresh two year highs, while the S&P 500 and RUT are trading just below two year highs. Not surprisingly, the US Dollar is under solid pressure and the commodities space is also benefiting with sharp gains. Gold is posting +3% gains and has rallied more than $50 off of yesterday's lows. Silver has gained +6% and sits near multi-decade highs, Copper has gained +3% and is trading at two year highs. Crude oil has decidedly broken out above $85.00 per barrel, gaining +2% and approaching two year highs. Agriculture commodities are also all higher. In early trading natural gas was down nearly -2% on bearish inventory data, but has since gone green. The benchmark 10-year Treasury is posting a +1% gain which has caused the yield to fall back below 2.50%, while the 5-year Treasury is making all-time lows near 1%. Equity markets overseas have posted sharp gains with many closing in the +1.50% to +2.00% range. This week's close will be very telling whether today's breakout will hold, or whether the market will take a much needed breather.
It was just a couple of weeks ago at the G20 meetings that the US criticized surplus nations for weak currencies, while at the same time championed a strong dollar. The Federal Reserve is apparently not on the same page. Today's commentary from world leaders about the Fed's new QE2 program has been mixed. European Central Bank (ECB) President Jean-Claude Trichet said he does not believe the US is pursuing a weak dollar policy, however, comments out of China and Brazil have criticized the move as dangerous to their economies. The Bank of England and ECB do not believe they need more QE as their monetary announcement today kept rates unchanged and said they would not be expanding their own bond buying programs. Last night Bloomberg Asia had analysts claiming the US market is now becoming one big Ponzi scheme being led by the Federal Reserve. So the currency wars, inflation battles, and economic stimulus debates continue on.
US economic data today was mixed with initial jobless claims jumping more than expected. Initial claims rose +20,000 to 457,000 compared to estimates calling for a reading of 442,000. Elsewhere, non-farm productivity jumped +1.9% y/y compared to estimates calling for an increase of +1%. Unit labor costs declined -0.1% compared to estimates calling for a gain of +0.6%.
Today's October same store sales reports were all over the board with many mall chains and department stores missing estimates as comps slowed noticeably from September levels. Apparel chains American Eagle, Abercrombie and Aeropostale all handily missed estimates, while JC Penny and Kohl's both reported declines that were also well below estimates. However, there were some positive reports with The Limited, Gap and TJX Companies all surprising with better than expected sales. Target, BJ's Wholesale and Costco also reported strong comps, while luxury name Saks handily beat estimates. Many of the retailers said they experienced a slow first half of October but traffic picked up the last two weeks of the month. Most retail stocks are posting gains probably because of the broader market strength.
Core Sector List:
Overall reading: 19 sectors advancing, 1 sectors declining
Strongest Sectors: Miners, Home Construction, Semiconductors
Weakest Sectors: Biotechnology
S&P 500 - Daily and Hourly Charts:
Dow Jones - Daily and Hourly Charts:
NASDAQ - Daily and Hourly Charts:
Russell 2000 - Daily and Hourly Charts: