Stock Market Update from Briefing.com

Briefing.com

2:55 pm: [BRIEFING.COM] The S&P 500 trades lower by 0.3% with one hour remaining in the session. The benchmark index held a slim gain at the start, but relative weakness among influential sectors like consumer discretionary (-0.3%), financials (-0.6%), and health care (-0.4%) have forced the index below its flat line.

Above all, it is worth noting that today's participation has been very limited, which is not all that surprising with a three-day weekend approaching. As a result, only 400 million shares have changed hands at the NYSE floor while Nasdaq volume has yet to cross the one billion mark.

2:25 pm: [BRIEFING.COM] Not much change in the market with the S&P 500 (-0.3%) holding a six-point loss. The benchmark index dipped into negative territory around 11:00 ET and has been inching lower since then.

The S&P 500 is on course to end the week lower by 1.4% while nine sectors are tracking weekly losses between 0.7% (consumer staples) and 2.7% (materials). Conversely, the utilities sector (+1.1%) trades higher by 0.9% for the week thanks to today's outperformance.

Elsewhere, Treasuries remain near their highs heading into the home stretch. The benchmark 10-yr yield is lower by four basis points at 2.38% today and down 10 basis points since last Friday.

1:55 pm: [BRIEFING.COM] The major averages remain near their session lows.

Improvements in the employment sector remain hard to come by.

Nonfarm payrolls added 223,000 jobs in June after adding adding a downwardly revised 254,000 (from 280,000) in May. The Briefing.com Consensus expected nonfarm payrolls to increase by 230,000 jobs.

Government payrolls were flat, and the entire increase in payrolls came from the private sector. Private payrolls increased by 223,000 after adding a downwardly revised 250,000 (from 262,000) in May. The consensus expected private payrolls to increase by 225,000.

While the payroll data nearly matched expectations, the details of the employment report highlight extreme weaknesses.

Both the average workweek and hourly earnings were flat in June. Total aggregate earnings increased a minuscule 0.2% in June, down from a 0.5% gain in May.

Any sizable gain in consumption will have to come from consumers dipping into their savings. There simply was not enough income growth to sustain May spending trends.

Income growth was also not strong enough to support any type of acceleration in core inflation.

1:30 pm: [BRIEFING.COM] The major indices continue to experience selling pressure as they rest near their session lows. 

A look inside the Dow Jones Industrial Average shows DuPont (DD 60.14, -1.29), UnitedHealth Group (121.50, -1.88), and United Technologies (109.47, -1.35) are underperforming. Dupont is the weakest Dow component after its price target was lowered at two separate analyst agencies following the completion of its Chemours (CC 16.30, -0.21) spin-off.

Conversely, Intel (INTC 30.58, +0.40) is the best-performing Dow component amid relative strength in semiconductors.

Ahead of the holiday weekend, the DJIA is currently down 1.4% for the week.

12:55 pm: [BRIEFING.COM] The major averages hover near their lows at midday with the Dow (-0.3%) and S&P 500 (-0.3%) trading a little ahead of the Nasdaq Composite (-0.4%).

Equity indices began the day on an upbeat note after the Nonfarm Payrolls report for June missed estimates (223,000; Briefing.com consensus 230,000) with the wage component showing no monthly growth. The lack of wage growth was viewed as an argument in favor of the Federal Reserve delaying its first rate hike, evidenced by a surge in the Treasury market. The 10-yr note remains near its best level of the day with the benchmark yield down six basis points at 2.37%.

Meanwhile, stocks began the day with gains, but the first half has featured a slow and steady retreat from opening highs. The benchmark index slipped below its flat line after the International Monetary Fund admitted that Greece will need approximately EUR50 billion in funds over the next three years and that a 20-year grace period should take place before any repayment begins. The comments from the IMF are likely to galvanize the 'no' camp ahead of Sunday's referendum in Greece.

Only three sectors remain in positive territory with the rate-sensitive utilities sector (+1.1%) holding the lead thanks to today's decline in Treasury yields. Similarly, the telecom services sector (+0.4%) also trades in the green while the heavily-weighted health care space (-0.4%) has struggled to keep pace with the market. Interestingly, biotechnology was among the early laggards, but iShares Nasdaq Biotechnology ETF (IBB 369.28, -0.62) has narrowed its decline to 0.2%.

Over on the cyclical side, the technology sector (-0.2%) trades near the broader market while consumer discretionary (-0.4%) and financials (-0.6%) are keeping the market under pressure. On the upside, the energy sector trades higher by 0.5% thanks to crude oil, which has climbed 0.9% to $57.48/bbl after tumbling 4.2% yesterday.

Today has been very quiet on the corporate front, but it is worth noting that Health Net (HNT 72.08, +7.02) has spiked 10.8% after agreeing to be acquired by Centene (CNC 76.08, -4.82) for roughly $78.57/share in cash and stock, representing a 21.0% premium to yesterday's closing price.

Economic data included Nonfarm Payrolls, Initial Claims, and Factory Orders:

  • Nonfarm payrolls added 223,000 jobs in June after adding a downwardly revised 254,000 (from 280,000) in May while the Briefing.com consensus expected an increase of 230,000 
    • Government payrolls were flat, and the entire increase in payrolls came from the private sector as private payrolls increased by 223,000 while the consensus expected an increase of 225,000 
    • Although the payroll data was not far from expectations, the details of the report highlight extreme weaknesses as average workweek and hourly earnings were both flat in June 
      • Total aggregate earnings increased a minuscule 0.1% in June, down from a 0.5% gain in May 
      • The unemployment rate fell to 5.3% in June from 5.5% while the consensus expected a decline to 5.4%; however, the entire decrease was due to a decline in labor force participation as opposed to employment growth 
  • The initial claims level increased to 281,000 for the week ending June 27 from an unrevised 271,000 while the Briefing.com consensus expected an increase to 271,000 
    • Despite the big increase, the four-week moving average increased by only 1,000 to 275,000, leaving the overall trend near a 15-year low 
  • Factory orders declined 1.0% in May following a downwardly revised -0.7% (from -0.4%) decline in April while the Briefing.com consensus expected a decline of 0.5% 
    • Durable goods orders declined 2.2% in May, which was revised down from a 1.8% decline in the advance report 
      • The entire decline resulted from continued weakness in the transportation sector with those orders declining 6.5% in May after falling 4.0% in April

12:25 pm: [BRIEFING.COM] Equity indices continue holding modest losses with the S&P 500 (-0.3%) trading just ahead of the Nasdaq Composite (-0.4%) and well ahead of the Russell 2000 (-0.9%).

Broadly speaking, countercyclical sectors continue trading ahead of their growth-sensitive counterparts, but that is a small victory considering just about every sector has backed away from its session high. That being said, the utilities space (+1.4%) remains not far below its best level of the day, but the sector has little impact on the broader market since it represents just 3.0% of the S&P 500.

Meanwhile, the top-weighted technology sector (-0.3%) is keeping pace with the benchmark index while financials (-0.5%) and health care (-0.4%) continue showing relative weakness.

11:55 am: [BRIEFING.COM] Not much change in the market with participants showing little willingness to step into the fold. The S&P 500 (-0.1%) remains just below its flat line with five of six cyclical sectors showing losses.

The materials sector (-1.0%) has lagged since the start and the group remains behind other growth-sensitive sectors. On the upside, the energy sector (+0.5%) trades ahead of most other groups thanks to a 1.2% increase in crude oil, which currently hovers near $57.66/bbl.

In all likelihood, today's session will produce below-average trading volume considering only 240 million shares have changed hands at the NYSE floor so far. As for market breadth, it is essentially even with one stock trading in the green for each decliner.

Elsewhere, Treasuries remain bid with the 10-yr yield down five basis points at 2.38%.

11:25 am: [BRIEFING.COM] The major averages have marked new lows for the day with the Nasdaq Composite now down 0.3%.

The tech-heavy index underperforms amid relative weakness in biotechnology, evidenced by a 0.4% decline in iShares Nasdaq Biotechnology ETF (IBB 368.35, -1.55). Furthermore, large cap technology components like Apple (AAPL 125.95, -0.65), Microsoft (MSFT 44.18, -0.27), and MasterCard (MA 94.14, -0.36) trade with losses between 0.4% and 0.6% while the broader tech sector is lower by 0.1%.

Given its current level, the S&P is on track to end the week lower by 1.3% while the tech-heavy Nasdaq has surrendered 1.6%. Also of note, recent underperformance among small cap names has the Russell 2000 trading lower by 0.6% today and down 2.4% for the week.

10:55 am: [BRIEFING.COM] Recent action saw the S&P 500 return to its flat line as heavily-weighted sectors like technology (unch), health care (-0.3%), and financials (-0.3%) underperform. Furthermore, the consumer discretionary sector (-0.2%) was among the early leaders, but the group now trades in the red, leaving industrials (+0.1%) and energy (+0.7%) as the only two cyclical sectors trading in the green.

Things look a bit better on the countercyclical side with consumer staples (+0.4%), telecom services (+0.7%), and utilities (+1.4%) trading ahead of the broader market.

Elsewhere, Treasuries remain not far below their best levels of the session with the 10-yr yield down four basis points at 2.38%.

10:40 am: [BRIEFING.COM]

  • The dollar hovered near unchanged from last session in early trading, prior to the morning's release of US unemployment and jobs data
  • Upon release of the data, which showed higher unemployment claims and lower non-farm payroll figures, the index sold off sharply.
  • The dollar's weakness has since extended, and given support to crude oil, precious metals and copper. The index is now -0.3% to 96.01
  • Crude oil was slightly positive in early trade, finding support near the flat line, ahead of the US data release and following yesterday's inventory figures
  • WTI rallied strong as the dollar weakened upon this morning's data release, and is still extending those gains, nearing its HoD at +1.4% to $57.73/barrel
  • Natural gas was strongly positive early, with highs near $2.84/MMBtu as the market expected the morning's inventory data to show more modest stockpile additions
  • EIA nat gas inventory data showed a modest build, which caused a rally in nat gas prices, that are now +2.7% at $2.86/MMBtu 
  • August copper lifted on a weaker dollar/US factory data, which in combination with market sentiment toward economic stabilization in China, has the commodity +0.4% to $2.64/lb
  • Precious metals saw support from the dollar index, with August gold -0.5% to $1163.80/oz and August silver +0.4% to $15.64/oz

10:00 am: [BRIEFING.COM] The S&P 500 trades higher by 0.2% with eight sectors remaining in the green.

It is worth noting that the top-weighted countercyclical sector-health care-has dipped into the red while another influential group-financials-hovers just above its flat line. Those two sectors, alongside with technology (+0.2%), deserve close attention as their performance can dictate the overall direction of the market.

According to the just-released Factory Orders report for May, orders decreased 1.0% while the Briefing.com consensus expected a decline of 0.5%.

9:40 am: [BRIEFING.COM] As expected, the major averages began the day with gains. The Dow, Nasdaq, and S&P 500 are all up near 0.3% apiece in the early going with nine sectors displaying opening gains.

The rate-sensitive utilities sector (+1.3%) has seized the lead thanks to today's drop in Treasury yields (10-yr -5 bps to 2.37%). Meanwhile, the remaining advancers hold gains slimmer than 1.0%. The heavily-weighted consumer discretionary sector (+0.4%) trades ahead of other cyclical groups while the materials sector (-0.5%) represents the lone decliner at this juncture.

The Factory Orders report for May (consensus -0.5%) will be released at 10:00 ET.

9:10 am: [BRIEFING.COM] S&P futures vs fair value: +6.50. Nasdaq futures vs fair value: +12.80. The stock market is on track for a higher open as futures on the S&P 500 trade seven points above fair value.

Index futures held modest gains through the bulk of the night, climbing to highs during the past 45 minutes after the Nonfarm Payrolls report crossed the wires. According to the report, payrolls increased by 223,000 in June, which was below the Briefing.com consensus of 230,000. Furthermore, the Unemployment Rate dropped to 5.3% from 5.5%, but that was a result of a large exodus from the labor force. As a result, the participation rate has dropped to its lowest level since October 1977.

Also of note, hourly earnings were unchanged while the consensus expected an increase of 0.2%. In all likelihood, this is why equity futures jumped to highs as the lack of wage growth makes the Federal Reserve less likely to begin hiking rates in the near term.

Treasuries surged off their lows in reaction to the report with the benchmark 10-yr yield now down four basis points at 2.38%.

The Factory Orders report for May (consensus -0.5%) will be released at 10:00 ET.

8:53 am: [BRIEFING.COM] S&P futures vs fair value: +7.80. Nasdaq futures vs fair value: +16.90. The S&P 500 futures trade eight points above fair value.

Markets in the Asia-Pacific region ended the day on a mostly higher note while China's Shanghai Composite (-3.5%) remained pressured. Meanwhile, China Securities Journal called on the People's Bank of China to focus on stock volatility and inject liquidity "when stock prices fall." Separate reports indicate the Shanghai Exchange could allow the use of real estate as collateral in margin calls.

  • In economic data: 
    • Japan's Monetary Base +34.2% year-over-year (expected 36.2%; prior 35.6%) 
    • Australia's May trade deficit narrowed to AUD2.75 billion from AUD4.14 billion (expected deficit of AUD2.20 billion) as exports rose 1.0% month-over-month (last -6.0%) while imports fell 4.0% (prior 4.0%) 
    • New Zealand's ANZ Commodity Price Index -3.1% month-over-month (last -4.9%) 
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  • Japan's Nikkei increased 1.0% on broad-based gains that were led by the Health Care (+2.2%), Consumer Discretionary (+1.8%), Financials (+1.8%). Individual standouts included Sharp (+8.6%) and Shinsei Bank (+2.8%). 
  • Hong Kong's Hang Seng increased just 0.1% today. Galaxy Entertainment was a notable mover, rising 13.2% after the latest Macau gaming figures were released. Likewise, gaming peer Sands China posted a 12.1% gain. 
  • China's Shanghai Composite declined 3.5% to close the weak. Financials bucked the broader market trend, after being notable laggards yesterday. Ind & Comm Bank of China rose 5.8%, while China Construction Bank gained 3.9% today. 
Major European indices trade near their flat lines while Italy's MIB (-0.6%) underperforms. Elsewhere, Greek Finance Minister Yanis Varoufakis announced plans to resign in the event of a 'yes' vote in Sunday's referendum, saying he would "cut his arm off" rather than sign a deal without debt restructuring.
  • Participants received several data points: 
    • Eurozone May PPI 0.0% month-over-month (expected 0.1%; prior -0.1%); -2.0% year-over-year, as expected 
    • UK's June Nationwide HPI -0.2% month-over-month (consensus 0.5%; prior 0.2%); +3.3% year-over-year (last 4.3%; prior 4.6%). Separately, June Construction PMI rose to 58.1 from 55.9 (expected 56.5) 
    • Spain's Unemployment Change -94,700 (expected -124,000; prior -118,000) 
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  • UK's FTSE trades higher by 0.4% with miners and utilities showing relative strength. BHP Billiton, Rio Tinto, Centrica, and National Grid are up between 1.2% and 1.7%. Consumer names underperform with Burberry, Coca-Cola HBC, and Intertek down between 1.7% and 2.6%. 
  • France's CAC trades flat. Utility stocks like Electricite de France, GDF Suez, and Veolia Environnement are up between 2.0% and 2.5% while Unibail-Rodamco is the weakest performer, down 2.4%. Other financials hold slimmer losses with Credit Agricole and Societe Generale down 0.6% and 0.3%, respectively. 
  • Germany's DAX is higher by 0.1%. Similar to UK and France, utilities trade well ahead of other index components with RWE and E.On showing respective gains of 6.2% and 3.8%. On the downside, K+S has given up 1.2% after rejecting a takeover offer from Potash. 
  • Italy's MIB underperforms with a loss of 0.6% amid weakness in financials. Banca di Milano Scarl, UBI Banca, BMPS, and Banco Popolare are down between 0.9% and 1.6%.

8:35 am: [BRIEFING.COM] S&P futures vs fair value: +6.70. Nasdaq futures vs fair value: +15.80. The S&P 500 futures trade seven points above fair value.

June nonfarm payrolls came in at 223,000 while the Briefing.com consensus expected a reading of 230,000. The prior month's reading was revised down to 254,000 from 280,000. Nonfarm private payrolls also added 223,000 against the 225,000 expected by the consensus. The unemployment rate fell to 5.3% while the Briefing.com consensus expected the rate to decline to 5.4%.

Hourly earnings were unchanged while the consensus expected growth of 0.2%. The average workweek was reported at 34.5, which is what the consensus expected.

Separately, the latest weekly initial jobless claims count totaled 281,000 while the Briefing.com consensus expected a reading of 273,000. Today's tally was above the unrevised prior week count of 271,000. As for continuing claims, they rose to 2.264 million from 2.249 million.

7:57 am: [BRIEFING.COM] S&P futures vs fair value: +6.00. Nasdaq futures vs fair value: +11.40. U.S. equity futures trade modestly higher amid cautious action overseas. The S&P 500 futures hover six points above fair value, but some volatility is expected around 8:30 ET when the Nonfarm Payrolls report for June crosses the wires. The Briefing.com consensus expected the report to indicate the addition of 230,000 payrolls while the Unemployment Rate is expected to tick down to 5.4% from 5.5%.

Treasuries hover in the red with the 10-yr yield higher by three basis points at 2.45%.

In addition to Nonfarm Payrolls, weekly Initial Claims (consensus 273K) will also be reported at 8:30 ET while the Factory Orders report for May (consensus -0.5%) will be released at 10:00 ET.

In U.S. corporate news of note:

  • AT&T (T 35.86, +0.29): +0.8% after Cowen upgraded the stock to 'Outperform' from 'Market Perform.' 
  • Health Net (HNT 76.99, +11.93): +18.3% after agreeing to be acquired by Centene (CNC 86.64, +5.74) for roughly $78.57/share in cash and stock, representing a 21.0% premium to yesterday's closing price. 
Reviewing overnight developments:
  • Asian markets ended mixed. China's Shanghai Composite -3.5%, Hong Kong's Hang Seng +0.1%, and Japan's Nikkei +1.0% 
    • In economic data: 
      • Japan's Monetary Base +34.2% year-over-year (expected 36.2%; prior 35.6%) 
      • Australia's May trade deficit narrowed to AUD2.75 billion from AUD4.14 billion (expected deficit of AUD2.20 billion) as exports rose 1.0% month-over-month (last -6.0%) while imports fell 4.0% (prior 4.0%) 
      • New Zealand's ANZ Commodity Price Index -3.1% month-over-month (last -4.9%) 
    • In news: 
      • China Securities Journal called on the People's Bank of China to focus on stock volatility and inject liquidity "when stock prices fall." Separate reports indicate the Shanghai Exchange could allow the use of real estate as collateral in margin calls. 
  • Major European indices trade near their flat lines. UK's FTSE +0.2%, France's CAC -0.1%, and Germany's DAX is flat. Elsewhere, Italy's MIB -0.4% and Spain's IBEX -0.1% 
    • Participants received several data points: 
      • Eurozone May PPI 0.0% month-over-month (expected 0.1%; prior -0.1%); -2.0% year-over-year, as expected 
      • UK's June Nationwide HPI -0.2% month-over-month (consensus 0.5%; prior 0.2%); +3.3% year-over-year (last 4.3%; prior 4.6%). Separately, June Construction PMI rose to 58.1 from 55.9 (expected 56.5) 
      • Spain's Unemployment Change -94,700 (expected -124,000; prior -118,000) 
    • In news: 
      • Greek Finance Minister Yanis Varoufakis announced plans to resign in the event of a 'yes' vote in Sunday's referendum, saying he would "cut his arm off" rather than sign a deal without debt restructuring

5:51 am: [BRIEFING.COM] S&P futures vs fair value: +4.00. Nasdaq futures vs fair value: +8.60.

5:51 am: [BRIEFING.COM] Nikkei...20522.50...+193.20...+1.00%.  Hang Seng...26282.32...+32.30...+0.10%.

5:51 am: [BRIEFING.COM] FTSE...6608.43...-0.20...0.00%.  DAX...11178...-2.50...0.00%.

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