CNBC: S&P 500 posts record close as Wall Street cheers Fed’s gradual plan to trim balance sheet

Wednesday, May 24, 2017

  • The S&P 500 gained 0.25 percent, as real estate led advancers, to post a record close.
  • The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting.
  • The S&P and the Dow closed above their May 16 closing levels, wiping out losses from the biggest sell-off of the year.

U.S. equities closed higher on Wednesday as investors cheered the Federal Reserve’s plan for scaling back its massive $4.5 trillion balance sheet.

The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting, according to the minutes from its May 3 meeting. Any amount it receives in repayments that exceeds the cap limit will be reinvested.

“The Fed provided more clarity here,” said Matt Toms, chief investment officer of fixed income at Voya Investment Management. “They’re implying the ability to modulate their balance-sheet reduction plan. It shows the Fed is not on auto-pilot and that they can adopt as needed.”

The S&P 500 posts record close as Street cheers Fed’s balance sheet plan U.S. equities closed higher on Wednesday as investors cheered the Federal Reserve’s plan for scaling back its massive $4.5 trillion balance sheet.

The central bank sees a system where it will announce cap limits on how much it will allow to roll off each month without reinvesting, according to the minutes from its May 3 meeting. Any amount it receives in repayments that exceeds the cap limit will be reinvested.

“The Fed provided more clarity here,” said Matt Toms, chief investment officer of fixed income at Voya Investment Management. “They’re implying the ability to modulate their balance-sheet reduction plan. It shows the Fed is not on auto-pilot and that they can adopt as needed.”

The S&P 500 gained 0.25 percent, as real estate led advancers, to post a record close. The Dow Jones industrial average rose about 75 points, with Goldman Sachs contributing the most gains. The Nasdaq composite advanced 0.4 percent.

“Although they indicate that they want to trim the balance sheet, they’re not locking themselves into a particular path,” said Daniel Deming, managing director at KKM Financial. “That’s why the market reacted positively to the minutes.

Historically, stocks have mostly posted gains on days when the Fed releases minutes since Janet Yellen became chair, according to Kensho. On average, the S&P 500 has gained 0.28 percent on those days, with health care, consumer discretionary and materials outperforming, Kensho data showed.

The Fed held off on raising rates earlier this month but most investors are expecting the central bank to hike again at its June 14 meeting. Market expectations for a June rate hike are 83.1 percent, according to the CME Group’s FedWatch tool.

“The central-bank narrative has changed dramatically over the past few months. It’s no longer easy money on the table, but rather a tightening path,” said Adam Sarhan, CEO of 50 Park Investments.

Treasury yields fell after the minutes’ release, with the benchmark 10-year note yield declined to 2.257 percent while the two-year yield slipped to 1.281 percent.

In other economic news, total mortgage application volume increased 4.4 percent last week on a seasonally adjusted basis from the previous week thanks largely to refinancings. Existing home sales slipped 2.3 percent in April, more than expected.

U.S. equities came into Wednesday’s session riding a four-day winning streak, bouncing back from their biggest sell-off of the year. The S&P and the Dow closed above their May 16 closing levels, wiping out last Wednesday’s losses.

“There are two pillars in the market right now. First, earnings were good. You can knock it any way you want but the earning season was good,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. “The second is this ying-yang data. As long as we continue to get mixed data, we will likely stay in this trading range.”

Overseas, European stocks traded marginally higher, while Asian equity markets closed mostly higher despite Moody’s downgrading China’s credit rating for the first time since 1989.

“Bond issuers in the country (many of which have government backing) will pay the price. The mothership helps finance much of the banking and follow-on shadow banking system indirectly, this downgrade will leave a stain,” said Larry McDonald, head of the U.S. macro strategies at ACG Analytics and author of The Bear Traps Report newsletter.

DJIA Dow Industrials 21012.42
74.51 0.36%
S&P 500 S&P 500 Index 2404.39
5.97 0.25%
NASDAQ NASDAQ Composite 6163.02
24.31 0.40%

The Dow Jones industrial average rose 74.51 points, or 0.36 percent, to close at 21,012.42, with Goldman Sachs leading advancers and General Electric lagging.

The S&P 500 gained 5.97 points, or 0.25 percent, to end at 2,404.39, with materials leading eight sectors higher and telecommunications underperforming.

The Nasdaq advanced 24.31 points, or 0.4 percent, to close at 6,163.02.

About four stocks advanced for every three decliners at the New York Stock Exchange, with an exchange volume of 797.15 million and a composite volume of 3.372 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 9.89, dipping below 10 for the first time since May 10.

—CNBC’s Jeff Cox contributed to this report.

Disclosure: CNBC’s parent NBCUniversal is a minority investor in Kensho.

On tap this week:


Earnings: HP, Pure Storage

2:00 p.m. FOMC minutes

6:00 p.m. Dallas Fed President Robert Kaplan


OPEC meets in Vienna

Earnings: Medtronic, Abercrombie and Fitch, Ulta Beauty, GameStop, Nutanix, Splunk, Best Buy, Hormel Foods, Toronto-Dominion Bank , Royal Bank of Canada

8:30 a.m. Jobless claims

8:30 a.m. Advance econ indicators

4:00 a.m. New York Fed Executive Vice President Simon Potter

10:00 a.m. Fed Gov. Lael Brainard

10:00 p.m. St. Louis Fed President James Bullard


8:30 a.m. Durable goods

8:30 a.m. Q1 (second read) Real GDP

9:45 a.m. Markit services PMI

10:00 a.m. Consumer sentiment


WSJ: Speculators Spark Surge in Cotton Prices, Upending Mills and Merchants

Rapid increase in cotton prices may force some cotton users to cancel sales or pay up for the fiber

Cotton futures have jumped 12% over three sessions, throwing the finances of textile mills and fiber merchants around the globe into disarray.

Speculators have been driving up the price, analysts say, following a government report last week showing a tightening in cotton supply. That triggered the largest three-day rally in the commodity since December 2010, with prices rising nearly 4% on Monday to 85.32 cents a pound.

After cotton futures topped their trading limits on both Friday and Monday, the Intercontinental Exchange after each session increased margin requirements, or the amount of money that buyers and sellers must put down as collateral to guarantee trades.

Increasing margin requirements is a tool used during periods of rapid run-ups caused by speculators. Exchanges hope to force traders who don’t have the money to guarantee their positions to unwind from those trades.

The rapid increase in prices may force some cotton users to cancel sales or pay up for the fiber, industry analysts say. The price surge is disrupting the industry during a crucial time in the crop cycle for U.S. cotton, when there will be no new cotton on hand for several months as farmers begin to plant for the next harvest, which begins in July and extends to November.

Many cotton buyers entered into contracts last year to purchase U.S. cotton at a price to be determined at a later date, a common practice in the business. Most were bearish on cotton prices and figured they could pay a cheaper price in the future.

But cotton prices have jumped 30% since September, and mills are running out of time for them to come back down.

Cotton merchants who sold cotton on call to mills have been waiting on the mills to fix those sales to a price in the futures market. There are 4.62 million bales whose price to complete the sale is yet to be determined. That amount is a record for this time of year, according to figures from the U.S. Commodity Futures Trading Commission.

Some users now face cotton prices that are 20 cents a pound, or about 30%, higher than when the sales were contracted.

“A mill somewhere is going to lose some money because they waited and paid through the nose,” said Howard Simons, an economic consultant and president of Rosewood Trading in Glenview, Ill. “And someone with cotton to deliver will make money.”

There isn’t much cotton left for mills or spinners to buy separately because most of the harvest is headed abroad.

Monday also set a record for trading volumes in cotton, at more than 109,000 contracts, breaking the previous record set Nov. 11, 2010 at 101,516 contracts traded, according to Plexus Cotton.

The catalyst for the rally came Wednesday, when the U.S. Agriculture Department dropped its estimate for U.S. stockpiles of fiber, attributing that to robust export sales. The trend was confirmed in Thursday’s export-sales report, which showed that the U.S. sold 328,000 bales in the week ended May 4.

The higher margin requirements will likely also hurt major cotton merchants. Companies, including Olam International , Cargill Inc. and Louis Dreyfus Co., face tens of millions of dollars a day in margins calls while they wait for cotton mills to fix sales, according to analysts and traders with knowledge of those businesses. The companies didn’t respond to requests for comment.

Margin calls for all market participants were expected to top $262 million Monday, analysts said. The margin calls intensify the standoff between merchants such as Cargill and Louis Dreyfus who have deep pockets and speculators. Many hedge funds and other traders have been piling into speculative agricultural trades, including cotton.

Adam Sarhan, chief executive of investment firm 50 Park Investments, said that cotton has attracted speculative money because it has been one of the top-performing materials.

“Cotton has remained one of the strongest commodities out there and is left with very little competition,” he said.

Analysts say the squeeze in the cotton market is unlikely to lead to the widespread defaults and fiber switching that occurred in 2011, when prices spiked to $2 a pound as China began stockpiling cotton en masse. The price fell back from that as defaults from previous sales lowered demand and mills switched to other fibers.

With about 700,000 bales of cotton left unsold in the current U.S. cotton crop, Peter Egli, a risk manager at Plexus Cotton Ltd. said some merchants are renegotiating contracts with mills.

The merchants are buying back the contracts from the mills and pushing that cotton back onto the exchange, with the hope of finding a buyer who is still betting on rising prices.

Most of the cotton spinners and textile mills are in Asia. Given the recent price rise, “nobody is going to touch U.S. cotton anymore,” said Mr. Egli.


Reuters: US STOCKS-Tech, consumer discretionary stocks drag down Wall St

Thursday May 11, 2017

* Macy’s profit plunges, drags down retail stocks

* Snap Inc sinks on disappointing revenue, user growth

* Weekly jobless claims fall to 236,000 – report

* Indexes down: Dow 0.19 pct, S&P 0.32 pct, Nasdaq 0.34 pct (Updates to open)

By Yashaswini Swamynathan

May 11 U.S. stocks were slightly lower on Thursday, with the Dow on track for its third straight day of losses, led by declines in consumer discretionary and technology sectors.

Macy’s disappointing profit and a 11 percent slump in shares took a toll on the consumer discretionary sector, which fell 0.52 percent with all of its components in the red.

Kohl’s was down about 2 percent despite beating profit estimate.

“Retail is front-and-center because it has been a sore area for the market over the last year or two,” said Adam Sarhan, chief executive officer at 50 Park Investments.

At 9:41 a.m. EDT the Dow Jones industrial average was down 40.78 points, or 0.19 percent, at 20,902.33, the S&P 500 was down 7.72 points, or 0.32 percent, at 2,391.91 and the Nasdaq Composite was down 21.11 points, or 0.34 percent, at 6,108.04.

Ten of the 11 major S&P 500 sectors were lower. Technology was down 0.3 percent, following losses in Microsoft and Intel.

Shares of Snapchat owner Snap Inc plunged 20 percent after the company reported a slowdown in user growth and revenue in its first earnings report as a public company.

Straight Path fell 20 percent after agreeing to be bought by Verizon for $184 per share and terminated an earlier deal with AT&T.

Whole Foods was up 5 percent after the grocer shook up its board and appointed a new CFO.

Declining issues outnumbered advancers on the NYSE by 1,836 to 718. On the Nasdaq, 1,662 issues fell and 606 advanced.

The S&P 500 index showed six 52-week highs and six lows, while the Nasdaq recorded 28 highs and 16 lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva)


CNBC: Energy sector drops, putting a lid on stocks; Dow closes little changed

Thursday, May 4, 2017

Equities closed mostly flat on Thursday as energy stocks put a lid on the broader market.

The Dow Jones industrial average closed about 8 points lower, with Caterpillar and Chevron contributing the most losses. The 30-stock index fell more than 100 points at session lows before recovering most losses.

The S&P 500 and the Nasdaq composite ended the session mostly flat.

U.S. oil plunged below $46 a barrel, hitting a five-month low after data showed a smaller-than-expected decline in U.S. inventories.

“Energy and commodities, in general, are putting pressure on the overall equity markets here,” said Adam Sarhan, CEO of 50 Park Investments. “There are also some questions about what can the Trump administration accomplish at this point.”

Energy stocks dropped about 2 percent Thursday, dragging the market lower.

“The question is whether the market sees this as a supply story or an indication of slowing growth in the economy,” said Quincy Krosby, chief market strategist at Prudential Financial .

Energy is also one of the biggest contributors to first-quarter earnings growth. CFRA’s Bell said that earnings growth including energy totals more than 14 percent and drops to about 7 percent when energy is excluded.

“Some of the big energy companies have come out with strong numbers. That’s a sign that things are beginning to stabilize,” said Peter Cardillo, chief market economist at First Standard Financial.

Investors also digested the House of Representatives’ vote to pass a bill aimed at repealing and replacing Obamacare.

The House passed the bill by a vote of 217 to 213 after months of struggling to win enough support to move it forward.

The GOP-led House scrapped a previous attempt at repealing and replacing Obamacare in March, raising concerns about when the government would tackle tax reform.

“That will at least get the ball moving” and get the government closer to tax reform, “which is what the market wants,” said Prudential’s Krosby.

Expectations of lower corporate taxes have been a boon for the U.S. stock market since President Donald Trump was elected in November. Since then, the S&P has shot up more than 11 percent.

That said, Lindsey Bell, investment strategist at CFRA, is not so sure House Republicans should celebrate just yet. “Even if this bill moves through the House, there will likely be a push-back from the Senate. That’s why you’re not seeing much of a reaction in health care stocks,” she said.

The health care sector traded higher for most of the session and was the second-best performer in the S&P.

Meanwhile, earnings season continued, as social media giant Facebook topped estimates for both profit and revenue, as did Chesapeake Energy and Church & Dwight, among others.

Companies headed into this earnings season with high expectations and most have managed to meet them. More than 70 percent of the S&P 500 companies that have reported have topped their bottom-line estimates.

Investors also parsed through a slew of economic data on Thursday. Jobless claims fell by 19,000 to 238,000, while productivity for the first quarter fell more than expected. The U.S. trade deficit, meanwhile, narrowed to $43.7 billion. Factory orders, meanwhile, rose less than expected in March.

These data releases culminate on Friday, with the U.S. government posting its monthly payrolls report. Economists polled by Reuters expect the U.S. economy to have added 185,000 jobs last month versus 98,000 in March.

“The good news is the strong jobs growth carried through from the previous administration into the first 100 days of the Trump presidency,” said Andrew Chamberlain, chief economist at Glassdoor. “The less good news is … we’re not seeing a big acceleration in wage growth.”

Kate Warne, investment strategist at Edward Jones, said Wall Street is looking ahead to Friday’s jobs report for two reasons.

“First, to see whether we can rebound from the weak first-quarter economic growth, and second, to determine whether the [Federal Reseve] can stay on its path towards normalization,” she said.

The Fed kept interest rates unchanged Wednesday after concluding its two-day monetary policy meeting. The central bank also gave the U.S. economy a solid assessment.

DJIA Dow Industrials 20951.47
-6.43 -0.03%
S&P 500 S&P 500 Index 2389.52
1.39 0.06%
NASDAQ NASDAQ Composite 6075.34
2.79 0.05%

The Dow Jones industrial average fell 50 points, or 0.24 percent, to 20,909, with Caterpillar lagging and Wal-Mart outperforming.

The S&P 500 dropped 2 points, or 0.13 percent, to trade at 2,385, with energy leading seven sectors lower and consumer staples the best performer.

The Nasdaq slipped 5 points, or 0.1 percent, to 6,067.

About three stocks declined for every advancer at the New York Stock Exchange, with an exchange volume of 402 million and a composite volume of 1.941 billion in midday trade.

On tap this week:


Earnings: Allscripts Healthcare, El Pollo Loco, Shake Shack, PerkinElmer, Zynga, Zillow, Wageworks, DeVry Education, CBS, Activision Blizzard, Herbalife

10:00 a.m. Factory orders


Earnings: TransCanada, Cognizant Tech, Moody’s, Cigna, CenterPoint

8:30 a.m. Nonfarm payrolls

3:00 p.m. Consumer credit

11:30 Fed Vice Chairman Stanley Fischer at Hoover Institution Monetary Policy Conference

12:45 a.m. San Francisco Fed President John Williams

1:30 p.m. Chicago Fed President Charles Evans, Boston Fed President Eric Rosengren, St. Louis Fed President James Bullard on panel at Hoover Institution

1:30 p.m. Fed Chair Janet Yellen in webcast from Brown University at event on 125 Years of Women at Brown


CNBC: Stocks Close Lower As Wall Street Braces For French Election, But Post Weekly Gains

Friday, April 21, 2017

U.S. stocks closed lower in choppy trade Friday as investors looked ahead to the French election. Wall Street also digested falling oil prices and comments from the Trump administration on tax reform.

The Dow Jones industrial average fell about 30 points with IBM contributing the most losses.

The index briefly turned positive in afternoon trade after President Donald Trump told The Associated Press his administration will unveil a “massive tax cut” in a new reform, though the timing of that package was unclear.

The S&P 500 declined 0.3 percent, with telecommunications falling more than 1 percent to lead decliners.

Energy was also among the decliners, falling 0.4 percent as U.S. crude dropped 2.15 percent to settle at $49.62 per barrel.

The Nasdaq composite closed 0.1 percent lower.

“We’ve had a pretty decent week, so people are taking a bit of risk off the table ahead of the French election,” said JJ Kinahan, chief market strategist at TD Ameritrade. “Depending on how it goes, it could be really good or really bad for the euro.”

The three major indexes were on track to post slight weekly gains as of 3:08 p.m. ET, with the S&P up around 1 percent for the week. Stocks received a boost from mostly strong earnings reports.

Dow, S&P and Nasdaq This Week

Source: FactSet

Nevertheless, the major indexes are lower for the month, with the S&P and Dow breaking below their respective 50-day moving averages.

“The 50-day moving average is the line of demarcation for this bifurcated market,” said Adam Sarhan, CEO of 50 Park Investments. “The longer the indexes stay below the 50-day moving average, the more negative the outlook gets.”

Equities rallied on Thursday, as corporate earnings and comments from Treasury Secretary Steven Mnuchin on tax reform lifted investor sentiment.

“Investors seem to be optimistic but there are factors dampening that optimism,” said Peter Cardillo, chief market economist at First Standard Financial. “The market is concerned over the French election.”

Uncertainty around the election has grown over the past month after far-left candidate Jean-Luc Melenchon’s surprising surge in the polls. Concerns over a victory from far-right candidate Marine Le Pen rose after a shooting in Paris.

Le Pen has said repeatedly that, if she wins, she’d pull France out of the European Union and the euro zone.

But centrist and pro-European candidate Emmanuel Macron is still the favorite to win the contest, according to French polling firm Ifop. The French presidential election is held over two rounds; the first one will be held Sunday and the second on May 7.


CNBC: Dow closes at session highs as Street’s overseas tension concerns ease

Monday, 4.18.17

U.S. equities closed higher on Monday as a weekend filled with geopolitical worries ended more calmly than investors expected, while bank stocks charged ahead.

The Dow Jones industrial average closed more than 180 points higher as Boeing and Goldman Sachs contributed the most gains on the 30-stock index.

The S&P 500 gained 0.86 percent, with financials leading advancers. The SPDR S&P Bank ETF (KBE) rose more than half a percent after the top two Wells Fargo executives bought $5 million worth of Wells stock.

The Nasdaq composite closed up 0.8 percent.

“I think this is a relief rally,” said Peter Cardillo, chief market economist at First Standard Financial. “Are out of the woods? No. I still think we’re in the midst of a pullback” given geopolitical conditions.

U.S. stocks also rose higher on Monday after Treasury Secretary Steven Mnuchin told the Financial Times that Republicans could complete tax reform without incorporating the border adjustment tax.

The SPDR S&P Retail ETF rose more than 1 percent, led by Rent-A-Center up almost 6 percent.

Vice President Mike Pence said the “era of strategic patience” with North Korea was over.

Pence made the comments on the border between North and South Korea a day after North Korea’s failed missile test. The Trump administration is working with China and its allies on a response to North Korea’s missile program.

“The fact that Pence was able to go there and come out unharmed led some bulls back into the market,” said Adam Sarhan, CEO of 50 Park Investments. “This is a combination of relief in financial markets and the geopolitical front.”

James Smigiel, managing director at SEI, said the rise in stocks may be a byproduct of low trading volumes after the Easter holiday. “I think it’s somewhat counter-intuitive that we’re up this much,” he said. “We didn’t get anything good today, … yet the market keeps on finding reasons to trade up.

The benchmark 10-year note yield hit its lowest level since Nov. 17 before bouncing back to trade around 2.23 percent. Gold futures, which had been a popular trade over the past week, also traded off its session highs.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded about 8 percent lower near 15. The index briefly broke above 16 last week.

Investors went home on Thursday on edge after the U.S. dropped “the mother of all bombs” in Afghanistan. The U.S. used GBU-43 bomb on a cave complex believed to have ISIS fighters.

Meanwhile, earnings season was set to kick into full gear this week, with Goldman Sachs, Bank of America and eBay, among others, set to report this week. Netflix was also set to report Monday after the close.

Investors have high hopes for first-quarter earnings, with Wall Street expecting the best season since 2011. But it’s the second-quarter guidance that has Nick Raich of The Earnings Scout worried.

In a Monday note, The Earnings Scout’s CEO said that just six of the 29 S&P 500 components that had reported also raised their second-quarter estimates, while 18 lowered them.

“It remains highly likely that 2Q 2017 EPS estimates will go lower as more companies report and this week, there will be 69 more companies in the S&P 500 reporting,” Raich said.

In economic news, the Empire State index hit 5.2 in April, well below the 16.4 print reached in March. The NAHB survey showed sentiment among homebuilders slipped.

The so-called hard economic data have softened recently. On Friday, the Labor Department said the consumer prices index — a key gauge of inflation — posted its biggest drop in more than two years in March, while the Commerce Department said retail sales dropped more than expected last month.

In turn, market expectations for a Federal Reserve rate hike in June have slipped. But writing off tighter monetary policy — even near term — might be premature, said Quincy Krosby, market strategist at Prudential Financial.

“It’s going to take a lot for the Fed to pull back from its path to normalization,” she said. “I think the Fed will tolerate more weakness” before deviating from its path.

Investors also focused on the outcome of France’s presidential election. Polls suggest a growing number of voters are turning away from mainstream parties, according to Reuters.

DJIA Dow Industrials 20636.92
183.67 0.90%
S&P 500 S&P 500 Index 2349.01
20.06 0.86%
NASDAQ NASDAQ Composite 5856.79
51.64 0.89%

The Dow Jones industrial average closed 183 points higher, or 0.9 percent, to 20,636, with Boeing leading advancers and Exxon Mobil the top decliner.

The S&P 500 gained 20 points, or 0.86 percent, to 2,349, with financials leading all 11 sectors higher.

The Nasdaq advanced 51 points, or 0.89 percent, to trade at 5,856.

About two stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 703 million and a composite volume of 2.806 billion in afternoon trade.

On tap this week:


Earnings: Netflix, United Continental, JB Hunt, M&T Bank, Celanese, Barracuda Networks, Pinnacle Financial

4:00 p.m. TIC data


Earnings: Bank of America, Goldman Sachs, Johnson and Johnson, UnitedHealth, Charles Schwab, Comerica, Yahoo, Harley-Davidson, Progressive, Omnicom, GNC Holdings, Intuitive Surgical,

8:30 a.m. Housing starts

8:30 a.m. Business leaders survey

9:15 a.m. Industrial production


Earnings: BlackRock, Morgan Stanley, American Express, eBay, Morgan Stanley, US Bancorp, TD Ameritrade, Textron, CSX, Canadian Pacific Railway, Qualcomm, Abbott Labs, Steel Dynamics, SLM

2:00 p.m. Beige book


Earnings: Travelers, Verizon, Blackstone, Philip Morris, ABB, Bank of NY Mellon, Alliance Data, PPG Industries, Imax, MGIC Investment, KeyCorp, Nucor, Janus, Visa, Sonoco Products, Sherwin-Williams, Mattel, NCR, Danaher

8:30 a.m. Weekly claims

8:30 a.m. Philadelphia Fed


Earnings: General Electric, Honeywell, NextEra Energy, Kansas City Southern, Schlumberger, Rockwell Collins, Stanley Black and Decker, SunTrust, Morningstar, Steve Madden

9:45 a.m. Manufacturing PMI

10:00 a.m. Existing home sales


CNBC: Stocks Close Mostly Flat As Trump-Xi Meeting Approaches

Tuesday, April 4, 2017

U.S. equities ended Tuesday’s session mostly flat ahead of a key meeting between President Donald Trump and Chinese President Xi Jinping.

The Dow Jones industrial average gained about 38 points with Caterpillar contributing the most gains. The S&P 500 ended the day nearly breakeven, with real estate lagging and energy outperforming. The Nasdaq composite also ended roughly flat on the day.

Xi and Trump will meet Thursday and Friday at Mar-a-Lago. Last week, Trump said via Twitter the meeting would not be easy because “we can’t have massive trade deficits … and job losses.”

“While the fanatical optimism over Trump’s proposed fiscal policies boosting U.S. growth has fueled the phenomenal stock market rally, the rising protectionist fears and concealed concerns over the pro-growth agenda falling short of expectations could catalyze an unexpected selloff,” said Lukman Otunuga, research analyst at FXTM.

Trade — specifically fair U.S. trade — was one of the Trump’s campaign pillars, as he promised the U.S. would renegotiate trade deals he considered to be unfair. The administration has already moved forward to renegotiate the North American Free Trade Agreement with Mexico and Canada.

“Investors have certainly reverted to caution and that aspect of the market is going to be around for a while,” said Peter Cardillo, chief market economist at First Standard Financial. “There’s a lot happening this quarter and the market has already priced in all the good news.”

The U.S. trade deficit narrowed in February to $43.56 billion, the Commerce Department said. Economists expected it to have narrowed to $44.8 billion from a five-year high.

Equities traded higher earlier in the session after Trump hinted at bank deregulation. Trump said his administration will make it easier for banks to lend money, adding they will do a “massive haircut” to Dodd-Frank.

“There’s a lot of nervousness built into the market, but Trump’s comments that we’re going to get rid of ‘horrible’ regulations is bullish for stocks,” said Adam Sarhan, CEO of 50 Park Investments.

Treasury yields — which move opposite to prices — rebounded, with the benchmark trading near 2.35 percent after touching it lowest level since late February.

Other data released Tuesday included factory orders for February, which rose 1 percent, in line with expectations.

“There has been this undercurrent in the market about whether the economy is softening,” said Quincy Krosby, market strategist at Prudential Financial. She also said investors are growing wary about the timing of Trump’s proposed tax reforms.

“The president said he was going to move toward tax reform, but now he’s talking about health care” again, she said.

The possibility of tax reform coming from the new administration has been at the crux of the stock market’s rally since the U.S. election. That said, the three major indexes have remained in a tight range recently, as Treasurys regained ground.

Overseas, European equities traded mostly higher, with the Stoxx 600 index rising 0.2 percent. In Asia, stocks closed mostly lower, with the Nikkei 225 sliding 0.91 percent and the Kospi falling 0.3 percent.

DJIA Dow Industrials 20689.24 39.03 0.19%
S&P 500 S&P 500 Index 2360.16 1.32 0.06%
NASDAQ NASDAQ Composite 5898.61 3.93 0.07%

The Dow Jones industrial average rose 10 points, or 0.04 percent, to 20,660, with Caterpillar leading advancers and Nike lagging.

The S&P 500 fell 2 points, or 0.1 percent, to 2,356, with financials leading four sectors lower and energy outperforming.

The Nasdaq slipped 5 points, or 0.1 percent, to 5,889.

About four stocks declined for every three advancers at the New York Stock Exchange, with an exchange volume of 464 million and a composite volume of 2.356 billion in afternoon trade.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 12.

On tap this week:


4:30 p.m. Fed Gov. Daniel Tarullo


8:15 a.m. ADP payrolls

9:45 a.m. Services PMI

10:00 a.m. ISM non-manufacturing

2:00 p.m. Fed minutes


8:30 a.m. Jobless claims


8:30 a.m. Employment report

10:00 a.m. Wholesale trade

12:15 p.m. New York Fed’s Dudley speaks on financial regulation

3:00 p.m. Consumer credit


MarketWatch: Why the stock-market bulls ‘remain in control’ — in one chart

Monday, April 3, 2017


Reuters: US STOCKS- Wall St set to open flat on last day of strong quarter

Friday, March 31, 2017

* S&P, Dow set for best 1st-qtr since 2013

* Feb U.S. consumer spending up 0.1 pct vs est. 0.2 pct

* FMC jumps on deal with DuPont

* Futures down: Dow 17 pts, S&P 3.5 pts, Nasdaq 3 pts (Adds details, comments, updates prices)

By Yashaswini Swamynathan

March 31 U.S. stocks looked set to open slightly lower as investors prepared to lock in gains on what is likely to be Wall Street’s strongest first-quarter performance in four years.

A raft of strong economic data and the possibility of fiscal stimulus under President Donald Trump have driven U.S. equities to record highs since his election.

The S&P is on track to gain 5.8 percent and the Dow 4.9 percent for the first quarter ending Friday, their biggest quarterly gains since 2013.

“It’s been a decent start to the quarter for stocks, and so far the market has navigated a somewhat uncertain terrain with grace,” said Adam Sarhan, chief executive officer at 50 Park Investments in Florida.

“It’s perfectly normal on the last day of the quarter and the last day of the month to see some profit taking, especially after a strong run.”

Dow e-minis were down 17 points, or 0.08 percent at 8:32 a.m. ET (1232 GMT), with 17,746 contracts changing hands.

S&P 500 e-minis were down 3.5 points, or 0.15 percent, with 126,574 contracts traded.

Nasdaq 100 e-minis were down 3 points, or 0.06 percent, on volume of 20,860 contracts.

As stocks continue to soar, investors are looking to the first-quarter earnings season to justify Wall Street’s lofty valuations.

The S&P is trading at about 18 times earnings estimates for the next 12 months against its long-term average of 15, according to Thomson Reuters data.

However, the improvement also means more interest rate hikes by the Federal Reserve. New York Fed President William Dudley said on Thursday evening that it was appropriate to tighten monetary policy to reduce the risk of overheating the economy.

On Friday, oil prices fell 0.8 percent after a three-day rally.

A report from the Commerce Department showed U.S. consumer spending barely rose in February, but the biggest annual increase in inflation in nearly five years supported expectations of further interest rate hikes this year.

Shares of DuPont were up 0.6 percent at $82.11 in premarket trading after the company said it would sell its crop protection business to FMC Corp and buy its health and nutrition unit in a deal that will give DuPont about $1.6 billion. FMC’s shares jumped 12.6 percent.

U.S.-listed shares of Blackberry were up 5 percent at $7.30 after the company reported fourth-quarter profit above expectations and said it expected to be profitable on an adjusted basis in 2018. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva)