CNBC: Dow posts 8-day slide, longest since 2011, as Street weighs tax reform prospects

Monday, March 27, 2017 4pm

U.S. stocks closed mostly lower on Monday as investors reassessed the prospects of key White House proposals, including tax reform, coming to fruition.

“When you look at some of the areas that have helped the market, they are waning a bit here,” said Daniel Deming, managing director at KKM Financial. “I think you’re also seeing some valuation concerns as well.

The Nasdaq composite traded 0.3 percent higher after briefly falling 1 percent.

The Dow Jones industrial average traded about 30 points lower — after falling nearly 200 points earlier, with Goldman Sachs contributing the most losses. The 30-stock index was also on track to post an eight-session losing streak, its longest since 2011.

The S&P 500 briefly turned positive after falling nearly 1 percent, with financials and telecommunications leading decliners and health care outperforming. Financials were dragged by bank stocks, as the SPDR S&P Bank ETF (KBE) and the Regional Banking ETF (KRE) both fell around 1 percent.

“This is coming as investors reassess how bad the news on health care actually is,” said Kate Warne, investment strategist at Edward Jones. “There are definitely mixed views on that. This could be a catalyst for Republicans to do a better job with tax reform.”

The Trump administration was dealt a body-blow Friday after a House bill aimed at replacing Obamacare was pulled from the floor. The GOP bill faced opposition not just from Democrats, but also from conservative and more moderate Republicans, and was not able to secure enough votes to pass.

“It’s been such a powerful rally that it’s not surprising to see a pullback after a disappointment that big,” said Maris Ogg, president at Tower Bridge Advisors, referring to the health care bill’s defeat. “But the big picture really hasn’t changed.”

The House vote was seen as crucial for the Trump agenda. Trump had said the repeal and replacement of Obamacare must happen before action can be taken on his other plans, including a major tax reduction. Stocks have rallied significantly since the U.S. election on hopes of lower taxes, deregulation and fiscal stimulus.

“Certainly what happened on Friday makes it harder [to push tax reform], but we’re not bogged down by it,” said Jeremy Klein, chief market strategist at FBN Securities. “I think people are realizing we have a long way to go on tax reform.”

Trump said Friday the administration would move to try and slash taxes.

The major indexes have taken a breather this month from their rip-roaring, postelection rally. The S&P and Dow were both down around 1 percent this month, while the Nasdaq held flat.

“I don’t think this is the beginning of a full-blown correction, but it’s definitely a reversal in market sentiment,” said Peter Cardillo, chief market economist at First Standard Financial.

U.S. Treasurys, which had fallen sharply immediately after the election, have also recovered ground this month after the Federal Reserve maintained its interest-rate outlook largely unchanged at its March meeting.

“One by one, we’re seeing the Trump trade unwind across all markets,” said Adam Sarhan, CEO of 50 Park Investments, noting that assets like gold and the Mexican peso are around levels not seen since before the election. “A defensive stance is warranted until we see some bullish action take place, and a lot of that depends on what happens in D.C.”

The benchmark 10-year note yield fell to 2.37 percent, while the short-term two-year note yield dipped to 1.24 percent.

The U.S. dollar declined to a four-month low against a basket of major currencies, with the euro near $1.087 and the yen around 110.6.

Overseas markets also faced pressure following the American Health Care Act’s defeat, with the pan-European Stoxx 600 index falling 0.4 percent.

There are no major economic data due Monday, but this week investors will digest the third reading on fourth-quarter GDP and personal income data, among others.

DJIA Dow Industrials 20550.91
-45.81 -0.22%
S&P 500 S&P 500 Index 2341.60
-2.38 -0.10%
NASDAQ NASDAQ Composite 5840.37
11.64 0.20%

The Dow Jones industrial average fell 53 points, or 0.26 percent, to 20,542, with Goldman Sachs lagging and DuPont leading advancers.

The S&P 500 dropped 4 points, or 0.2 percent, to 2,339, with telecommunications leading nine sectors lower and health care the biggest riser.

The Nasdaq composite gained 5 points, or 0.1 percent, to 5,834.

About four stocks declined for every three advancers at the New York Stock Exchange, with an exchange volume of 424 million and a composite volume of 2.001 billion in afternoon trade.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.3.

Gold futures for April delivery rose $7.20 to settle at $1,255.70 per ounce.

On tap this week:

6:30 p.m. Dallas Fed President Robert Kaplan


8:30 a.m. Adv. econ indicators
9:00 a.m. S&P Case-Shiller HPI
9:45 a.m. Services
10:00 a.m. Consumer confidence
12:45 p.m. Kansas City Fed President Esther George on the economy and policy
12:50 p.m. Fed Chair Janet Yellen speaks on workforce development challenges in low-income communities
1:00 p.m. Dallas Fed President Robert Kaplan
4:30 p.m. Federal Reserve Governor Jay Powell


9:20 a.m. Chicago Fed’s Evans
10:00 a.m. Pending home sales
11:30 a.m. Boston Fed President Eric Rosengren
1:15 p.m. San Francisco Fed President John Williams


8:30 a.m. Jobless
8:30 a.m. Q4 Real GDP
9:45 a.m. Cleveland Fed President Loretta Mester
11:00 a.m. Dallas Fed’s Kaplan
11:15 a.m. San Francisco Fed’s Williams
4:30 p.m. New York Fed President William Dudley


8:30 a.m. Personal income
8:30 a.m. Consumer spending
8:30 a.m. Core PCE prices
9:45 a.m. Chicago PMI
10:00 a.m. Consumer sentiment
10:00 a.m. Minneapolis Fed President Neel Kashkari
10:30 a.m. St. Louis Fed President James Bullard


CNBC: Nasdaq hits all-time high as Street takes in Fed speakers

Monday, March 20, 2017

U.S. equities traded mostly higher on Monday, while investors turned their eyes to comments from several Federal Reserve officials.

The Nasdaq composite hit a fresh all-time high in midmorning trade, outperforming the other major indexes, and held about 0.15 percent higher.

The Dow Jones industrial average rose about 40 points, with Caterpillar and Disney contributing the most gains. The S&P 500 held just above breakeven.

“Investors want to know what the Fed has to say about the next rate hike,” said Adam Sarhan, CEO of 50 Park Investments. “That’s going to be the headline this week.”

The U.S. central bank raised interest rates for the second time in three months last week, but the “dot plot” that shows each member’s expectations for where rates will be in coming years changed little from the last meeting.

Minneapolis Fed President Neel Kashkari spoke with CNBC’s “Squawk Box” on Monday, saying he voted against a rate hike last week because he wanted to see more inflation in the U.S.

Philadelphia Fed President Patrick Harker told CNBC’s “Squawk on the Street” that it’s OK if inflation overshoots the Fed’s inflation target as the labor market tightens.

“Obviously there’s a lag to inflation. We have to be careful of not getting behind the curve,” said Harker.

Chicago Fed President Charles Evans is scheduled to deliver a speech Monday afternoon.

Treasurys traded mixed, with the short-term two-year note yield slipping to 1.30 percent and the benchmark 10-year note yield holding flat at 2.496 percent.

The postelection rise in equities and Treasury yields has largely slowed down recently as investors await for more details on the White House’s tax reform, deregulation and government spending proposals.

“The market has had a pretty big run [in stocks] and a consolidation is possible here,” said Bruce Bittles, chief investment strategist at Baird. “We’ll likely move sideways here in the near term and after that we’ll continue to go up again.”

Investors also kept an eye on oil prices, as prices were pressured by rising inventories.

“Sure, there’s a lot of supply, but what about demand? If demand is waning, that could be trouble for the market,” said 50 Park’s Sarhan.

U.S. crude futures for April delivery fell 1 percent to $48.27 per barrel.

Meanwhile, Wall Street also braced for a contentious House vote on the GOP health care bill slated for Thursday. The bill’s passing is seen as a step toward enacting tax reform, but it has faced criticism from both Republicans and Democrats.

Overseas, European equities traded mostly lower after the G-20 failed to agree on a joint communication that supported free and open trade.

Meanwhile, the pound slipped against the dollar after UK Prime Minister Theresa May’s office announced the country will trigger Article 50 to exit the European Union on March 29.

“The country is divided and this is the biggest task that currently rests in her hands. Theresa May is going to start touring the UK in an attempt to bring the country together and create more support for Article 50,” said Naeem Aslam, chief market analyst at Think Markets, in a note.

DJIA Dow Industrials 20946.84 32.22 0.15%
S&P 500 S&P 500 Index 2377.15 -1.10 -0.05%
NASDAQ NASDAQ Composite 5907.06 6.06 0.10%

—CNBC’s Jeff Cox contributed to this report.

On tap this week:


1:10 p.m. Chicago Fed President Charles Evans


Earnings: FedEx, Nike, Petrobras, General Mills, Lennar, Lands’ End

8:30 a.m. Current account

8:30 a.m. Philadelphia Fed manufacturing

12:00 p.m Kansas City Fed President Esther George

6:00 p.m. Cleveland Fed President Loretta Mester


Earnings: Tencent, Winnebago, Five Below, Acushnet
9::00 a.m. FHFA home prices

10:00 a.m. Existing home sales


Earnings: Conagra, Scholastic, KB Home, Accenture, GameStop, Shoe Carnival, Micron

8:30 a.m. Initial claims

8:45 a.m. Fed chair Janet Yellen makes opening remarks at Strong Foundations Conference

10:00 a.m. New home sales

12:30 p.m. Minnepolis Fed President Neel Kashkari at Strong Foundations Conference

7:00 p.m. Dallas Fed President Rob Kaplan


Earnings: Finish Line

8:30 a.m. Durable goods

8:45 a.m. Chicago Fed’s Evans

9:05 a.m. St. Louis Fed President James Bullard

9:45 a.m. Manufacturing PMI

10:00 a.m. New York Fed President William Dudley


MarketWatch: Stock market struggles for traction, but weekly gains in sight

Friday, March 17, 2017

U.S. stocks were moving in and out of positive territory on Friday and poised for weekly gains as investors monitored a meeting of Group of 20 finance ministers in Germany, which could provide some insight into important geopolitical issues.

Investors are also watching for news from the meeting in Washington, D.C. between President Donald Trump and German Chancellor Angela Merkel, postponed from earlier in the week.

Equities have been in an uptrend of late. Both the S&P and the Nasdaq are set to post their seventh weekly gain of the past eight weeks, while the Dow is on pace for its fifth weekly advance of the past six weeks.

Index losses Friday were primarily due to the financial sector XLF, -0.53% which dropped 0.7%. Goldman Sachs Group Inc. GS, -1.41%  lost 1.3% and J.P. Morgan Chase & Co. JPM, -0.64%  was off 0.6%.

“The market is in a tight trading range and it’s fairly quiet. That said, the 10-year yield ticked down a bit to below 2.50 and the financials are down while utilities, a bond surrogate is up,” said Quincy Krosby, market strategist at Prudential Financial.

The 10-year Treasury yield TMUBMUSD10Y, -1.67%  fell to 2.495% on Friday.

Finance ministers from industrialized and emerging-market economies are gathering in Baden-Baden for a G-20 meeting, the first for Treasury Secretary Steven Mnuchin. The finance chief is expected put pressure on other countries to boost the value of their currencies, given Trump’s push for a weaker dollar, while the Trump administration’s protectionist policies are also a focus.

Read: Trump’s dollar paradox could fuel trade tensions at G-20

“This is the first time that global leaders are interacting with the Trump administration on a large scale, and you have to expect the market will be quiet ahead of a major question mark like that,” said Adam Sarhan, chief executive officer at 50 Park Investments.

“So far Trump has gotten the benefit of the doubt from foreign leaders, so there’s a high likelihood that we come out of this with a positive framework, but there’s no question that we’re in a period with lofty valuations and stretched positive sentiment,” he said. “The cards are shaping up for a climatic run marked by panic buying, rather than panic selling, which is a sign you’re in the late stage of a bull market.”

Germany is one of the countries seen by Trump as having an unfair trade advantage. The country’s leader, Merkel, is scheduled to visit Trump in the White House Friday, in a meeting postponed from earlier in the week due to the East Coast snowstorm. Russia and immigration, as well as trade, are seen as likely topics on the agenda.

In the latest economic data, industrial production was flat in February, below expectations for a rise of 0.3%. Separately, the index of consumer sentiment rose to 97.6 in March from 96.3 in February, based on a preliminary reading by the University Michigan. This was slightly below the reading of 98 that had been expected.

The Conference Board said its leading economic index rose 0.6% in February — the third straight gain of that magnitude — to reach its highest level in more than a decade.

Trading on Friday could be more volatile than usual due to so-called quadruple witching, as stock-index futures, stock-index options, stock options and individual stock futures all expire on the same day.

Stock movers: Shares of Adobe Systems Inc. ADBE, +4.39%  jumped 4.9% after the software company late Thursday reported better-than-expected quarterly profit and sales.

High-end jeweler Tiffany & Co. TIF, +3.49% rose 3.1% after it reported better-than-expected earnings and gave an upbeat outlook.

Other markets: Asian stock markets closed higher, with the exception of Japan’s Nikkei, ahead of the G-20 meeting while European stocks were also higher.

Crude oil CLJ7, +0.04%  was flat while gold GCZ7, +0.19%  edged up.


Reuters: US STOCKS-Wall St set to falter at the open as Fed meets

* Fed decision due Wednesday afternoon

* British gov’t gets parliament nod to launch Brexit talks

* Valeant plunges after Ackman exits stake

* Futures down: Dow 62 pts, S&P 8 pts, Nasdaq 13.25 pts (Adds details, comments, updates prices)

By Yashaswini Swamynathan

March 14 U.S. stocks looked set to open marginally lower on Tuesday as investors fixed their sights on the outcome of a meeting where the Federal Reserve is widely expected to raise interest rates for the first time this year.

The Fed meets over two days starting Tuesday, with traders pricing in a 90 percent chance of a quarter point rate hike as inflation picks up and the labor market shows solid strength.

Early on Tuesday, Dow e-minis were down 62 points, or 0.3 percent, with 12,309 contracts changing hands.

S&P 500 e-minis were down 8 points, or 0.34 percent, with 132,876 contracts traded.

Nasdaq 100 e-minis were down 13.25 points, or 0.25 percent, on volume of 6,560 contracts.

The Fed’s statement is due at 2:00 p.m. ET on Wednesday, which will be followed by Fed Chair Janet Yellen’s press conference.

“Ahead of a major data point like the Fed, you typically don’t see big investors move sharply in one way or the other,” said Adam Sarhan, chief executive officer at 50 Park Investments in Florida.

“Investors are taking a wait-and-see approach, don’t expect any fireworks today.”

Wall Street’s top banks were unanimous on the view the Fed would raise rates at its policy meeting, a Reuters poll showed on Friday.

The next big question for the market is whether the Fed signals a more aggressive tightening path than previously expected, especially as markets are betting on a potential economic boost from President Donald Trump’s proposed fiscal policies.

Wall Street’s major indexes have been largely kept in check since the start of the month as investors prepared for higher rates following a slew of hawkish comments from top Fed officials.

On Monday, stocks ended flat with the S&P 500 trading in its tightest range this year.

Shares of Valeant plunged 13 percent to $10.56 in heavy premarket trading on Tuesday after billionaire investor William Ackman said his hedge fund, Pershing Square Capital Management, sold its entire stake in the company.


CNBC: Stocks Close Lower As Financials and Materials Lag; March Rate Hike Becomes More Likely

Monday, March 06, 2017

U.S. equities fell on Monday as the chances of tighter monetary policy from the Federal Reserve sunk in for investors, while geopolitical concerns increased.

“It feels like the fundamental picture is still there,” said Art Hogan, chief market strategist at Wunderlich Securities. “But at the same time you’ve got some events happening in March that are getting people worried. I think you’re starting to see that.”

The Dow Jones industrial average closed about 50 points, with Travelers contributing the most losses. The S&P 500 declined 0.3 percent, with financials and materials leading decliners. The Nasdaq pulled back around 0.4 percent.

Market expectations for a rate hike were 86.4 percent Monday, according to the CME Group’s FedWatch tool. The Fed’s monetary policy committee is set to meet between March 14 and 15.

“The March rate hike doesn’t matter. What matters is how many times they raise,” said Jeremy Klein, chief market strategist at FBN Securities. “If they stay at three times [for this year], then the market will be fine.”

The only potential obstacle for the Fed to raise rates at this point is the February jobs report, which is scheduled for release on Friday. Economists polled by Reuters expect the U.S. economy to have added 186,000 jobs last month.

“I think the market treads water ahead of the jobs report. That could give you the next 15 percent” in rate hike expectations, said Kim Forrest, senior equity analyst at Fort Pitt Capital. “But if it’s a dramatic miss, it could take it off the table.”

Investors also kept an eye on the geopolitical front after North Korea fired four ballistic missiles Monday, three of which landed in Japan’s exclusive economic zone, according to Japanese Prime Minister Shinzo Abe.

The Japanese Nikkei 225 fell 0.46 percent overnight, lagging the rest of the region.

Meanwhile, in Europe, stocks declined broadly as bank stocks were led lower by Deutsche Bank. Germany’s biggest lender announced it will raise $8.5 billion to boost its capital position and has set new financial targets.

“At the same time, the bank is going to cut its stake in asset management units by focusing more on its core business,” said Naeem Aslam, chief market analyst at Think Markets in London. “Deutsche Bank is going to remain on traders’ dashboards as they try to make sense of company’s future.”

Deutsche’s U.S.-listed shares fell 3.8 percent, while the pan-European Stoxx 600 index pulled back 0.52 percent.

Stocks in the U.S. are coming off a record-setting week after a speech from President Donald Trump lifted expectations that the administration’s agenda — especially regarding tax reform and deregulation — could become reality in the near future.

However, the Trump administration called for an investigation Sunday on whether former president Barack Obama wiretapped Trump Tower during last year’s election. Trump originally leveled the accusations against Obama on Saturday via Twitter, but did not provide and evidence supporting them.

“If the dynamic changes and the market believes Trump’s pro-growth agenda will not go through, that would change the game on Wall Street,” said Adam Sarhan, CEO of 50 Park Investments.

Trump signed a new travel ban Thursday, doubling down on the most divisive action of his young presidency.

DJIA Dow Industrials 20954.34
-51.37 -0.24%
S&P 500 S&P 500 Index 2375.31
-7.81 -0.33%
NASDAQ NASDAQ Composite 5849.17
-21.58 -0.37%

The Dow Jones industrial average fell 51.37 points, or 0.24 percent, to close at 20,954.34, with Travelers leading decliners and Caterpillar leading advancers.

The S&P 500 declined 7.81 points, or 0.33 percent, to end at 2,375.31, with materials and financials leading 10 sectors lower and energy as the only riser.

The Nasdaq dropped 21.58 points, or 0.37 percent, to close at 5,849.17.

About three stocks declined for every advancer at the New York Stock Exchange, with an exchange volume of 795.71 million and a composite volume of 3.224 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.3.

—CNBC’s Jacob Pramuk, Aza Wee Sile and Reuters contributed to this report.

On tap this week:


CERAWeek conference begins

3:00 p.m. Minneapolis Fed President Neel Kashkari


Earnings: Brown-Forman, H&R Block, Michaels Cos, Dick’s Sporting Goods, Urban Outfitters, Navistar

8:30 a.m. Trade deficit

3:00 p.m. Consumer credit


Earnings: Adidas, Bob Evans, Ciena, Express, Hovnanian, Children’s Place, Camping World, Sunrun, United Natural Foods

8:15 a.m. ADP payrolls

8:30 a.m. Productivity and costs

10:00 a.m. Wholesale trade


Earnings: Staples, Ulta Beauty, El Pollo Loco, Verifone, Zumiez, International Game Technology, Party City, Signet Jewelers, Embraer

7:45 a.m. European Central Bank rate decision

8:30 a.m. ECB President Mario Draghi briefing

8:30 a.m. Jobless claims

8:30 a.m. Import prices


Earnings: The Buckle, Vail Resorts

8:30 a.m. Employment report

2:00 p.m. Federal budget



CNBC: Dow snaps 12-day winning streak ahead of Trump’s speech to Congress

Tuesday, February 28, 2017

U.S. stocks closed lower Tuesday as investors eagerly awaited a speech from President Donald Trump while parsing through key economic data.

The Dow Jones industrial average closed about 25 points lower, with Wal-Mart contributing the most losses. The index also snapped a 12-day winning streak.

“Investors are setting up to potentially sell the news,” said Adam Sarhan, CEO of 50 Park Investments. “Investors have been buying the rumor, in this case Trump’s speech, and now there’s a lot of pent-up selling” in case Trump does not deliver what the market wants.

The S&P 500 declined 0.26 percent, with consumer discretionary lagging, snapping. Shares of Target dragged discretionaries lower, falling more than 10 percent on the back of weaker-than-expected quarterly results and light guidance.

The Nasdaq composite fell 0.6 percent.

“A lot of this has been built on expectations about Trump’s policies, but nothing has happened yet,” said Ben Barizdeh, wealth advisor at Piershale Financial Group. “We do expect him to elaborate

Trump is scheduled to speak at a joint Congress session Tuesday night. Wall Street will be listening closely for any clues or details regarding the administration’s plans on tax reform and deregulation.

“Although global stocks have displayed phenomenal gains this month, the growing scepticism over the sustainability of the bull rally may encourage participants to heavily scrutinize Trump’s first speech to a joint session of Congress,” said Lukman Otunuga, research analyst at FXTM, in a note.

Equities in the U.S. have spiked into record-high territory since Trump’s election.Treasury yields and the dollar also surged, but have recently lost steam.

“Everyone is kind of holding back, waiting to hear what is said tonight,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “The key will potentially be what is said on taxes because that’s what puts money in people’s pockets.”

The benchmark 10-year note yield traded near 2.39 percent Tuesday, while the dollar index held around 101; they began 2017 trading near 2.48 percent and 102.21, respectively.

In economic news, the second read on fourth-quarter U.S. GDP remained unchanged, but consumer spending was revised sharply higher to a 3.0 percent rate from 2.5 percent.

“There wasn’t much news in the report,” said Scott Clemons, chief investment strategist at Brown Brothers Harriman. “I do think the internals are interesting in terms of the direction; the magnitude was not great.”

“If anything, the quality of the data improve a little bit,” he said.

Meanwhile, low inventory and mortgage rates pushed home prices 5.8 percent higher in December, up from November’s 5.6 percent annual gain, according to the S&P/Case-Shiller U.S. National Home Price Index.

Other data released Tuesday included consumer confidence for February, which hit its highest level since July 2001.

Philadelphia Fed President Patrick Harker, a voting member on the policymaking committee, reiterated his view that the Fed could raise rates three times this year.

DJIA Dow Industrials 20812.24
-25.20 -0.12%
S&P 500 S&P 500 Index 2363.64
-6.11 -0.26%
NASDAQ NASDAQ Composite 5825.44
-36.46 -0.62%

The Dow Jones industrial average fell 25.20 points, or 0.12 percent, to close at 20,812.24, with Wal-Mart leading decliners and Coca-Cola outperforming.

The S&P 500 declined 6.11 points, or 0.26 percent, to end at 2,363.64, with consumer discretionary leading eight sectors lower and utilities the top advancer.

The Nasdaq composite slipped 39 points, or 0.67 percent, to 5,822.

About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 1.192 billion and a composite volume of 4.186 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 12.9.

—CNBC’s Elizabeth Gurdus contributed to this report.

On tap this week:


Monthly vehicle sales

Earnings: Best Buy, Mylan Labs, Broadcom, Shake Shack, Planet Fitness, Lowe’s, Windstream, Luxottica

8:30 a.m. Personal income and spending
9:45 a.m. Manufacturing PMI
10:00 a.m. ISM manufacturing
10:00 a.m. Construction spending
1:00 p.m. Dallas Fed’s Kaplan
2:00 p.m. Fed’s Beige Book

6:00 p.m. Fed Gov. Lael Brainard


Earnings: Costco, A-B InBev, Ambev, Toronto-Dominion Bank,, Kroger, Burlington Stores, Autodesk, American Outdoor Brands, Wingstop, Barnes and Noble, Abercrombie and Fitch

8:30 a.m. Jobless claims
7:00 p.m. Cleveland Fed President Loretta Mester


Earnings: WPP Group

9:45 a.m. Services PMI
10:00 a.m. ISM nonmanufacturing
10:15 a.m. Chicago Fed President Charles Evans, Richmond Fed President Jeffrey Lacker

12:15 p.m. Fed Gov. Jerome Powell
1:00 p.m. Federal Reserve Vice Chairman Stanley Fischer at Monetary Policy Forum
1:00 p.m. Fed Chair Janet Yellen, Executives Club of Chicago on outlook, with Q&A


WSJ: Bullish Cotton Bets Fly in Face of Trump’s Trade Rhetoric

If a drop in cotton demand is coming, Wall Street doesn’t seem worried.

While cotton producers and physical traders worry that President Donald Trump’s protectionist policies will cut into demand for cotton from its foreign trade partners in China and Mexico, hedge funds and other money managers are betting on rising prices in the cotton market at record levels.

Those investors cite recently strong demand for U.S. cotton from China and a booming economy under President Trump they say will drive up demand for goods like cotton, spurring inflation.

“If the U.S. economy is stronger, that will increase demand for cotton and other commodities. And if that demand goes up strongly enough, it will offset any tariffs that take place on one or two nations,” said Adam Sarhan, chief executive of 50 Park Investments.

In the long sleepy cotton market, speculator bets that prices will rise soared to a record 101,163 bullish bets as of Tuesday, according to the U.S. Commodity Futures Trading Commission, waking up a market that roughly a year ago was solidly in control of the bears because of swelling stockpiles of the fiber in China.

The $9.7 billion cotton futures market has watched speculative interest in U.S. cotton futures climb to the highest level since March 2008 when open outcry trading ended.

Rogers Varner, president of Varner Brothers, a firm that places bets in the cotton market on behalf of hedge funds, see Trump’s recent moves as a negotiation tactic.

“I don’t think this ‘America First’ thing bubbles over into a bonafide trade war. It is for show-and-tell,” he said.

But market participants say those speculators are on the wrong side of that bet.

Jordan Lea, chairman of Eastern Trading Company, a cotton merchant based in Greenville, S.C., says with Trump making policy decisions on campaign promises, the cotton market should be pricing in a drop in demand from countries that could push back by going elsewhere for cotton.

Mexico and China together account for one quarter of U.S. cotton exports this year and Mr. Trump has taken aim at both nations in his efforts to reframe trade policy.

“The powerful people in the world, the big money, has not taken him literally. But that’s starting to change. We’re in uncharted territory,” said David Martin, managing member of commodity hedge fund Martin Fund Management.

Mr Martin said with half the world’s cotton held in China and the potential for a trade war with Mexico, he’s staying out of the cotton market.

“Tariffs could increase the price of cotton. Or the price could actually collapse. It’s a big chess board,” Mr. Martin said.


CNBC: US stocks trade mixed amid Janet Yellen’s testimony

Tuesday, February 14, 2017

U.S. equities traded mixed Tuesday as investors digested testimony from the top Federal Reserve official.

The Dow Jones industrial average chopped around the flatline, with Caterpillar contributing the most losses and Goldman Sachs the most gains. The S&P 500 slipped 0.1 percent, with real estate lagging. The Nasdaq composite also fell 0.1 percent.

Fed Chair Janet Yellen said in prepared remarks that waiting too long to raise interest rates would be “unwise,” given the rise in inflation and economic growth.

“It was expected of her to be a little hawkish,” said Adam Sarhan, CEO of 50 Park Investments. “From her perspective, the stock market is at all-time highs and the economic data is improving, so it’s very prudent for her to be hawkish.”

U.S. Treasury yields ticked higher following Yellen’s remarks, with the benchmark 10-year note yields trading around 2.48 percent and the short-term two-year note yield advancing to 1.25 percent.

The dollar, meanwhile, erased earlier losses against a basket of currencies, with the euro near $1.058 and the yen around 114.

Tuesday also marked the first time Yellen testifies following President Donald Trump‘s election.

Economic data have broadly improved since Nov. 8, with sentiment and inflation metrics all ticking higher. The NFIB small business index, which measures small-business confidence, hit 105.9, the best read since December 2004.

“As a prudent banker … and if she listens to the message of the market since the election she should lay the March meeting clearly on the table for a rate hike,” said Peter Boockvar, chief market analyst at The Lindsey Group.

Market expectations for a rate hike next month rose to 23 percent from 16 percent following Yellen’s remarks, according to Jefferies.

Stocks in the U.S. have rallied sharply since Trump’s election on hopes of lower corporate taxes, fiscal spending and deregulation. On Monday, the three large-cap indexes, along with the small-caps Russell 2000, hit record highs. Trump hinted last week that the administration will be releasing a “phenomenal” tax plan in the next two or three weeks.

“the Fed has talked about three rate hikes for this year, but if they see fiscal stimulus coming down the hill, they might be forced to raise in March,” said David Kelly, chief global strategist at JPMorgan Funds. “There’s a big wait-and-see attitude in terms of, do you pay for what the president promised through spending cuts or do you let the deficit grow.”

“I think there should be some nervousness in the market about that,” he said.

DJIA Dow Industrials 20393.24 -18.92 -0.09%
S&P 500 S&P 500 Index 2322.67 -5.58 -0.24%
NASDAQ NASDAQ Composite 5750.63 -13.32 -0.23%

On tap this week:


Earnings: AIG, TransUnion, Devon Energy, Express Scripts, Lending Club, Generac, Molson Coors Brewing

10:00 a.m. Fed Chair Janet Yellen before Senate Banking Committee

1:00 p.m. Dallas Fed President Rob Kaplan

1:15 p.m. Atlanta Fed President Dennis Lockhart on crisis, recession, recovery


Earnings: PepsiCo, Applied Materials, Cisco, Kraft Heinz, Groupon, Marriott, Marathon Oil, CBS, Och-Ziff, Chemours, NetApp, Avis Budget, Kinross Gold

8:30 a.m. Retail sales

8:30 a.m. CPI

8:30 a.m. Empire State manufacturing

9:15 a.m. Industrial production

10:00 a.m. Fed Chair Yellen testifies before House Financial Services Committee on economy

10:00 a.m. Business inventories

10:00 a.m. NAHB survey

12:45 p.m. Philadelphia Fed President Patrick Harker on economy

4:00 p.m. TIC data


Earnings: TransCanada, Wendy’s, Time Inc, Avon, Alexion, GNC, Dean Foods, Cabela’s, MGM Growth, PG&E, Con Ed, WebMD, Encana

8:30 a.m. Jobless claims

8:30 a.m. Housing starts

8:30 a.m. Building permits

8:30 a.m. Philadelphia Fed survey


Earnings: Campbell Soup, Fluor, Bloomin’ Brands, Deere, JM Smucker, Moody’s, VF Corp, Allianz

MarketWatch: Dow rises by triple digits as stock market carves out records

Monday, February 13, 2017

U.S. stocks extended gains on Monday, with major indexes notching a third day of record-breaking session as financial and industrials stocks paved the way to higher ground.

The Dow Jones Industrial Average DJIA, +0.72% gained 151 points, or 0.8%, to 20,421. The S&P 500 SPX, +0.54% advanced 12 points, or 0.6%, to 2,328. The Nasdaq Composite Index COMP, +0.54% climbed 32 points, or 0.6%, to 5,766.

All three indexes were trading at records, after closing at all-time highs on Friday.

“Even though we have social unrest and building geopolitical tensions, the market refuses to fall in any meaningful fashion, which means there remains a very strong underlying bid in the market,” said Adam Sarhan, chief executive officer of 50 Park Investments. “This is due to a confluence of a few factors, including the earnings recession being over, a very strong bull market, and the hope for future prosperity under the pro-growth policies of the new administration.”

Gains have been pronounced since Donald Trump’s presidential election victory in November, and the latest move higher was pegged to the president suggesting last week that he would announce a tax plan in the near term. While he didn’t reveal details, in the campaign he advocated for massive corporate tax cuts.

Analysts said investors are also relieved that Trump has taken a softer stance toward China and Japan, key trading partners.

“Today’s advance is propelled by rising bank shares, the result of the possibility of higher interest rates which will permit the financials to be more profitable,” said Kent Engelke, chief economic strategist at Capitol Securities Management Inc.

Banks have been the biggest beneficiaries of the postelection rally, with investors betting they will benefit from both deregulation and an environment with rising interest rates. Industrial stocks have gained on hopes that a massive infrastructure deal, which Trump also touted during the campaign, would increase demand for the sector.

Goldman Sachs Group Inc. GS, +1.49%  gained 1.7% while J.P. Morgan Chase & Co.JPM, +1.32% added 1.4% while heavy machinery maker Caterpillar Inc.CAT, +2.31%  rose 2.5% as one of the biggest advancers on the Dow.

A meeting between Trump and Canadian Prime Minister Justin Trudeau had no significant impact on the U.S. market. The Canadian benchmark GSPTSE, +0.16% is up 3%, extending gains from last week.

That the two leaders did not surprise the markets is a good thing, according to Colin Cieszynski, chief market strategist at CMC Markets.

“The two leaders have significant policy differences in areas like climate change and immigration, but trade between the U.S. and Canada is so huge it’s really important that they focus on business and not get caught up in other areas. The less drama the better from a market perspective,” he said.

Individual movers: Apple Inc. AAPL, +1.07%  is poised to close at a record after Goldman Sachs raised its price target for the stock.

Shares in Verizon Communications Inc. VZ, -0.86%  fell 0.8% as the nation’s biggest wireless carrier starts selling unlimited data plans again. It’s the first time Verizon has offered such a service since 2011, signaling that intense competition is forcing the telecom to change its strategy.

Teva Pharmaceutical Industries Ltd. TEVA, +5.48%  rose 5.7% after it reported earnings and revenue that beat expectations.

Other markets: European stocks SXXP, +0.75% rose and Asian markets closed higher. Oil CLH7, -1.78%  fell sharply while gold futures GCH7, -0.67%  retreated and the ICE U.S. Dollar Index DXY, -0.01% edged up 0.1%.

–Victor Reklaitis contributed to this report.