Daily Market Recap
Weak Economic Releases Have Little Impact on Market Today
Overnight trading was weak for most equity markets. The Flash Manufacturing PMI in China was weaker than expected and the Shanghai composite fell sharply. Shares in China fell 2.1%. European trading was also weaker. French PMI numbers came in below expectations. Numbers in Germany were encouraging with both the manufacturing and service PMI’s better than expected. But, the numbers for the Eurozone as a whole were below expectations. Markets in France, England, and Germany were down between 0.4% and 0.7%. Remember these markets have been up sharply over the past several weeks.
The S&P 500 ended the day off less than 1 point, after being down close to ten points earlier in the morning. For the week, the index is down by 0.38% and is near multi-year highs.
Today was a little busier than earlier in the week when it comes to economic releases. The Philadelphia Fed survey was better than expected and much better than last week. The number was -1.9 for September against an estimate of -4.0. Last month the number was -7.1. The rate of change is the key thing to focus on here. Based on the current trend this number could move to positive territory in the coming months.
Weekly jobless claims totaled 382,000 versus expectations for 375,000. Continuing jobless claims fell slightly.
Negative economic releases and poor earnings guidance from companies in several areas had little impact on the market today. Homebuilders continued their impressive move. There is continued buying in the space after the Fed announcement of increased mortgage backed securities purchases and positive housing related data. The consumer staples sector was a leader today. A little continued profit-taking in last week’s big winners with financials and energy helping out staples today. Telecom stocks were up after the area came under pressure earlier in the month and big names in the space, like AT&T, have come back into favor.
Large cap pharmaceutical stocks performed well today. Pfizer, Johnson & Johnson, Merck and Eli Lilly all traded higher. Pfizer was especially strong.
Transportation stocks were weaker today on news that Norfolk Southern issued poor guidance. Earnings estimates for NSC were lowered due to its heavy exposure to coal. Until there is increased demand for coal shipments the company is likely to continue to struggle. Other rail stocks came under pressure today in response to the poor guidance.
Technology underperformed the broader market today. Semiconductors were an area of particular weakness. Fears over slowing growth in the PC space have increased concerns regarding semiconductor earnings. Today those fears spread to the smartphone supply chain. Skyworks, for example, which sells to the iPhone, gave disappointing earnings guidance.
Financials lagged the broader market again today. The sector has corrected this week after being in favor the week prior. Financials opened poorly today and saw increased buying throughout the course of the day. After the sharp move higher last week the correction this week has been controlled and orderly.
Materials lagged the market today with weak PMI data dragging down the steel sector.
Source: PFS Group
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