Opening Comment — August 26, 2016
S&P 500: 2,172.50
Nasdaq Composite: 5,212.20
Stock index futures are little changed Friday. The Dow and S&P 500 are down less than 0.1% in pre-market action. The Nasdaq 100 is trading 0.1% below fair value on GLOBEX.
The major averages are indicated to open modestly lower ahead of Fed Chair Janet Yellen’s speech this morning in Jackson Hole, Wyoming. Investors will look for possible hints from the chief policy maker on the timing of the next interest rate increase. On the data front, second-quarter GDP was revised down to 1.1% annualized rate from the initial 1.2% reading.
In earnings, GameStop is falling 8% to $29.60 as the video-game retailer reported weak sales of new gaming software. Ulta Salon is down 2.4% to $265.00 after the company’s forecast came in below analyst estimates.
European markets are declining near mid-session with the broad Euro STOXX 600 down 0.1%. Volume is 40% below its 30-day moving average as investors await remarks from Janet Yellen this morning. In economic news, updates on GDP growth in the U.K. and France matched expectations. The U.K.’s FTSE 100 is little changed in the session while the CAC 40 in Paris is ticking up 0.1%. In Asia, Japan’s Nikkei 225 fell 1.2% in sympathy with a weaker yen. In China, the Shanghai Composite added 0.1% while the HANG SANG advanced 0.4%.
Treasuries are advancing with the benchmark 10-year note up 3/32 to yield 1.56%. In commodities, NYMEX WTI crude is slipping 0.1% to $47.31/barrel. COMEX gold is adding 0.2% to $1323.10/ounce. In FOREX, the Dollar Index is falling 0.2%.
Midday Comment — August 26, 2016
DJIA: 18,403.93, down 44.48
S&P 500: 2,168.80, down 3.99
Nasdaq Composite: 5,211.258, up 0.95
Stocks are declining near mid-session Friday. The Dow is down 44 points to 18403. The S&P 500 is losing 3 points to 2168 and the Nasdaq Composite is gaining less than a point to 5211.
The major averages are attempting to hold on to early gains after Fed Chair Janet Yellen signaled an optimistic approach to interest rate increases. Yellen outlined the solid performance of the labor market and improved outlook for economic activity as reasons the case for rate hikes has strengthened in recent months. On the data front, second-quarter GDP was revised down to 1.1% annualized rate from the initial 1.2% reading. The University of Michigan’s gauge of consumer sentiment eased in August to a four-month low.
Seven of 10 sectors in the S&P 500 are gaining near halftime. In earnings, Autodesk is adding 6.4% to $67.78 as the software supplier raised its yearly guidance. Pure Storage is down 2.5% to $11.50 despite reporting a narrower-than-expected quarterly loss. Shares of Splunk are falling 9.3% to $59.04 after being the subject of negative analyst commentary. Herbalife is losing 5% to $58.85 with news Carl Icahn may sell his 18% stake in the company.
Breadth is even on issues on the NYSE; positive by 4-3 on Nasdaq. Composite NYSE volume is 1.5 billion shares.
Treasuries are mostly lower with the benchmark 10-year note down 1/32 to yield 1.57%. In commodities, NYMEX WTI crude is adding 0.6% to $47.60/barrel. COMEX gold is gaining 0.4% to $1338.60/ounce. In FOREX, the dollar is advancing against the euro and yen.
Closing Comment — August 26, 2016
DJIA: 18,395.4, down 53.01
S&P 500: 2,169.04, down 3.43
Nasdaq Composite: 5,218.92, up 6.71
Stocks finished mostly lower on Friday. The Dow was down 53 points to 18395. The S&P 500 lost 3 points to 2169 and the Nasdaq Composite gained 6 points to 5218.
The Nasdaq snapped its eight-week win streak on Friday as investors digested comments from Fed Chair Janet Yellen and Vice Chairman Stanley Fischer. Yellen signaled an optimistic approach to interest rate increases as she stated the case for rate hikes has strengthened in recent months. Equities moved lower after Fischer said Yellen’s comments were consistent with a possible September interest rate increase. On the data front, second-quarter GDP was revised down to 1.1% annualized rate from the initial 1.2% reading.
Seven of 10 sectors in the S&P 500 finished in negative territory. Utilities were the worst performers retreating over 2% on the session. In earnings, Brocade declined 11.7% to $9.24 after reported weaker-than-expected IP Ethernet revenue. Herbalife was down 2.3% to $60.50 with news Carl Icahn may sell his 18% stake in the company. Shares of Splunk fell 10.1% to $58.52 after being the subject of negative analyst commentary. Autodesk was a notable gainer adding 8.1% to $68.87 as the software supplier raised its yearly guidance.
Breadth was negative on issues by 2-1 on the NYSE; even on Nasdaq. Composite NYSE volume totaled 3.3 billion shares.
Treasuries declined sharply after Fischer’s comments. The benchmark 10-year note finished 12/32 lower to yield 1.61%. In commodities, NYMEX WTI crude was little changed at $47.35/barrel. COMEX gold added 0.1% to $1321.50/ounce. In FOREX, the Dollar Index surged 0.7%.
For the week, the Dow was down 0.8%, the S&P lost 0.7%, and the Nasdaq fell 0.4%.