Equities ended higher, with a 1% move to the upside for WTI crude to $82. Per barrel, while Brent prices rose 1.3% to $87.12. Energy futures were higher overnight and extended gains after the Department of Energy reported a smaller weekly build in inventories.
Equities ended higher, with a 1% move to the upside for WTI crude to $82. Per barrel, while Brent prices rose 1.3% to $87.12. Energy futures were higher overnight and extended gains after the Department of Energy reported a smaller weekly build in inventories.
Equities ended higher, with a 1% move to the upside for WTI crude to $82. Per barrel, while Brent prices rose 1.3% to $87.12. Energy futures were higher overnight and extended gains after the Department of Energy reported a smaller weekly build in inventories.
Index Up/Down % Last DJ Industrials -31.44 0.18% 16,974 S&P 500 -2.74 0.14% 1,982 Nasdaq -15.07 0.33% 4,549 Russell 2000 -2.06 0.18% 1,147
Equity Market Recap Not necessarily more hawkish, but certainly appeared a bit less dovish that the outcome of todays FOMC meeting results, which saw the end of QE3 (is it really the end of QE?), and kept benchmark interest rates at record lows (still near 0%). The picture painted by the Fed portrayed the U.S. economy on stronger footing than before, as Fed officials dropped the word "significant" in describing underutilization of the labor market, a sign they are more upbeat on the jobs outlook. The outlook and commentary certainly opens the door for the Fed to potentially raise rates sooner than expected (range has been from mid-2015 to not at all in 15). Equities initially lower after FOMC (Dow fell 100 points), but gained ground to the closing bell
FOMC Meeting The FOMC said it sees further improvement in the labor market while confirming it will end an asset-purchase program to $0 (from $15B) that has added $1.66 trillion to its balance sheet. Some bullet points from the FOMC statement include: 1) Federal funds target rate remains unchanged at 0.25%, 2) the Fed said it sees solid job gains with lower unemployment and that underutilization of labor resources gradually diminishing (was a change in language), 3) Fed repeats risks to economy, job outlook nearly balanced, 4) re inflation, Fed says lower energy prices to hold down inflation near term, but said "the likelihood of inflation running persistently below 2% has diminished somewhat."
Commodities Energy prices ended higher, with a 1% move to the upside for WTI crude to $82.20 per barrel, while Brent prices rose 1.3% to $87.12. Energy futures were higher overnight and extended gains after the Department of Energy reported a smaller weekly build in inventories (rose 2M barrels vs. est. near 4M build), while gasoline posted draw of -1.24M barrels and distillates a draw of - 5.29M) all bullish data points (WTI touched high of $82.88) but still down 20% from June Gold prices (closed prior to FOMC statement) slipped $4.50 to settle at $1,224.90 an ounce, while silver prices fell 4c to $17.26 an ounce. After the FOMC release, gold futures initially moved lower as Fed monthly total purchases pared to $0 from $15B (but Fed also said the likelihood of inflation running persistently below 2% has diminished somewhat.") Gold future sold off afterward, down as much as 1.6%
Currencies The dollar surged following the end of QE by the Fed, with the index (DXY) rising 0.56 to around the 86.0 level (follows 2 days of modest selling); the euro fell about 1 full cent against the USD to 1.2639, while the greenback jumped against the yen (nears 109). The Fed certainly painted a much stronger picture of the economy in this release that prior, leading to dollar strength
Bond Market Bond prices dropped after the FOMC meeting statement expressed an improved jobs market and generally positive outlook for the economy, as the FOMC removed its QE3 asset buying, but kept rates at record lows; the 10-yr yield jumped as high as 2.362% before paring gains. Bond prices had fallen earlier due to tepid demand on a $35 billion sale of five-year Treasury notes Prior to the FOMC report; US Treasury sold $35B in 5-year notes at yield of 1.567% (above yield prior to auction), with bid-to-cover 2.36, lowest since July 2009 (down from 2.56% prior auction) and 47.8% awarded to indirect bidders (10.5% to direct bidders) so little demand despite higher yields offered
Other Interesting tidbits Investor Intelligence Poll shows writers classified as bulls by Investors Intelligence jump to 4- week high 47.0% from 35.3%; Bears fall to 16.3% from 18.2%; 3-week low and those expecting a correction falls to 36.7% from 30-year high 46.5% last week Former Federal Reserve Chairman Alan Greenspan said he doesnt think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets http://goo.gl/vwu3aR
Sector News Breakdown Consumer Retail movers; KORS downgraded to neutral at Janney saying Europe growth may not offset US slowdown; RL Q2 EPS beats/revs miss and cuts revenue growth outlook to 5%-7% from 6%-8% prior; PETM Staples; HSY falls as Q3 eps/revs miss views and cuts 2014 profit/sales outlook as traffic irregular; ABEV raised to buy at Goldman Sachs; JMBA upgraded to Outperform at Wedbush on potential growth in profitability from current initiatives; SODA to suspend annual forecasts starting next year; cuts forecast this year Lodging/Leisure/Gaming; hotels up (group fell yesterday despite HOT beat/buyback) MAR saw strong RevPAR growth of +8.8% in 3Q, while occupancy at 77.6%, while raising rates by 5%, while H shares fall on earnings; WYNN Q3 eps beat, regular dividend increase and special dividend announced (casinos little changed) Housing stocks/building product stocks generally lower; MTH leads builders lower after quarterly eps missed (other builders mixed), while building product names mostly lower after EXP earnings (recall MLM fell yesterday on earnings)
Autos; tire makers rise as GT Q3 EPS beats by 17c and sees year eps growth at high end of 10%- 15% range (CTB moves); Fiat (FCAU) Q3 results top views and backs year rev outlook also to make public offer for 10% of Ferrari and files to offer up to 100M of common FCAU shares Restaurants; PNRA falls after mixed quarterly results, as Q3 comps/eps top estimates, but cut its year and Q4 outlook (follows strong BWLD results yesterday); DIN cut to market perform by an analyst
Energy Energy as a whole was higher early, lifted by a few earnings reports, and on a higher move in oil prices (for today at least) E&P movers; APC teaming up with KKR to drill more than 500 wells across East Texas in a major expansion (stocks that may benefit in partnership include CRK, HK, APA, CWEI with acreage in play according to several analysts)NFX shares surged after Q3 eps beat Energy earnings; refiner PSX Q3 eps/revs both short of consensus citing lower volumes from maintenance activities at some PSX refineries (MPC, HFC, WNR); HES better earnings/sees 2014 production at high end of forecast Utility movers; Utility index (UTY) touched record highs of 574.60 before paring gains; earnings in group mostly better, with EIX and EXC beating PCG rises after analyst upgrade Solar/alternative energy; solar co SPWR Q4 eps beat but guidance for Q4 misses midpoint of views; BLDP falls after missing estimates and lowers guidance Pipelines; biggest MLP IPO of the year today as SHLX opened at $32.00 after 40M share IPO priced at $23.00; So said it would consider gas pipeline investments (also posted earnings)
Financials Financial as a whole, little movement early, tracking moves in major averages, but there were several individual stock stories that moved a few names/sectors REIT movers; ARCP among biggest losers after saying accounting errors were intentionally not corrected/replaces CFO and COO; WSH said is the insured broker for ORB exploded rocket (also posts Q3 eps miss by 3c); AFSI falls on analyst downgrade and cautious article in Seeking Alpha; XOOM Q4 outlook short of views and says CFO is stepping down; BBSI shares fall after taking a big reserve charge Lending names move, led by OCN after Height reported the company has recognized backdating issues, is taking steps to resolve; resolution necessary as 3 state AGs have commented theyre monitoring (says if settlement required, OCN likely to pay civil fine, make restitution payments to harmed borrowers) - Bloomberg; shares of NSM, HLS, WAC, ASPS, AAMC move
Healthcare Pharma/Biotech movers; GILD Q3 eps missed/revs in-line; Sovaldi sales strong at $2.8B, but below estimates; AMGN upgraded at Nomura after earnings (touched new all-time high); SNY ousts CEO (biotechs sell off after touching new highs yesterday GILD, VRTX, REGN weigh) Earnings movers; AMED jumps on eps beat; ICAD jumps on guidance; USNA jumps to record highs after Q3 beat and increased profit outlook; Managed care group mixed yesterday on AET results, but WLP numbers top views, lead group higher Story movers; UNIS tgt raised to $9 from $5 at Jefferies as views deal with SNY for injectables significant; CARA up after HAL trial of IV formulation of CR845 met primary endpoint
Industrials & Materials Metals & Mining; X shares lead steel names higher after quarterly results top views, as sales of flat-rolled steel quadrupled shares of AKS (added to Deutsche short-term buy list), NUE, STLD rise; VALE cut to Underperform despite significant correction in mining equities; CLF upgraded to OP with $18 tgt at Macquarie, while Brean cut to sell with $8 tgt (gives back about half of Tuesday gains); CCJ Q3 revs miss/cuts uranium production outlook Industrials/Machinery; ETN the latest machine maker to post strong quarterly results as EPS beat/revs miss; Industrial gas stocks decline after PX cut its full year forecast after seeing mixed Q4 volumes and FX headwinds (shares of ARG, APD fell); SPW said to spin off its flow business Aerospace; ORB falls after its Antares rocket explodes 6 seconds after lift-off/creates uncertainties note ATK said it was conducting a thorough evaluation of any potential implications resulting from the ORB incident, including current operating plans, long-term strategies, and the proposed transaction to merge the company's Aerospace and Defense businesses with Orbital (the AJ26 engine manufactured by GY unit, which also fell) Transports give back some gains, but not before trading to new all-time highs earlier for index; CHRW upgraded to buy at Bank America after earnings; SKYW posted earnings; package delivery stocks FDX and UPS were weak early
Technology, Media & Telecom Tech in general weaker, led by FB; AAPL making new all-time highs daily (trades 107.34); Semi index pares recent gains, with SOX lower (big run over the past 2-weeks despite mixed results earnings tonight from RFMD, CAVM); high beta stocks continue to get beaten up following earnings; stocks up on earnings were ARW, WDC, TSS, EA, while STM, CRAY, HLIT fell Internet FB story in tech today, beating Q3 expectations, but guidance and expense talk weighs on shares (daily active users were 864M, up 19% YoY and mobile DAUs were 703M, up 39% YoY); BABA initiated coverage by 14 analysts (all buy rated except 1 neutralGS); EBAY initiated Underperform and $45 target at Morgan Stanley; AMZN initiated Overweight and $420 tgt (added to best ideas list) at Morgan Stanley; TWTR and IBM announce data analytics partnership Earnings movers; video gamer EA boosted its 2015 eps/sales forecast after quarter tops views on soaring mobile use; IACI Q3 EPS/revs top views as profit surges; GRMN shares fell despite beat and raise quarter; INVN among worst performers after Q2 eps/revs miss and guides q3 below (downgraded by a few analysts); AZPN drops on decelerating growth (downgraded by two analysts after earnings); ULTI down after earnings; WDC rises (qtr. beats/guidance misses) LED space; AIXG missed Sep-14Q EPS due to very weak gross margins, which the company blamed on sales mix, customer support activities, and write-downs (follows weak guidance from CREE recently after quarterly results) 3D movers; HPQ unveils new 3-D capable computer called Sprout that sells for $1,899 and will be available early next month (DDD, SSYS, XONE, VJET were active)
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