Credit: Shutterstock photoTuesday,May15, 2018, 10:15 AM, EST
- NASDAQ Composite-0.95%Dow-0.68%S&P500 -0.71%Russell 2000-0.36%
- NASDAQ Advancers:783Decliners:1361
- Today's Volume (vs. yesterday)+26%
The bulls are taking a rest this morning as U.S. equity markets are lower to start the day. Home Depot's miss of sales estimates is getting some of the blame, though futures were weaker to start the day. The Dow has now posted higher highs for the last eight days, however this morning is setting up to end this streak. Currently all 11 S&P 500 sectors are trading lower with Real Estate and Utilities the worst performing sectors. Crude oil and Gold are both trading lower while the dollar and the yield on the 10-yr both move higher.
- MSCI announce the inclusion of China A-share stocks into their widely followed MSCI China Index. The list of 234 Chinese stocks caps a years-long process that is likely to attract billions of dollars into China's markets. The initial batch of companies will have a 0.39% weighting in MSCI's Emerging Markets Index and a 1.3% weighting in the MSCI China Index. Estimated inflows could top $400 billion of foreign investment into the main-land listed shares. The MSCI will rebalance their indexes at the end of May.
- Retail sales increased by 0.3% in April matching the consensus forecast after a revised 0.8% advance the prior period. Bigger after tax paychecks helped compensate for rising fuel costs, indicating that consumer demand was off to a solid start for the quarter. The results would seem to indicate that consumer spending as a whole will rebound from a weak 1st quarter. Nine of the thirteen major retail categories showed advances in April led by the biggest increase from Apparel stores. Furniture merchants, building material outlets and Internet retailers were also strong.
- The retail sales data also helped drive speculation that the Fed will hike rates for a fourth time later this year (see technical take below). This dinged equities as stocks fell from two-month highs. After a four day rally that was assisted by some marginal good news on U.S./China trade relations, today seems to be a "risk-off" day as treasuries yields and the dollar are moving higher.
Technical Take: "Hawkish Inflation"
The US dollar is surging higher today following stronger economic data in both retail sales and the NY Fed's Empire State Manufacturing Index. The latter manufacturing data includes inflationary readings in prices paid and received whereby the prices paid rose to 54 in May, its highest level since 2011. Markets reacted "hawkishly" by increasing the odds of a fourth rate hike to more than 55% before now settling back at current levels of 48%, up from 15% just five weeks ago.
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Steven Brown is a Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over twenty years of experience in equities. With a focus on client retention he currently covers the Financial, Energy and Media sectors.
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Brian Joyce, CMT is a Director on the Market Intelligence Desk (MID) at Nasdaq. Before joining Nasdaq Brian spent 16 years as an institutional trader executing equity and options orders for both the buy side and sell side. He also provided trading ideas and wrote technical analysis commentary for an institutional research offering. Brian focuses on helping Nasdaq's Financial, Healthcare and Transportation companies, among others, understand the trading in their stock. Brian is a Chartered Market Technician (CMT).
Michael Sokoll, CFA is a Senior Managing Director on the Market Intelligence Desk (MID) at Nasdaq with over 25 years of equity market experience. In this role, he manages a team of professionals responsible for providing NASDAQ-listed companies with real-time trading analysis and objective market information.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
