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Afternoon Note

Relative Calm

By Charles Payne, CEO & Principal Analyst
9/7/2017 1:01 PM
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It’s been a relatively calm day in the market as Hurricane Irma continues its rage.  Major indices have been in and out of positive territory.  In the Dow, financials are taking it on the chin again today. Treasuries have continued to rally with the 10-year note yielding 2.05%, and this is pressuring banks, especially the regional ones.  Insurers are also getting drenched (pun intended) as Irma heads toward Florida.  The financial sector ETF, XLF, is below its 200 day moving average, and the S&P 500 financial sector has dropped 3.8% for the week.

Disney shares are also getting hit hard, down over 3% after CEO Bob Iger warned that this year’s earnings per share growth will be about the same as 2016.  This contributed about 25 points to the Dow’s 50 point decline.  The news has sent the consumer discretionary sector lower as well.  

Apple is also contributing to the Dow’s losses as the Wall Street Journal has indicated that the new iPhone 8 has supply glitches and this could impact iPhones sales especially going in the holiday buying season.  This isn’t unusual news for Apple as it relates to its new releases and any weakness would be a buying opportunity (we are long on our Hotline service).

On the positive side, Amazon stock is up 1.17%, as the company announced its plans to open its second headquarters in North American that it will call HQ2. 

In the oil patch, crude is recovering from earlier losses.  The EIA inventory report showed a larger build of 4.6 million barrels compared to estimates of 4.0 million barrels for the week ending September 1.  The latest report from the American Petroleum Institute (API) released last night showed a build of 2.8 million barrels.  WTI is trading at approximately $49 a barrel, and up over 2% on the week. 

WTI Crude (Oct'17)

Initial claims were the highest since April 18, 2015, coming at 298,000, up 62000 from the prior week as Hurricane Harvey impacted claims.  A better gauge, the 4-week moving average increased 13,500 to 236,750.  Seasonally adjusted, the advance insured unemployment rate was unchanged at 1.4% for the week ending August 26, at 1,940,000 and down 5,000 from the previous week.  The 4-week moving average decreased 4,000 to 1,948,250.

At midday, decliners are leading advancers 1447/1379 on the NYSE and 1461/1325 on the Nasdaq.  



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