Morning Commentary
So, the major indices couldn’t eclipse early high points. However, that last-minute rally into the close on Thursday was impressive. Moreover, market breadth was the best I’ve seen in weeks.
NYSE
NASDAQ
Message of Market
By the end of the session, every sector except Health Care was higher with Energy leading the way, but Communication Services was not far behind. While Disney (DIS) led the way after a big target increase at Morgan Stanley (MS), and the stealth rebounds in Facebook (FB) and Alphabet (GOOG) continued.
The widespread success of the rally continues to be a hallmark of the 2019 rally, which once saw 450 winners in the S&P 500.
Beyond all the exogenous issues impacting the stock market, the distribution and resolve are so under- reported (in fact, not ever discussed), but perhaps it’s the biggest reason to be bullish.
S&P 500 Index |
+0.41% |
Communication Services (XLC) |
+1.12% |
Consumer Discretionary (XLY) |
+0.90% |
Consumer Staples (XLP) |
+0.22% |
Energy (XLE) |
+1.17% |
Financials (XLF) |
+0.33% |
Health Care (XLV) |
10.12% |
Industrials (XLI) |
+0.50% |
Materials (XLB) |
+0.59% |
Real Estate (XLRE) |
+0.13% |
Technology (XLK) |
+0.30% |
Utilities (XLU) |
+0.20% |
Portfolio Approach
No position changes.
Communication Services |
Consumer Discretionary |
Consumer Staples |
1 |
3 |
1 |
Energy |
Financials |
Healthcare |
1 |
2 |
1 |
Industrial |
Materials |
Real Estate |
2 |
3 |
1 |
Technology |
Utilities |
Cash |
3 |
0 |
2 |
Today’s Session
Economic data continued today.
Retail Sales
Retail sales for May increased 0.5% vs the estimate of +0.6%. April was revised to +0.3% from -0.2%. Retail less auto and gas was up 0.5% month over month topping estimates of +0.4%.
Other highlights:
While consumers are spending, they are also saving at elevated levels. The U.S. saving rate is in focus. In 2001 to 2007, it averaged 4.7%, and since 2009, its average 7.0%.
At 10 ET, we will get a read on consumer sentiment from the University of Michigan. The estimate is for 97.3 from the prior month of 100.0.
Industrial Production
Industrial Production
May Industrial Production increased+0.4% vs +0.2% consensus, compared to -0.4% in the prior month.
China Trade Impact
China
China factories have seen the slowest growth since 2002. Investment has decelerated as the trade war takes its toll. China industrial output rose 5% from the prior year, while fixed-asset investment expanded 5.6% in the first five months. Both were slower than in April and below expectations.
Retail sales was a bright spot, expanding 8.6% compared to May last year, partly because a longer May Day holiday encouraged more tourism and spending.
Broadcom
Broadcom (AVGO) is getting hit hard and it is taking semiconductor names with it. On its earnings call, the company cited it sees the second half of the year revenue flat and down high single digits year over year, as the extremely uncertain environment is weighing on demand. Guidance was conservative. The environment is extremely nervous and uncertain based on the potential for the next round of tariffs.
Highlights from call:
Speaking of trade jitter, in a letter to President Trump, over 600 U.S. companies urge him to resolve trade dispute with China.
The markets are under pressure this morning.
Comments |
Great analyses espacially with the summery I have chip stocks that has been hit hard with trade war with China, although I agree with the concepts of trade war, but needs negotiations and ending it soon Art Hajjarian on 6/14/2019 10:28:38 AM |
Tweet |
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4/16/2024 9:42 AM | FEAR ARRIVES |
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