Closing Market Summary: Indices Flat Ending Range-Bound WeekThe major averages ended a flat week on a similar note as early selling gave way to a partial rebound in afternoon action. The Dow Jones Industrial Average (-0.2%) settled behind the S&P 500 (-0.1%) and slightly behind the Nasdaq Composite (UNCH).
Equity indices began the day under moderate selling pressure as investors adjusted U.S. rate hike expectations and responded to a downturn in European markets. European bourses tilted to the downside as weakness in Italian banking names weighed on regional indices. Additionally, reports indicated that U.K. Prime Minister Theresa May hopes to invoke Article 50 of the Lisbon Treaty by April 2017. The move would begin formal talks for the country's withdrawal from the European Union.
On the central bank front, San Francisco Fed President Williams (not an FOMC voter) surprised market participants last evening by stating that the Fed should get back to hiking rates sooner rather than later. Recall that Mr. Williams published a letter earlier in the week, calling on central banks to reexamine their policy framework. Separately, Dallas Fed President Kaplan (not an FOMC voter) indicated that the Fed has room to manoeuver on rates, but that a lower neutral rate does limit the central bank's policy options.
The prospect of a sooner-than-expected rate hike helped keep a lid on buying interest at the open. The benchmark index violated technical support near the 2178/2180 price level before finding its bearings near its 20-day simple moving average (2175.80).
The broader market marched off that level through the afternoon as heavily-weighted industrials (UNCH), consumer discretionary (UNCH), and technology (+0.2%) helped lead the rebound effort. Seven sectors ended in the red with defensively-oriented telecom services (-0.9%) and utilities (-1.2%) rounding out the leaderboard.
The influential technology space (+0.2%) ended near the front of the pack as top-weighted Apple (AAPL 109.36, +0.28) outperformed. The Dow component erased a 0.7% decline, ending higher by 0.3%. The early selling followed reports of a string of insider sales. Chipmakers led in the sector as Applied Materials (AMAT 29.64, +1.96) jumped 7.1%. The semiconductor name topped bottom-line estimates for the quarter and raised its fourth-quarter outlook above consensus.
In the industrial space (UNCH), Deere (DE 87.32, +10.38) demonstrated relative strength, surging 13.5%. The company beat bottom-line estimates for the quarter and increased its net income guidance for the full-year. Courier names also outperformed in the group as FedEx (FDX 168.63, +1.44) and JB Hunt Transportation (JBHT 83.53, +1.15) moved higher by 0.9% and 1.4%, respectively. Conversely, Emerson (EMR 52.98, -1.69) ended lower by 3.1% after announcing the acquisition of Pentair's (PNR 65.79, -0.74) valve control business.
The consumer discretionary space (UNCH) ended flat while retail names displayed relative strength. The SPDR S&P Retail ETF (XRT 45.94, +0.19) finished higher by 0.4% as above-consensus earnings results from Gap (GPS 26.89, +1.01), Ross Stores (ROST 65.06, +2.18), and Foot Locker (FL 68.49, +6.81) boosted the sub-group. Separately, Dow component Nike (NKE 58.90, +1.69) ended at the top of the price-weighted index.
The U.S. Dollar Index (94.48, +0.32, 0.34%) ended off its session high as the greenback gained against the yen, euro, and pound. The dollar/yen pair ended higher by 0.3% (100.14) while the single currency declined 0.2% against the buck (1.1326). Separately, cable declined 0.7% (1.3085), but rebounded from the 1.3020 price level.
The Treasury complex settled off session lows while yields gained across the curve. The yield on the 2-yr note rose five basis points (0.75%) while the yield on the 10-yr note ended at 1.58% (+4 bps).
Today's participation was above the recent average as more than 824 million shares changed hands at the NYSE floor.
There was no economic data of note released today and investors will not receive any economic data on Monday.
- Russell 2000 +8.8% YTD
- S&P 500 +6.9% YTD
- Dow Jones +6.5% YTD
- Nasdaq Composite +4.6% YTD