- Stocks continue treading water. (10:06am ET) Major indexes are again starting off on a cautious note as traders appetite for risk remains subdued. The S&P 500 fell -0.1% on Tuesday but finished well off the day’s lows; marginal gains in industrials (+0.2) and consumer staples (+0.1) were offset by losses in the heavily-weighted technology (-0.4%) and healthcare (-0.2%) sectors. Asian markets saw a repeat of the prior day’s action with the Hang Seng (+0.9%) and Shanghai Composite (-0.5%) moving in opposite directions while a strengthening yen again dragged down the Nikkei (-1.0%). Sentiment in Europe is better, though the STOXX 600 (+0.3%) is drifting away from early-session highs. WTI crude oil ($53.46/barrel) is getting a boost on hopes that Saudi Arabia will look to extend supply cuts set to expire next month, COMEX gold ($1277/oz.) is up another 0.3% on safe haven moves, while the yield on 10-year notes is little changed at 2.30%.
- Oil rises for the eighth straight day. Private inventory data released Tuesday afternoon showed a 1.3 million barrel drawdown versus 1.5 million expected, ahead of the Energy department data today. The inventory data, supply disruptions in Libya and Canada, the Syria-driven increase in geopolitical tensions, and reports that the Saudis will agree to extend production curbs through the second half of the year have fueled oil’s winning streak. We have a bias toward higher oil prices over the balance of the year though the likely U.S. production response may cap crude’s gains in the mid-to-high $50s and lead to volatility which keeps our view neutral on the energy sector currently.
- Mixed JOLTS report. The Labor Department’s latest Job Openings and Labor Turnover Survey (JOLTS) revealed a 2.1% increase in job openings in February to 5.743 million, the highest level since July 2016 and the fourth highest level since the end of the Great Recession. Hires fell 2% month over month but remained near the best levels of the expansion. Year over year, openings were up 3.2% and hires were up only 2.4%, which points to employers’ ongoing difficulty finding the right skills to fill job openings. The current spread between openings and hiring, at 429K, is the widest in five months. A slight 0.1% downtick in the quit rate, to 2.1%, likely reflects the tempered wage environment in addition to the skills mismatch that is capping the number of quits. Overall, the report suggests there is still some slack in the labor market.
- Support at the 50-day. The S&P 500 Index was red the entire day yesterday, ending a streak of 18 consecutive days it was both green and red on an intraday basis. The encouraging news is that it closed well off the session lows yesterday and once again found support near its upward trending 50-day moving average. In fact, it has now closed above this trendline for 105 consecutive days, the longest streak since 130 days nearly six years ago. Last, the S&P 500 hasn’t closed up or down 0.35% or more for 10 consecutive days; December 1968 being the last time that happened. In other words, the past 10 trading days have been one of the most boring two week stretches in history for equities.
- When will the April positive seasonality start? As we noted at the start of the month, historically April has been one of the better months for the S&P 500. In fact, over the past 20 years, it has been the best performing month with an average return of 2.0%. Now what is interesting about April is the majority of the gains take place during the second half of the month. In fact, as of April 14th, the S&P 500 is up 0.2% for the month on average the past 20 years. Given it historically averages 2.0% for the full month, that tells you when most of the gains take place. Today on the LPL Research blog we will take a closer look at this phenomena.
- Bank of Canada Rate Decision & Monetary Policy Report
- Initial Jobless Claims (Apr 1)
- Banks Open, Markets Closed
- CPI (Mar)
- Retail Sales (Mar)