Market Update: Wednesday, August 2, 2017

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Yesterday’s Market Activity

  • Stocks up despite lackluster economic data; bounce-back from early lows. S&P 500 Index +0.2%, Dow +0.3% (another record high, 5th in a row), Nasdaq +0.2%.
  • Sectors broadly higher, though weakness in healthcare (-0.2%), industrials (-0.2%) offset rise in financials (+0.8%), tech (+0.5%).
  • Economic data mostly disappointing as ISM manufacturing (56.3), personal income (flat) and spending (+0.1%), construction spending (-1.3%) missed expectations. Core PCE Price Index (+0.1%) was in-line.
  • Auto sales (16.5mm) bested last month’s tally, though estimates were for 16.7mm. All major auto makers contributed to shortfall.
  • Oil snapped six-day winning streak; off 2% to $49.19/bbl. Weakness stemmed from a Bloomberg survey showing rise in OPEC output in July, and an American Petroleum Institute report showing gain in U.S. inventories.
  • COMEX Gold up modestly at $1275/oz., industrial metals fell, U.S. dollar +0.2% vs. major currencies, 10-year Treasury yield down 5 basis points (0.05%) to 2.25%.

Overnight & This Morning

  • U.S. equities higher in early trading, boosted in part by a well-received earnings report from Apple.
  • Europe is broadly lower, driven by earnings and oil prices; STOXX Europe 600 -0.2%.
  • In Asia, major indexes closed mixed. Shanghai Composite (-0.2%), Hang Seng (+0.2%), Nikkei (+0.5%).
  • Commodities – WTI crude oil (+0.1%) at $49.25/bbl, gold ($1271/oz.) lower by 0.7%, copper -0.1%.
  • 10-year Treasury yield 2.25%, dollar index unchanged.
  • Economic data takes a breather today, with ADP employment the only major report, which beat expectations slightly at +178k jobs (vs. 173k consensus and 158k previous). This number is in line with expectations for the official employment report, which will be released on Friday (180k growth in non-farm payrolls expected).

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Macro Notes

  • Sector winners in August? As we discussed earlier this week, August tends be a weak month seasonally. However, one way to reduce the negative effects of potential equity headwinds in August is by identifying sectors and industries that have the potential to outperform. We take look at which areas have historically performed better, today on the LPL Research blog.

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Click Here for our detailed Weekly Economic Calendar

Wednesday

Thursday

  • Markit Services PMI (Jul)
  • ISM Non-Mfg. (Jul)
  • Durable Goods Orders (Jun)
  • Capital Goods Shipments & Orders (Jun)
  • Germany: Retail Sales (Jun)
  • Italy: Markit Services PMI (Jul)
  • France: Markit Services PMI (Jul)
  • Germany: Markit Services PMI (Jul)
  • Eurozone: Markit Services PMI (Jul)
  • UK: Markit Services PMI (Jul)
  • Eurozone: Retail Sales (Jun)

Friday

 

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