Live Markets: Wednesday data: Hump day doldrums
25/08/2021 16:00
* Major U.S. indexes just above flat
* Financials lead S&P sector gainers; healthcare weakest
group
* Euro STOXX 600 index just below flat
* Dollar edges up; gold, crude dip; bitcoin gains
* US 10-Year Treasury yield ~1.34%
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WEDNESDAY DATA: HUMP DAY DOLDRUMS (1100 EDT/1500 GMT)
A ho-hum day for the stock market is also a ho-hum day for
economic data. Nothing to write home or fret about.
New orders for durable goods manufactured in the U.S.
USDGN=ECI inched a hair lower in July, dropping 0.1% from
June's 0.8% gain.
Still, the decrease reflected in the Commerce Department's
report - which covers everything from waffle irons to fighter
jets - was shallower than the 0.3% decline analysts expected.
Line by line, a 20.5% jump in defense capital goods helped
mitigate the 48.9% plunge in non-defense aircraft/parts, which
was attributable in large part to a net order decline at Boeing
Co BA.N .
Excluding transportation, new orders were stronger than
anticipated, rising by a more respectable 0.7%,
Motor vehicles/parts rose by a healthy 5.8% even as the
sector continues to wrestle with an ongoing chip shortage.
Core capital goods USNDXA=ECI , which excludes defense and
aircraft and is considered a proxy for U.S. business spending
plans, was unexpectedly flat, falling short of the 0.5%
consensus.
Shipments, on the other hand, picked up speed in a potential
sign that business spending could compensate for softening
consumer demand. urn:newsml:reuters.com:*:nL1N2PV1NR
"Businesses are sitting on record cash piles, so we expect
capital goods orders to run hot for some time yet," writes Ian
Shepherdson, chief economist at Pantheon Macroeconomics. "The
backlog of capex, dating back to the crash of 2008, is
enormous."
Separately, mortgage demand staged a partial comeback last
week, according to the Mortgage Bankers Association (MBA),
rising 1.6% as interest rates backed down.
The average 30-year fixed contract rate USMG=ECI shed 3
basis points to 3.03%, prompting applications for loans to
purchase homes USMGPI=ECI and refinance existing mortgages
USMGR=ECI to increase by 3.0% and 0.9%, respectively.
The report marked the biggest increase in purchase
applications since early July.
Even so, purchase loan demand is down 16% from the same week
last year, when a pandemic-driven rush to the suburbs was
sending demand - and home prices - through the roof.
"Strong demand, still-low mortgage rates and a modest
increase in the inventory of existing homes are supportive of
home sales," says Nancy Vanden Houten, lead economist at Oxford
Economics. "However, supplies are still historically tight, and
home prices at or near record levels will continue to temper the
pace of home sales."
Wall Street appeared to be taking a breather a day after the
S&P 500 eked out its 50th record closing high of the year.
All three major U.S. indexes are pale green in mid-morning
trade, with financials .SPSY and chips .SOX outperforming.
(Stephen Culp)
*****
U.S. STOCKS TREAD WATER (1006 EDT/1406 GMT)
Major U.S. equity indexes are trading around flat early on
Wednesday as the broader markets remain subdued ahead of a U.S.
monetary policy update this week. .N
With this, hourly historical volatility on the S&P 500
.SPX is collapsing. In fact, so far on Wednesday, the SPX's
daily range as a percentage of the prior day's close, at just
0.13%, is on track to be one of its tightest in decades. This
follows just a slightly larger range, at 0.23%, on Tuesday.
Perhaps not surprisingly, major S&P 500 sectors are also
mixed, with relatively modest changes. It's roughly a dead heat
when comparing value .IVX to growth .IGX .
The U.S. 10-Year Treasury yield US10YT=RR , however, is
pushing above 1.30%, hitting an 8-day high.
Here is where markets stand in early trade:
(Terence Gabriel)
*****
MORE NASDAQ COMPOSITE VITAL SIGNS (0900 EDT/1300 GMT)
The Nasdaq Composite .IXIC ended at yet another new high
on Tuesday, marking its 29th record-high close so far this year.
However, a number of pronounced divergences remain between
various measures of internal Nasdaq strength, and the
Composite's lofty levels.
The Nasdaq New High/New Low (NH/NL) index has been one of
those measures failing to confirm the IXIC's push further into
record territory. urn:newsml:reuters.com:*:nL1N2PV0NP The Nasdaq Advance/Decline (A/D)
line has been another. urn:newsml:reuters.com:*:nL1N2PK0P3
Additionally, the Nasdaq McClellan Summation (McSum), a
breadth/momentum measure based on advancing and declining
issues, has been especially weak:
Since topping on February 16 of this year at +1,967, the
McSum has collapsed. It ended Wednesday at -3,724.
Also highlighting the severity of this measure's recent
divergence with the Nasdaq, on Monday, the McSum's -3,813
reading was its weakest close, with the Composite at an all-time
high, since early-November, 1999!
Just since late 2018, there have been a number of major and
minor Nasdaq setbacks from record-high territory, all of which
developed in the wake of McSum divergence.
On the plus side, the McSum has ticked up from last Friday's
low, which was its lowest level since April 14, 2020. That said,
it remains below its descending 10-day moving average.
However, given its historically low levels, there certainly
is room for a significant bounce, or reprieve, even if the McSum
can simply claw its way back up toward the resistance line from
its February peak.
A resumption of its downtrend with a break of last Friday's
low, however, can signal increasing internal weakness within the
Nasdaq.
(Terence Gabriel)
*****
FOR WEDNESDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EDT/1300
GMT - CLICK HERE: urn:newsml:reuters.com:*:nL1N2PW0WA
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
IXICmcSum08252021 https://tmsnrt.rs/3mEsukG
earlytrade08252021 https://tmsnrt.rs/3jdBR96
Durable goods https://tmsnrt.rs/3gwZffZ
Core capital goods https://tmsnrt.rs/3mtpDLD
MBA https://tmsnrt.rs/3kF9Cjh
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)