Monday, 4 April 2016
Wall Street flat as investors take stock after rally
U.S. stocks were largely unchanged on Monday in muted trading as investors took a breather from a recent rally that helped indexes recover from a selloff at the start of the year.
Crude hovered near one-month lows as hopes that top oil producers would reach an agreement to help tackle a stubborn global glut faded. [O/R]
Investors have been skittish following U.S. Federal Reserve Chair Janet Yellen's comments last week urging caution on raising rates, which were in contrast with remarks made by some policymakers supporting more aggressive stance on rates.
The Fed is likely to raise rates before current market expectation since overseas risks to the U.S. economy are fading, Boston Fed President Eric Rosengren said on Monday.
While the Fed's projections point to two rate hikes this year, traders expect only one, according to the CME Group's FedWatch program.
"We've been fairly quiet in the markets today," said Michael Baughen, global investment specialist at JP Morgan Private Bank in Tampa.
"Today's (stock market) decline is mild and doesn't have anything causing it, other than maybe a lack of catalysts."
Baughen said the market was likely to trade sideways for the rest of the week and that catalysts for stocks would come from the upcoming corporate earnings season.
A rebound in oil and encouraging economic data helped Wall Street recover from a steep selloff at the start of the year.
At 12:40 p.m. ET the Dow Jones industrial average (DJI) was down 10.41 points, or 0.06 percent, at 17,782.34, the S&P 500 (SPX) was down 2.19 points, or 0.11 percent, at 2,070.59 and the Nasdaq Composite (IXIC) was down 6.48 points, or 0.13 percent, at 4,908.06.
Seven of the 10 major S&P sectors were lower, led by a 0.62 percent decline in the consumer discretionary (SPLRCD) sector.
Healthcare stocks' (SPXHC) 1.26 percent rise helped limit losses. The sector was boosted by Edwards Lifesciences (N:EW).
Shares of the medical device maker rose 20 percent to $107.65 after a study showed a less-invasive heart-valve implant was superior to open surgery, prompting a slew of brokerages to raise their ratings on the stock.
Virgin America (O:VA) surged 42 percent to $55.28, after the airline agreed to be bought by Alaska Air (N:ALK) for about $2.60 billion. Alaska Air shares were down 4.8 percent at $78.10.
Smith & Wesson (O:SWHC) slumped 16.3 percent to $23.23 after Cowen cut its rating on the stock to "market perform".
Declining issues outnumbered advancing ones on the NYSE by 1,980 to 957. On the Nasdaq, 1,366 issues rose and 1,351 fell.
The S&P 500 index showed 55 new 52-week highs and no new lows, while the Nasdaq recorded 51 new highs and 17 new lows.
names chief operating officer seen as CEO-in-waiting
names chief operating officer seen as CEO-in-waiting, NEW YORK (Reuters) - Honeywell International Inc (N:HON) on Monday named Darius Adamczyk as its first president and chief operating officer, a newly-created role seen as a step toward designating a successor to Chief Executive Dave Cote, who has led the company for 14 years.
Adamczyk, 50, a Polish immigrant who did not speak English when he arrived in the United States at age 11, earned degrees in electrical and computer engineering at Michigan State University and Syracuse University before earning an MBA at Harvard, Honeywell said.
"Darius is an eight-year veteran of Honeywell and an accomplished executive with a strong track record in numerous Honeywell businesses," Cote said in a statement.
The heads of Honeywell's businesses, which include aerospace, building controls and security and performance materials, will report to Adamczyk, who will report to Cote, the company said. The change is effective immediately.
Adamczyk has run Honeywell divisions, including most recently its $9.3-billion performance materials unit, whose products range from refrigerants to oil refining technology, Honeywell said.
Analysts praised the appointment but the stock didn't respond much to the news, edging down 0.5 percent at $112.65 in morning trading on the New York Stock Exchange.
"Though not explicit in the announcement, this seems to be a clear indication to us that Mr. Adamczyk is the most likely successor to Chairman/CEO Dave Cote," Steve Winoker, analyst at Sanford Bernstein, said in a note. "We've had no concerns over how the succession might play out – and today's announcement makes us all the more positive."
The appointment of Adamczyk comes just weeks after Honeywell's bid to acquire United Technologies Corp (N:UTX) was rebuffed.
Gold flat in quiet trade, as China markets remain closed during festival
Gold was relatively flat on Monday in quiet trade, one session after plunging to fresh five-week lows, as markets in China remained closed for a traditional spring holiday.
On the Comex division of the New York Mercantile Exchange, gold for June delivery traded in a tight range between $1,216.00 and $1,224.00 an ounce before settling at $1,218.30, down $5.20 or 0.43% on the day. It came one session after gold plummeted more than $20 an ounce to its lowest level since mid-February, as upbeat U.S. jobs data increased the probability that the Federal Reserve could implement multiple interest rate hikes before the end of the year. Gold futures have closed lower in three consecutive sessions and eight of the last 11. Despite the recent downturn, the precious metal is still up by more than 14% since the start of the year and is coming off its strongest opening quarter in three decades.
Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.
Investors in Asia await Tuesday's release of China's monthly Caixin Services PMI index in March for further indications on the health of the struggling manufacturing sector in the world's second-largest economy. It will be followed be a closely-watched release of the nation's monthly foreign exchange reserves on Wednesday, as analysts continue to gauge the strength of the yuan for spillover effects into the global economy. The People's Bank of China (PBOC) has rattled global foreign exchange markets twice over the last nine months with unexpected devaluation of its currency.
Chinese markets were closed on Monday in celebration of the Qingming Festival, an annual holiday devoted to paying respect to the deceased. China is the world's largest producer of gold and is the world's second-largest consumer of the yellow metal behind India.
Elsewhere, investors continued to digest an optimistic March U.S. jobs report from the end of last week, which provided broad signals of improved labor market conditions nationwide. For the month, U.S. nonfarm payrolls rose by 215,000 in March, eclipsing consensus estimates of 210,000 and building on an upwardly revised 245,000 figure a month earlier. In addition, average hourly earnings jumped by 0.3% for the month, while the labor force participation rate also increased by 0.1 to 63%. Although the employment rate inched up by 0.1 to 5.0%, it still remains near eight-year lows from the previous two months.
The report came in the wake of hawkish indications from Fed chair Janet Yellen that the U.S. central bank will express caution in approving further rate hikes against a backdrop of heightened global economic and financial risks. A wave of Federal Open Market Committee (FOMC) policymakers, including Yellen are scheduled to speak later this week. On Monday, Boston Fed president Eric Rosengren said he expects the Fed to resume a path of gradual tightening "sooner than implied by financial market futures," if the economy continues to exhibit moderate recovery."
Any rate hikes by the Fed this year are viewed as bearish for gold which struggles to compete with high yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, was also relatively flat in U.S. afternoon trading at 94.51, down 0.07% on the session. The index remains near five-month lows.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for May delivery fell 0.086 or 0.57% to $14.960 an ounce.
Copper for May delivery lost 0.023 or 1.06% to 2.140 a pound.
Wall Street slips after hawkish Fed remarks; oil down in choppy trade
Wall Street traded lower on Monday after hawkish comments from a Federal Reserve (Fed) official, while oil lost ground in choppy trade.
At 15:24GMT or 11:24AM ET, the Dow 30 fell 32 points, or 0.18%, while the S&P 500 dropped 6 points, or 0.27%, and the tech-heavy NASDAQ Composite lost 20 points, or 0.42%.
Boston Fed president Eric Rosengren showed his surprise on Monday that financial markets were only pricing in one or even zero rate hikes in 2016, insisting that risks from abroad were abating.
"I personally expect that a stronger economy, at essentially full employment and with gradually rising inflation, will lead to more tightening than is currently priced into the futures market expectations for the next two years," Rosengren said.
The remarks came on the back of Cleveland Fed chief Loretta Mester’s hawkish comments on Friday as she said that the Fed should still raise interest rates gradually this year given the economy's resilience.
Markets await Fed chair Janet Yellen’s appearance on Thursday to gauge the dovish chief’s current stance on the future path of monetary policy.
Minneapolis Fed President Neel Kashkari and Dallas Fed President Rob Kaplan will speak after the U.S. market close.
Oil prices showed choppy trade on Monday as investors digested mixed news flow surrounding the global supply glut.
After Saudi Deputy Crown Prince Mohammed bin Salman said on Friday that the kingdom will not cap output unless Iran and other major producers do so, casting doubts over whether a highly awaited production freeze will happen, the Russian energy minister said on Monday that Iran would stop production once it reached four million barrels per day.
Meanwhile, Saudi Arabia was reportedly acting to slow Iran’s oils exports. Iranian ships carrying crude were being denied entrance to ports in Saudi Arabia and Bahrain, according to a report by Financial Times citing traders and shipbrokers.
Crude futures on the New York Mercantile Exchange fell 0.98% to $36.43 a barrel by 15:29GMT or 11:29AM ET, while Brent oil traded down 1.53% to $38.08.
With regard to Monday’s macro data, factory orders fell 1.7% in February, in line with consensus expectations but adding to the idea that U.S. economic growth slowed in the first quarter.
In company news, World Wrestling Entertainment Inc (NYSE:WWE) rose more than 3% after setting attendance and gross revenue records at its WrestleMania event on Sunday night.
Tesla (NASDAQ:TSLA) shares also rose more than 3% after orders for its new Model 3 electric sedan topped 276,000 since the company starting accepting deposits on March 21
U.S. factory orders fall 1.7% in February April 2016
U.S. factory orders fell in line with forecasts in February, official data showed on Monday.
In a report, the U.S. Census Bureau said factory orders declined by a seasonally adjusted 1.7% last month, in line with the consensus forecast. Factory orders rose 1.2% in January, revised from the initial read of a 1.6% increase.
Excluding transportation, factory orders fell 0.8%, compared to the 0.6% drop in January that was revised from a 0.2% decline.
EUR/USD was trading at 1.1403 from around 1.1397 ahead of the release of the data, GBP/USD was at 1.4294 from 1.4286 earlier, while USD/JPY was at 111.36 compared to 111.37 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 94.44, compared to 94.49 ahead of the report.
Meanwhile, U.S. stock markets inched up after the open. The Dow 30 edged forward 0.03%, the S&P 500 advanced 0.05%, while the Nasdaq Composite gained 0.01%.
Elsewhere, in the commodities market, gold futures traded at $1,221.40 a troy ounce, compared to $1,221.0 ahead of the data, while crude oil traded at $37.13 a barrel from $36.96 earlier.
Oil falls on growing doubts producers will freeze output
Oil falls on growing doubts producers will freeze output, NEW YORK (Reuters) - Oil prices fell on Monday, with Brent touching one-month lows as investors doubted that producers will freeze output to rein in a worldwide glut.
U.S. crude prices briefly bounced off session lows after an outage on a major pipeline raised concerns about delivery to the U.S. storage hub.
Iran will raise its crude output and exports until it reaches pre-sanction levels, the semi-official Mehr news agency quoted Oil Minister Bijan Zanganeh as saying. Last week, a Saudi prince reportedly dismissed a production freeze plan without Tehran's involvement.
In the United States, the Keystone crude pipeline has been shut after an incident on Saturday in South Dakota, the pipeline's operator TransCanada Corp said in a notice sent to shippers and obtained by Reuters. The pipeline is part of a network that carries oil to the U.S. crude delivery hub in Cushing, Oklahoma.
Brent crude futures were down 60 cents at $38.07 a barrel by 12:55 p.m. EDT (1655 GMT). The session low was $37.96, the lowest since March 4.
U.S. crude futures slid 50 cents to $36.29. The session low was $36.11.
Oil prices have lost upward momentum in the past week, but remain up about 40 percent from around 12-year lows struck in mid-February. U.S. government data on Friday showed that in the week to March 29, hedge funds cut their net long position in U.S. crude for the first time in six weeks. [CFTC/]
The Organization of the Petroleum Exporting Countries and other major oil producers are to meet in Doha, Qatar in two weeks to discuss an output freeze plan.
But analysts said prospects for a deal looked dimmer, with the Saudis declining to rein in output without Iran, and Russia reporting its highest oil production in 30 years.
"If we draw a line and add up the stance of these countries, we have to conclude that a meaningful deal is only a distant possibility," PVM Oil Associates analyst Tamas Varga said.
Wednesday, 30 March 2016
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