Tuesday's Brew - Oct 10
Enjoy your fresh morning coffee with our summary of the market outlook for the day and a medley of important information you should find useful today. Stocks ended higher yesterday as the Fed proved more powerful than North Korea. The Nasdaq Composite reached its highest level in five months, rising 0.5 percent, while the Dow Industrials and S&P 500 each rose about 0.1 percent. It was a somewhat surprising result, as a Fed official's calming remarks on inflation overpowered North Korea's nuclear test. Also helping quiet North Korea, ex-Fed chairman Alan Greenspan said that last week's rise in weekly mortgage applications could signal that the worst may well be over for the U.S. housing industry.
OVERSEAS
Asian stocks rebounded intraday to close higher Tuesday as calmer nerves prevailed, but the yen briefly reached an eight-month low before recovering later to trade around ¥119.10 to the dollar. Tokyo's Nikkei share average closed 0.25 percent higher on the day. European shares followed Asia's lead, as the FTSEurofirst 300 index of top European shares was up 0.4 percent to 1,419.9, finding a new five-year peak.
COMMODITIES
Crude lost its punch, falling below $60 a barrel in New York as Saudi Arabia, OPEC's largest producer, signaled to refineries in Asia and Europe that no reductions in supply will occur next month. As reported by Bloomberg, Saudi Arabia's oil company will meet commitments to refiners in Japan, South Korea, India, Taiwan and the Mediterranean region, said traders and refinery officials who received notices from the company and declined to be identified. Yesterday, oil rose on OPEC President Edmund Daukoru's letter to the group's 11 members to cut output by a total of 1 million barrels a day starting Nov. 1. A lack of clarity remains as to what real efforts OPEC will make to reduce output. This could weaken energy today, and possibly provide a nicer entry point into natural gas stocks. We see natural gas related shares benefiting in the near term from a cold wave that is about to sweep much of the U.S.
ECONOMIC & MARKET MOVING NEWS
Today's economic schedule is light, with August wholesale inventories expected to be up 0.6 percent after a 0.8 percent rise last month. Dallas Fed President Richard Fisher will make a speech today, and markets are likely to compare his comments to colleague Janet Yellen's, who said holding interest rates steady makes sense as policymakers come to grips with economic data.
STOCKS
Aluminum producer Alcoa Inc. will kick off the third-quarter earnings reporting season when it posts results after the close on Tuesday. Google (GOOG) is up 1.3% today due to its announced acquisition of YouTube for $1.65 billion in stock. J.P. Morgan upgraded several home builders today, taking D.R. Horton Inc. and Standard Pacific Corp. to overweight from neutral and Toll Brothers Inc. to neutral from underweight. Toll Brothers was up nearly 6% in early trading.
As we stated previously, we would look again to natural gas related names ahead of a cold front sweeping the U.S. over the weekend. Also, we believe geopolitical concerns have helped to establish a floor for gold prices. If equities are to rise higher, capital funding the rise would have to come from cash or from other sectors like consumer staples, which benefited previously on economic concern. We expect another few months of market uncertainty, as the market seeks to decipher if the U.S. economy is headed for recession or soft landing. We hope you enjoyed your morning coffee, and wish you a good day trading. (disclosure)
OVERSEAS
Asian stocks rebounded intraday to close higher Tuesday as calmer nerves prevailed, but the yen briefly reached an eight-month low before recovering later to trade around ¥119.10 to the dollar. Tokyo's Nikkei share average closed 0.25 percent higher on the day. European shares followed Asia's lead, as the FTSEurofirst 300 index of top European shares was up 0.4 percent to 1,419.9, finding a new five-year peak.
COMMODITIES
Crude lost its punch, falling below $60 a barrel in New York as Saudi Arabia, OPEC's largest producer, signaled to refineries in Asia and Europe that no reductions in supply will occur next month. As reported by Bloomberg, Saudi Arabia's oil company will meet commitments to refiners in Japan, South Korea, India, Taiwan and the Mediterranean region, said traders and refinery officials who received notices from the company and declined to be identified. Yesterday, oil rose on OPEC President Edmund Daukoru's letter to the group's 11 members to cut output by a total of 1 million barrels a day starting Nov. 1. A lack of clarity remains as to what real efforts OPEC will make to reduce output. This could weaken energy today, and possibly provide a nicer entry point into natural gas stocks. We see natural gas related shares benefiting in the near term from a cold wave that is about to sweep much of the U.S.
ECONOMIC & MARKET MOVING NEWS
Today's economic schedule is light, with August wholesale inventories expected to be up 0.6 percent after a 0.8 percent rise last month. Dallas Fed President Richard Fisher will make a speech today, and markets are likely to compare his comments to colleague Janet Yellen's, who said holding interest rates steady makes sense as policymakers come to grips with economic data.
STOCKS
Aluminum producer Alcoa Inc. will kick off the third-quarter earnings reporting season when it posts results after the close on Tuesday. Google (GOOG) is up 1.3% today due to its announced acquisition of YouTube for $1.65 billion in stock. J.P. Morgan upgraded several home builders today, taking D.R. Horton Inc. and Standard Pacific Corp. to overweight from neutral and Toll Brothers Inc. to neutral from underweight. Toll Brothers was up nearly 6% in early trading.
As we stated previously, we would look again to natural gas related names ahead of a cold front sweeping the U.S. over the weekend. Also, we believe geopolitical concerns have helped to establish a floor for gold prices. If equities are to rise higher, capital funding the rise would have to come from cash or from other sectors like consumer staples, which benefited previously on economic concern. We expect another few months of market uncertainty, as the market seeks to decipher if the U.S. economy is headed for recession or soft landing. We hope you enjoyed your morning coffee, and wish you a good day trading. (disclosure)
posted by The Greek | 9:12 AM
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