[MM_Member_Data name=’firstName’],
U.S. markets were slightly weak for much of the session with the S&P 500 and Nasdaq failing to break into positive territory. The Dow saw a little daylight on the open but relinquished its 10-session winning streak with its lower finish.
Meanwhile, the Russell 2000 showed some strength after coming within 4 points of a fresh all-time high but also closed slightly lower. Most sectors finished in the red with Consumer Staples leading to the downside. The Industrial and the Financial sectors were the standouts, rising 0.3% and 0.2%, respectively.
Global Economy – European markets rose with financials and insurance sectors leading the way higher. France’s CAC 40 added 0.5% and Germany’s DAX 30 climbed 0.3%. The Stoxx Europe 600 gained 0.2% while the Belgium20 advanced 0.1%. UK’s FTSE 100 gave back 0.1%.
Asian markets were mostly lower following the overnight Fed news from the U.S. on Wednesday. Australia’s S&P/ASX 200 fell 0.9% while China’s Shanghai index and South Korea’s Kospi declined 0.2%. Hong Kong’s Hang Seng Index dropped 0.1% and Japan’s Nikkei rose 0.1%
The Bank of Japan policy-setting board voted 8-1 to keep its target for 10-year Japanese government bond yields near zero and its short-term deposit rate at -0.1%. The standpat decision was widely expected as inflation remains far from the central bank’s 2% target. BOJ also reiterated its pledge to buy government bonds at an annual rate of 80 trillion yen, or $713 billion, as a sign of its commitment to easing.
U.S. weekly initial unemployment claims fell 23,000 to 259,000 in the week ending September 16th. Expectations were for a gain of 16,000 to 300,000. Continuing claims surged 44,000 to 1.98 million versus expectation for a gain of 31,000.
September Philadelphia Fed business outlook index survey rose to a robust 23.8 from 18.9 in August, and ahead of expectations for a print of 17.2.
The FHFA home price index for July rose 0.2%, versus the 0.4% increase that was expected.
August leading indicators rose 0.4% to 128.8 versus expectations for a 0.3% pop.
The Bloomberg Consumer Comfort Index Level checked in at 50.6.
Market Sentiment – Fed funds futures implied rates are now suggesting about a 60% chance for a 25 basis-point hike by year end, with about a 75% chance by the end of Q1 2018.
The FOMC dot-plot projections were tweaked as the lower-end estimates for the long-run fed funds rate outlook were revised, with the central tendency now at 2.5%-3.0% versus 2.8%-3%, and the full range at 2.3%-3.5% versus 2.5%-3.5%.
The iShares 20+ Year Treasury Bond ETF (TLT) traded to a high of $126.56 on the open with upper resistance at $126.25-$126.50 getting stretched. Support at $125.75-$125.50 and the 50-day moving average held into the closing bell.
Market Analysis- The Dow Jones Industrial Average ETF (DIA) had traded higher for 10-straight sessions with today’s all-time high tapping $223.97 before the lower finish. The surge above the $220 level earlier this month represented a multi-top breakout with rising support currently at $223-$222.50.
A move below $222 could lead to a continued backtest to $220-$218 and the 50-day moving average. Continued closes above resistance at $223.75-$224 keeps blue-sky territory open up to $225-$227.50.
The Health Care Select Sector Spider (XLV) recently topped out at the $83 level and is trying to hold support at $81.50-$81 and prior resistance on continued weakness. This area also represents the triple-top breakout that occurred earlier this month.
Today’s low reached $81.54 with risk to $80-$79 and the 50-day moving average on continued weakness. Resistance is at $82-$82.50 with a move above the latter signaling a return to fresh 52-week peaks.
RSI is just above 55 after having backed off the 70 level with support at 50.
All the best,
Roger Scott