David Moenning’s Daily State of the Markets: 02/02
Tweet
Share
E-mail
Alive and Shopping
Good morning. Stocks stepped lively again yesterday on the back of economic data showing that the consumer is alive and shopping and yet inflation continues to remain largely in check. And while the news on the manufacturing front wasn’t nearly as upbeat, from a big-picture perspective, traders recognize that the data once again cemented the idea that Goldilocks is the name of the game right now.
Another round of afternoon buying produced a third straight day of gains for the Dow and a fifth day of green screens over on the NASDAQ. The gain of 52 points pushed the DJIA to another fresh all-time high where it was joined by the NYSE, Russell 2000, Small Cap and Mid Cap indices. And while the S&P 500 still has some work to do to (5.3% to be exact) in order to reach its high of 1522.35 set on March 23, 2000, the blue-chip index did close at its best level in six years.
The key to the session was the Personal Income and Spending report. As we reported yesterday before the bell, Personal Income rose by 0.5% in December while Spending increased by 0.7%. Both numbers were in line with expectations, so there wasn’t any real surprise factor to spur any buying. No, the key for the bulls was the fact that the report showed the consumer continues to spend and that the inflation genie, at the core level anyway, remains in the bottle.
While the long-term consequence of consumers spending more than they earn is certainly ominous, Wall Street definitely liked the fact that spending rose by the highest level since last July. However, it is still a little unsettling to realize that the annualized savings rate fell to -1.0% in December, which is the largest negative reading since 1933. Hmmm…
In addition, we should probably note that the economic news wasn’t all peaches and cream yesterday. The ISM Report showed that the manufacturing sector continued to struggle in January. The composite index fell 2.1 points to 49.3, which is the lowest reading since April 2003. More importantly, the sub-50 reading is indicative of a slight contraction in the manufacturing sector. And while the inflation news was positive on the consumer side, it was discouraging to see that the Prices component of the ISM report rose more than was expected.
Turning to this morning, we are going to continue on with our economic theme and focus on the big Kahuna of economic data – the January Employment Report. The labor department reported that the economy created 111,000 jobs this month, which at first blush sounds like a pretty big miss in light of the fact that the expectations had been for a number in the 150k range.
However, revisions to both the November and December jobs totals added another 81,000 jobs to the mix. In addition, the Unemployment Rate rose to 4.6%, which was a tenth higher than expected and then average Hourly Earnings came in a tenth below expectations.
All in all, traders seem to like the report as the “not too hot, not too cold” refrain is being heard just about everywhere. Both stocks and bond futures have improved on the report and it looks like the bulls once again have something to work with today.
Running through the rest of the pre-game indicators, the foreign markets up across the board again. Gold is trading down $1 to $662.00 right now. In the oil pits, crude futures are up so far with the latest quote showing the March contract higher by $0.63 to $57.93. Interest rates are a heading lower this morning with the yield on the 10-year currently trading at 4.81%. And finally, with 45 minutes before the bell, stock futures in the U.S. are looking to open higher. The Dow futures are currently higher by almost 20 points; the S&P’s are 3.40 to the good, while the NASDAQ looks to be about 6 points above fair value at the moment.
Stocks “In Play” This Morning:
Weyerhaeuser (WY) – Mentioned positively in Business Week
Amazon.com (AMZN) – Reported $0.23 vs. $0.21, Downgraded at Bear Stearns, Upgraded at Piper
Cameron (CAM) – Reported $0.92 vs. $0.87
Electronic Arts (ERTS) – Reported $0.63 vs. $0.57, Upgraded at Deutsche Bank
Genworth Financial (GNW) – Reported $0.80 vs. $0.72
NYSE Group (NYX) – Reported $0.45 vs. $0.46
Starwood Hotels (HOT) – Upgraded at AG Edwards
Microsoft (MSFT) – Upgraded at BofA
Apache Corp (APA) – Downgraded at Citigroup
Raytheon (RTN) – Upgraded at Citigroup
Alliant Techsystems (ATK) – Upgraded at Citigroup
Deutsche Telekom (DT) – Upgraded at Credit Suisse
FedEx (FDX) – Upgraded at Deutsche Bank
Cisco Systems (CSCO) – Mentioned positively at Goldman Sachs
Murphy Oil (MUR) – Upgraded at Goldman Sachs
Royal Dutch Shell (RDS.A) – Downgraded at Goldman Sachs, JP Morgan
Archstone Smith Trust (ASN) – Downgraded at JP Morgan, Deutsche Bank
Valero (VLO) – Upgraded at Prudential
Gilead Sciences (GILD) – Downgraded at Wachovia
Mr. Moenning holds Long positions in stocks mentioned: BSC, GS, CSCO
Note: All earnings reports compared to Reuters consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Good morning. Stocks stepped lively again yesterday on the back of economic data showing that the consumer is alive and shopping and yet inflation continues to remain largely in check. And while the news on the manufacturing front wasn’t nearly as upbeat, from a big-picture perspective, traders recognize that the data once again cemented the idea that Goldilocks is the name of the game right now.
Another round of afternoon buying produced a third straight day of gains for the Dow and a fifth day of green screens over on the NASDAQ. The gain of 52 points pushed the DJIA to another fresh all-time high where it was joined by the NYSE, Russell 2000, Small Cap and Mid Cap indices. And while the S&P 500 still has some work to do to (5.3% to be exact) in order to reach its high of 1522.35 set on March 23, 2000, the blue-chip index did close at its best level in six years.
The key to the session was the Personal Income and Spending report. As we reported yesterday before the bell, Personal Income rose by 0.5% in December while Spending increased by 0.7%. Both numbers were in line with expectations, so there wasn’t any real surprise factor to spur any buying. No, the key for the bulls was the fact that the report showed the consumer continues to spend and that the inflation genie, at the core level anyway, remains in the bottle.
While the long-term consequence of consumers spending more than they earn is certainly ominous, Wall Street definitely liked the fact that spending rose by the highest level since last July. However, it is still a little unsettling to realize that the annualized savings rate fell to -1.0% in December, which is the largest negative reading since 1933. Hmmm…
In addition, we should probably note that the economic news wasn’t all peaches and cream yesterday. The ISM Report showed that the manufacturing sector continued to struggle in January. The composite index fell 2.1 points to 49.3, which is the lowest reading since April 2003. More importantly, the sub-50 reading is indicative of a slight contraction in the manufacturing sector. And while the inflation news was positive on the consumer side, it was discouraging to see that the Prices component of the ISM report rose more than was expected.
Turning to this morning, we are going to continue on with our economic theme and focus on the big Kahuna of economic data – the January Employment Report. The labor department reported that the economy created 111,000 jobs this month, which at first blush sounds like a pretty big miss in light of the fact that the expectations had been for a number in the 150k range.
However, revisions to both the November and December jobs totals added another 81,000 jobs to the mix. In addition, the Unemployment Rate rose to 4.6%, which was a tenth higher than expected and then average Hourly Earnings came in a tenth below expectations.
All in all, traders seem to like the report as the “not too hot, not too cold” refrain is being heard just about everywhere. Both stocks and bond futures have improved on the report and it looks like the bulls once again have something to work with today.
Running through the rest of the pre-game indicators, the foreign markets up across the board again. Gold is trading down $1 to $662.00 right now. In the oil pits, crude futures are up so far with the latest quote showing the March contract higher by $0.63 to $57.93. Interest rates are a heading lower this morning with the yield on the 10-year currently trading at 4.81%. And finally, with 45 minutes before the bell, stock futures in the U.S. are looking to open higher. The Dow futures are currently higher by almost 20 points; the S&P’s are 3.40 to the good, while the NASDAQ looks to be about 6 points above fair value at the moment.
Stocks “In Play” This Morning:
Weyerhaeuser (WY) – Mentioned positively in Business Week
Amazon.com (AMZN) – Reported $0.23 vs. $0.21, Downgraded at Bear Stearns, Upgraded at Piper
Cameron (CAM) – Reported $0.92 vs. $0.87
Electronic Arts (ERTS) – Reported $0.63 vs. $0.57, Upgraded at Deutsche Bank
Genworth Financial (GNW) – Reported $0.80 vs. $0.72
NYSE Group (NYX) – Reported $0.45 vs. $0.46
Starwood Hotels (HOT) – Upgraded at AG Edwards
Microsoft (MSFT) – Upgraded at BofA
Apache Corp (APA) – Downgraded at Citigroup
Raytheon (RTN) – Upgraded at Citigroup
Alliant Techsystems (ATK) – Upgraded at Citigroup
Deutsche Telekom (DT) – Upgraded at Credit Suisse
FedEx (FDX) – Upgraded at Deutsche Bank
Cisco Systems (CSCO) – Mentioned positively at Goldman Sachs
Murphy Oil (MUR) – Upgraded at Goldman Sachs
Royal Dutch Shell (RDS.A) – Downgraded at Goldman Sachs, JP Morgan
Archstone Smith Trust (ASN) – Downgraded at JP Morgan, Deutsche Bank
Valero (VLO) – Upgraded at Prudential
Gilead Sciences (GILD) – Downgraded at Wachovia
Mr. Moenning holds Long positions in stocks mentioned: BSC, GS, CSCO
Note: All earnings reports compared to Reuters consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
You May Also Be Interested In
- Midday movers: PepsiCo, JetBlue fall; GM, Danaher and UPS rise
- Midday movers: Tesla, Li Auto and CNH Industrial fall; Salesforce rises
- After-hours movers: United Airlines, J.B. Hunt, and more
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
