We’re back in familiar territory in the SPX index, between 1400 and 1420. During the second half of March, and practically the whole of August, the index bounced around between those 2 levels , before breaking down in April, and breaking up in August. Here is chart showing how individual sectors have performed in the last 2 months, a period in which the SPX was basically flat:
Forget the jumble of lines in the middle. Most sectors are close to unchanged. There are 2 standouts on the upside, health care and financials (both up 5% with the index flat). On the downside, technology is down almost 5%, the clear underperformer.
AAPL and AMZN report after the close today. The reactions to these 2 reports will be a clear signal as to whether the technology underperformance of the last 2 months was a head fake, or a sign of more weakness to come.
- Asia continues to be the best performing region, as all major regions were higher with the exception of the Shanghai index. Japan has been especially strong the last 2 weeks as the yen has weakened (USD/JPY now above 80.00)
- Europe opened in the red, but is now trading up 0.5%, in a quiet session. The performance gap between Europe and the U.S. is down to 4%, near the lows since March (due to U.S. underperformance in the last month)
- SPX futures are up 0.6%, testing the upper end of the 1400-1420 range in SPX cash this morning. The dollar and Treasury bonds are lower, and commodities are higher, with the exception of copper.
- Durable Goods and Jobless Claims released at 8:30 am. Economists’ consensus estimate of Durable Goods is for a 7.5% increase (to make up for the 12% fall last month)
- PG beat estimates, CL matched estimates but missed on revenues, and Ford announced that it is closing 3 European plants as European demand is weak.