Daily Market Update 08.11 | Stocks Close Mixed after PPI data.
Daily Market Update 08.11 | Stocks Close Mixed after PPI data.
MyntBit's Daily Market Update is dedicated to providing traders with a recap and bringing setups to watch for the next trading day.
Today's Recap
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Stocks showed a strong move to the upside in early trading on Thursday but gave background over the course of the session. The major averages showed a notable downturn after reaching their best intraday levels in three months.
The major averages eventually finished the day mixed. The tech-heavy Nasdaq jumped as much as 1.3 percent but ended the day down 74.89 points or 0.6 percent to 12,779.92. The S&P 500 also edged down 2.97 points or 0.1 percent to 4,207.27, while the narrower Dow inched up 27.16 points or 0.1 percent to 33,336.67.
The extended rally in early trading came after the Labor Department released a report showing an unexpected decrease in producer prices in the month of July.
The Labor Department said its producer price index for final demand fell by 0.5 percent in July after surging by a revised 1.0 percent in June. The decrease marked the first drop in producer prices since April 2020.
The pullback came as a surprise to economists, who had expected producer prices to edge up by 0.2 percent compared to the 1.1 percent jump originally reported for the previous month.
The report also showed the annual rate of producer price growth slowed to 9.8 percent in July from 11.3 percent in June. Economists had expected the annual rate of growth to slow to 10.4 percent.
Meanwhile, the Labor Department said core producer prices, which exclude prices for food, energy and trade services, crept up by 0.2 percent in July after rising by 0.3 percent in June.
The annual rate of core producer price growth also slowed to 5.8 percent in July from 6.4 percent in the previous month.
Following Wednesday's tamer than expected consumer price inflation data, the report initially added to optimism that the Federal Reserve will slow the pace of its interest rate hikes next month.
Subsequent comments from Fed officials seemed to downplay the importance of the data, however, with Chicago Fed President Charles Evans saying inflation remains "unacceptably high."
"After a little pushback from the Fed, Wall Street is starting to second guess how soon the Fed will be in a position to pivot," said Edward Moya, senior market analyst and OANDA.
He added, "Fed rate hike expectations will bounce between a half-point and 75 basis-points ahead of the September policy meeting, but it is way too early to continue to expect the next round of inflation readings to keep that declining pace.
Sector News
Biotechnology stocks came under pressure over the course of the session, dragging the NYSE Arca Biotechnology Index down by 1.5 percent.
Considerable weakness also emerged among gold stocks, as reflected by the 1.4 percent drop by the NYSE Arca Gold Bugs Index. The weakness in the sector came as the price of gold for December delivery fell $6.50 to $1,807.20 an ounce.
Pharmaceutical stocks also showed a notable move to the downside on the day, with the NYSE Arca Pharmaceutical Index falling by 1.4 percent.
On the other hand, energy stocks held on to substantial gains, benefiting from a sharp increase by the price of crude oil. Crude for September delivery surged $2.41 to $94.34 a barrel.
Reflecting the strength in the energy sector, the Philadelphia Oil Service Index spiked by 3.9 percent, the NYSE Arca Oil Index shot up by 3.2 percent and the NYSE Arca Natural Gas Index surged by 3 percent.
Banking stocks also saw continued strength on the day, driving the KBW Bank Index jumping by 1.6 percent to a two-month closing high.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index jumped by 1.6 percent, while Hong Kong's Hang Seng Index surged by 2.4 percent.
Meanwhile, the major European markets turned in a mixed performance on the day. While the French CAC 40 Index rose by 0.3 percent, the German DAX Index edged down by 0.1 percent and the U.K.'s FTSE 100 Index fell by 0.6 percent.
In the bond market, treasuries pulled back sharply after failing to sustain an initial upward move. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10.2 basis points to 2.888 percent after hitting an early low of 2.730 percent.
Looking Ahead
Trading on Friday may be impacted by reaction to readings on U.S. import and exports prices and consumer sentiment and inflation expectations.
But, as of now, nothing has changed from our weekly perspective.
CPI Coming Up NEXT Week! Could It CRASH The Market? | Weekly Market Update
Tomorrow's Plan
/ES - Emini S&P 500
On /ES, we opened well above 4200 after the PPI report came in lower than expected and we went all the way up to 4260 which we called, see below.
Then, /ES lost steam and fell all the way down to 4200, which we also called in the discord.
The market looked weak towards the end of the day with AAPL losing 170 to finish at 168. VIX did spike up but still remains near the 20s area.
Bullish Scenario
If we OPEN above the POC of 4200, we will need to go above 4217, then 4240, 4260, and lastly 4300 remains the key level for bulls.
Bearish Scenario
If we OPEN below 4200, we can see 4180-4170, then 4150.
POC: 4232 | Range: 3723 - 4300
/NQ - Emini Nasdaq 100
On the /NQ side, we again spiked all the way up to our range top at 13580 and got rejected to finish at 13300 levels.
Bullish Scenario
If we OPEN above 13300, to see further upside, we need to overcome the POC from today at 13412 then 13500 area (our HOD for today), and 13789 (which might serve as a strong resistance).
Bearish Scenario
If we OPEN below 13300, we will need to retest 13293 then the 13160 - 13100 level.
POC: 13412 | Range: 11390 - 13583
For the stock watchlist from the weekend and daily updates, please watch the below videos…
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