Wall Street showed overall strength for the second straight session despite a mixed batch of economic news and the start of the Federal Reserve’s two-day meeting — and more in Tuesday’s WealthPress stock market update.
The market is fully priced for a dovish update, and that could make for some disappointment. Bullish traders will be listening for any news on quantitative easing and if the Fed will alter the volume of its daily purchases.
The Nasdaq rose 1.2% with the intraday high reaching 11,236.
The Russell 2000 closed flat after testing a high of 1,551 shortly after the opening bell.
The S&P 500 rose by 0.5% to extend its winning streak to three straight sessions following a morning push to 3,419.
The Dow gained just 2 points total, closing at 27,995 after the first-half peak rose as high as 28,231.
Communication Services paced sector leaders after rallying 1.8% while Real Estate and Technology rose 1.3% and 1.1%, respectively. Financials and Energy were the weakest sectors with losses of 1.3% and 0.7%.
Shares of Apple Inc. (Nasdaq:AAPL) were slightly higher after hosting an event to announce a fresh round of product updates. There was not a new iPhone release, although one is coming, with the focus on Apple’s latest watch and an updated iPad.
Starbucks Corp. (Nasdaq: SBUX) announced comparable store sales in U.S. company-operated stores open a year or longer were down 19% in June, down 14% in July and down 11% in August. Starbucks said China is approaching full sales recovery, noting that comparable company-operated store sales declined 8% in June, fell 10% in July and were flat in August.
The company will release fourth-quarter earnings and give 2021 guidance on October 29. A golden cross has formed with the 50-day moving average, clearing the 200-day moving average. This is typically a bullish setup for higher highs.
Adobe Systems beat forecasts by 26 cents after reported a profit of $2.57 a share on revenue of $3.23 billion with forecasts at $2.41/ $3.16 billion.
FedEx topped expectations by a whopping $2.18 after announcing a profit of $4.87 a share on sales of $19.3 billion versus $2.69/ $17.55 billion.
European markets showed strength ahead of the U.S. and UK central bank meetings this week.
UK’s FTSE 100 jumped 1.3% and the Stoxx 600 gained 0.7%. The Belgium20 and France’s CAC 40 rose 0.3% while Germany’s DAX 30 edged up 0.2%.
Asian markets were mixed despite upbeat economic news out of China.
South Korea’s Kospi rose 0.7% and China’s Shanghai added 0.5%. Hong Kong’s Hang Seng was up 0.4%. Japan’s Nikkei was down 0.4% and Australia’s S&P/ASX 200 slipped 0.1%.
China Industrial output increased 5.6% in August, accelerating from the rise of 4.8% in July. Meanwhile, the country’s National Bureau of Statistics said Chinese retail sales rose 0.5% in August.
Import prices were up 0.9% and export prices rose 0.5% in August. This follows upwardly revised gains of 1.2% and 0.9%, respectively, in July. The gains in August brought 12-month rates up to -1.4% year-over-year for import prices from -2.8%, and -2.8% year-over-year for export prices versus -3.8% previously.
Petroleum import prices remained firm, rising 2.9% versus the prior 16.5% jump. Excluding petroleum, import prices were up 0.7% versus 0.2%. Import prices with Canada were up 3.3% from 3.7% previously, and were flat with China from 0.2%. For export prices, agricultural goods prices declined -2.2% versus the prior 1.6% gain. Excluding ag, export prices climbed 0.8% following the 0.9% July gain.
The New York Empire State Manufacturing Survey jumped 13.3 points to 17 in September after dropping -13.5 points to 3.7 in August. Forecasts were for a print of 6.5%. The employment component climbed to 2.6 from 2.4 while the workweek rebounded to 6.7 from -6.8. New orders zoomed to 7.1 from -1.7.
Prices paid climbed to 25.2 from 16, with prices received increasing to 6.5 from 4.7. The six-month outlook index was higher at 40.3 in September from 34.3 in August. The future employment gauge rose to 17.2 from 15.5, with new orders rising to 39.1 from 37.2. Prices paid rose at 33.1 from 22.7 while prices received fell to 7.9 from 9.3. Capex improved to 18.7 from 6.
Chain store sales declined -1.6% last week, versus the -1% pullback in the previous week. Sales were down -1.2% year-over-year for the week, versus -0.1% previously. According to the report, sales are a little weaker as back to school shopping has been extended given the uncertain effects of the coronavirus pandemic, with the trend expecting to continue into the fall.
Industrial Production rose 0.4% in August, weaker than expectations for a print of 1.2%, and follows an upwardly revised 3.5% gain in July. The August capacity utilization edged up to 71.4% from 71.1% previously.
Strength was seen in manufacturing, which rose 1% versus July’s 3.9% increase. Machinery manufacturing increased 1% from the prior 3.1% gain. Manufacturing of computers and electronics was up 1.1% from 1.3% previously. Manufacturing of motorvehicles and parts sank -3.7% last month following July’s 31.7% surge. Utility production dropped -0.4% from the prior 3.8% gain while mining was down -2.5% following the prior 1.4% July increase.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down for the second straight session after testing an intraday low of $163.79. Current and upper support at $164-$163.50 was breached but held. A move below the latter reopens risk toward $162.50-$162.
Resistance remains at $165-$165.50, followed by $166 and the 50-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) extended its losing streak to three straight sessions, with the morning low tapping 24.92. Prior support from the start of the month at 25.50-25 and the 50-day moving average were breached but levels that held?
Resistance remains at 26.50-27, followed by 28.50-29 and the 200-day moving average.
The iShares Russell Growth 1000 ETF (NYSEArca: IWF) was up for the second straight session with the opening high reaching $218.68. Near-term and lower resistance is at $218.50-$219 was cleared but held. A move above the $220 level would be a more bullish signal for additional strength toward the $221.50-$222 area.
Support is at $217-$216.50. A close below the latter would signal additional weakness toward $215.50-$215.
The SPDR S&P Homebuilders ETF (NYSEArca: XHB) extended its winning streak to three straight sessions, with the intraday peak reaching $54.18. Near-term and lower resistance at $54-$54.50 was breached but held. A close above the latter and the late August all-time high at $54.71 would be a bullish signal for blue-sky upside toward $55.50-$56.
Support is at $53.50-$53. A drop below $52.50 would signal a possible near-term top with additional pullback potential toward $51.50-$51.
Check back for the most important news and numbers each day after the closing bell here in the WealthPress stock market update.