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T3's Take 3: Mysterious Biotech Splatter Snuffs Out Rally


Today's financial recap and tomorrow's financial outlook.

Today at T3 Live

T3 Live cordially invites you to our first annual Finance Festival, scheduled for November 6-8 in sunny Miami, Florida.

Since we announced the event on July 8, we've added some very big names to the agenda, including:

-David Kotok, Founder and Chief Investment Officer of Cumberland Advisors
-David Rosenberg, Chief Economist of Gluskin Sheff
-Ivan Zinn, Chief Investment Officer of Atalaya Capital Management

Read about our expanded lineup here.

US Equities & Yellen Address

Yesterday after the close, Fed chairwoman Janet Yellen expressed confidence that interest rates will be raised later this year. The comment helped ease investor concerns about the world economy's ability to handle a rate hike.

Yellen also addressed concerns about poor inflation, stating that the strong dollar, falling oil and import prices are only temporarily weighing down consumer prices. 

Updated data showed that GDP grew at 3.9% annually, beating the 3.7% estimate from last month.

US markets initially opened higher on the news and the rally in Europe. However, gains slowly fell apart as the day progressed.

Healthcare was the worst performing sector today as biotech stocks continued the downtrend that started when Presidential Candidate Hilary Clinton spoke about instituting price controls on drugs. The iShares NASDAQ Biotechnology ETF (IBB) tumbled 4.9%, despite a lack of industry-specific news.

The S&P Biotech ETF (XBI), which includes many small and mid-cap biotech stocks, did even worse with a 6.9% decline.

Financial and utility stocks were the day's bigggest gainers.

The S&P 500 was up early in the day, but the sharp drop in biotech spooked traders, and the Index finished down 0.1% at 1931.34.

The US dollar gained slightly against most major currencies, but lost against the Australian dollar.

World Equity Markets

The Shanghai Composite closed down 1.6% after capital outflows hit a new record. In Japan, the Nikkei started the day lower on lackluster inflation data, but managed to close up 1.8% as investors expect the Bank of Japan to ramp up stimulus after its October policy meeting.

European stocks closed broadly higher today. The German DAX rallied 2.77%, and the French CAC gained 3.07%. Volkswagen (VW) shares fell another 3.4% today, down nearly 28% this week. BMW shares bounced back 4.2% from yesterday, when car magazine Auto Bild accused BMW off also cheating on emission tests. Auto Build has since retracted its claim. Other major auto makers such as Renault, Dailmer Mercedes, and Fiat Chrysler rallied. Mining stocks also saw a slight rebound but were held down by the slump in commodity prices. 

Apple iPhone Launch

Today, Apple's (AAPL) iPhone 6S went on sale.

Sean Udall, manager of T3 Live's TechStrat service, believes the 6S upgrade cycle will be very strong.

Sean's research shows that about 70% of the iPhone installed base has yet to upgrade, providing a large base of ready buyers.

He also believes that Apple's superiority "in terms of what's best for the total cost outlay" is increasing relative to Android, which suffers from fragmentation and security issues.

Shares of Apple closed down 0.3% today.

Click here to learn more about the TechStrat Report.

Monday's Financial Outlook

US economic data for Monday will include personal income & spending, PCE data (which is closely watched by the Fed), pending home sales, and Dallas fed manufacturing activity.

Overseas economic data will feature China's leading index, and German retail sales. 

Synnex (SNX) will report earnings after the close on Monday. 
No positions in stocks mentioned.
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