US Markets Churn Around Flat on Slow Volume Day
Today's financial recap and tomorrow's financial outlook.
Other information during the day suggested that Russia was making a larger military push into Ukraine. The meeting yesterday to discuss trade between Ukraine and Russia spurred further communication. However, NATO cautioned that Russia was more overtly backing Ukrainian rebels, which was a troubling sign. Additionally, the FBI said today that it had evidence JPMorgan (JPM) and another US banks, as well as a number of European banks, were hacked by Russia, probably in retaliation to the economic sanctions over the last few months.
The S&P 500 (SPX) finished near unchanged after closing above 2,000 yesterday for the first time in history. Volume was abysmal for a fourth straight day and have been the worst full-day sessions of the year. Energy stocks took a bit of a breather after outperforming for the prior three days and utilities took over. Treasuries continued to rally behind the strength in German Bunds. The auction of $35 billion in new 5-year notes barely dented the buying demand. The 30-year Treasury yield fell 5.5bps to a year-to-date low of 3.10%.
Tomorrow's Financial Outlook
Tomorrow morning the first revision of second quarter GDP will be released. The June revisions due to the Commerce Department's quarterly durable goods survey have caused expectations to be increased over the last few days, but generally economists expect the annualized rate of growth to be revised down to 3.9% from the initial estimate of 4.0%. Inventory gains are still expected to be a large contributor to the growth in the quarter. Also scheduled to be released are July pending home sales and weekly jobless claims.
Because of the focus by the ECB on persistent disinflation in the eurozone, tomorrow's preliminary estimate of the August German consumer price index will draw a high amount of scrutiny. For the moment, the report will not generate a large negative price movement unless inflation were to come in only slightly below expectations. A large miss should only give cover to the ECB to enact its asset purchase program next week. However, some investors may feel uneasy that its action may not cause the inflation that it seeks. German unemployment and Chinese industrial profits are also scheduled to be reported.
Only four major US companies are scheduled to report earnings tomorrow. They are Dollar General (DG), Abercrombie & Fitch (ANF), Splunk (SPLK), and Omnivision (OVTI). Dollar General may draw increased scrutiny because of its rejected deal for Family Dollar (FDO).
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