An incredibly non volatile week as indexes did next to nothing until Wednesday afternoon when the Federal Reserve delivered the much expected quarter rate cut. Markets rallied into the close Wednesday, flat lined yet again Thursday and then a small pullback Friday.
While there was some worry about oil supply early in the week after an attack on Saudi facilities, much of that was washed away by mid week.
As for the central bank:
The Fed announced it would cut the benchmark federal funds rate a quarter percentage point to a range of 1.75% to 2% Wednesday afternoon, but said in an accompanying statement that “sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective are the most likely outcomes.”
Three members of the Federal Reserve’s interest-rate setting committee voted against Wednesday’s decision, with Kansas City Fed President Ester George and Boston Fed President Eric Rosengren voting against a rate cut, while St. Louis Fed President James Bullard preferred to cut rates by 50 basis points, rather than 25.
Friday, markets started higher after reports that Trump was exempting hundreds of Chinese products from tariffs. But then some Chinese officials who were set to visit Montana of all places cancelled. And markets fell on that. Yes I am serious.
Economic news was not market moving.
The S&P 500 fell 0.5% for the week.
Here is the 5 day weekly intraday chart of the S&P 500 …via Jill Mislinski.
The week ahead..
Not to get all wonky but for those interested there has been some dislocation in the “overnight funding market” – and the Fed has had come to the rescue multiple days in the past week. It’s something that could or could not be interested when we look back 6 months from now. If you want to go down the rabbit hole, here is a nice little story on the situation. Otherwise take the blue pill and nothing happened in the past week – it’s all good!
Other than that the normal normal – the bulls will cry out (demand!) the Fed cuts rate at the October meeting. The bulls will say the China-US trade deal is happening any second now (as it has been for a year) and the bears will say nope not so much. We are a week away from the interesting economic data, and the start of earnings season in October.
Short term: the S&P 500 is still battling old highs. The NASDAQ is a bit weaker.
The Russell 2000 remains in its very long term range (in yellow) – the trendline connecting recent highs remains a constraint.
The NYSE McClellan Oscillator remains positive but is close to the 0 level.
Long term: decent conditions.
Charts of interest / Big Movers:
Tuesday, Corning (GLW) tumbled 6.1% after the glass and ceramics manufacturer reduced its outlook for the full-year 2019.
Fedex (FDX) tumbled 12.9% Wednesday after the transport company missed profit expectations and cut its outlook, citing “increasing trade tensions,” and global economic sluggishness.
Thursday, software company Ping Identity (PING) popped nearly one-third on Thursday after its initial public offering, giving the company a valuation of more than $1 billion.
McDermott (MDR) slid 24% amid heavy trading Thursday, amid fears that the provider of engineering and construction services to the energy industry may be considering a bankruptcy after reports that it hired a turnaround consultant. The company denied that rumor. Then on Friday morning the company soared 68% before settling at a 23% gain, after the energy-services company said it was exploring a sale of its Lummus Technology business, which has been valued at $2.5 billion.
Netflix (NFLX) fell 5.9% Friday, putting it on track for its third consecutive loss, after falling 2.4% and 1.7% Wednesday and Thursday, respectively. CEO Reed Hastings warned investors at a conference Friday that “While we’ve been competing with many people in the last decade, it’s a whole new world starting in November . . . It’ll be tough competition.”
Roku (ROKU) slid 19.2% Friday after a research analyst distributed a note asking if the streaming-device maker was “broken.” That follows a string of bad headlines for the company, and brings its two-week decline to over one-third of its September 6 record high.
Have a great week and we’ll see you back here Sunday!