Today in the overall market we are seeing the negative ramifications of the hawkish Fed tone from yesterday. The NASDAQ is once again having more air taken out of it on a relative basis to the DOW. No surprise here as the former is being helped by a large gain in BA which is at a new all-time high. In addition, advances in other industrial components such as 3M, CAT and UTX are assisting the DOW from falling even lower than it has slipped today. It came off of its worst level of the session being down 110 an hour after the opening. It is now lower by “only” 30 because of gains in the aforementioned issues.
The NASDAQ was lower by 87 about the same time this morning as none other than mighty GOOG received the downgrade treatment. I am always amazed when an analyst lowers the rating on a stock after it has begun to roll over…rubbing salt in the wound. On the other hand, you rarely see a downgrade when the stock is in a steady uptrend. We witnessed the same strategy with AAPL this past week when it received two downgrades after it started to come off of its high.
The dollar is stronger today as rates are moving higher. The 10-year Treasury Note is at 2.16%. As a result, the Euro is down to 110.5 and the Japanese yen is at 110.3. Gold is selling off down to $1,253 on the greenback strength. Crude oil is languishing at the lower levels in the mid- $44 a barrel area…once again illustrating the lack of inflationary pressures.
For 2017, earnings projections for the S&P are expected to be up by around 11% according to current estimates. For 2018 the number is almost 12%. So, we have seen the stock market moving higher to justify those profit gains.
Donald M. Selkin
These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.