DAILY MARKET RECAP – June 21, 2017
• S&P 500 down 0.06% to $2,435.61
• DJIA down 0.27% to $21,410.03
• U.S. 10-yr unch at 2.16%
• WTI Oil down 2.28% to $42.52
U.S. equities traded lower as investors watched oil prices tank again today. Political analysts and investors alike watched last night’s special congressional election results in Georgia and South Carolina closely in order to extrapolate electoral trends. With two victories for Republicans in both key races, we are likely to see a discouraged Democratic Party and an emboldened Republican Party in the short term. Although the world of politics is notoriously fickle, a reasonable observer would conclude that these results might make life a little easier for leaders like House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell as they attempt to get health and tax reform packages on President Trump’s desk. However, red flags are already appearing ahead as the Senate prepares to release its version of a healthcare reform bill tomorrow. According to reports, the bill is not much different from the House’s version, but the Senate bill is likely to face extra hurdles because of the body’s more complex rules that govern the process of passing legislation via reconciliation. Also driving the news today was the announcement that Saudi Arabia has a new crown prince. Traders are likely to watch for any changes in that country’s oil policy in light of the development.
• Existing Home Sales: 5.620M
• EIA Petroleum Status Report, Crude Oil Inventories: -2.5M Barrels
Much of the housing data as of late has been disappointing, but not the May report on existing home sales. After recording a month-over-month decline of 2.5% in April, this reading saw a month-over-month increase of 1.1% and a positive year-over-year change of 2.7%. According to the National Association of Realtors, this report accounts for a larger share of the housing market than new homes and is more indicative of housing market trends. We also learned that existing home sale prices are now at a record high: the median price is $252,800, which represents a year-over-year increase of 5.8%.
According to the EIA’s weekly report, domestic crude oil stockpiles experienced a week-over-week decline of 2.5 million barrels. This larger-than-expected decrease will likely be a source of optimism for those who have been worried about oversupply issues, especially on the part of the U.S. However, it is worth noting that oil has lost 20% in value so far this year, which is the commodity’s worst performance for the first half of the year since 1997. Oil prices settled 2.28% lower today.
Sectors comprising the S&P 500 index were down today with the exceptions of health care (1.24%), information technology (0.67%), and consumer discretionary (0.12%). Decliners included energy (-1.58%), telecommunication services (-1.20%), materials (-1.10%), financials (-0.76%), industrials (-0.65%), utilities (-0.62%), consumer staples (-0.38%), and real estate (-0.22%).
Major anticipated catalyst: Jobless Claims – Expected 240K v. 237K Prior
All estimates come from Econoday’s survey of economists/analysts. Earnings per share estimates are from Factset, are set against year ago results, and represent adjusted earnings.