DAILY MARKET RECAP – September 20, 2017
• S&P 500 up 0.06% to $2,508.24
• DJIA up 0.19% to $22,412.59
• U.S. 10-yr up 2 bp to 2.27%
• WTI Oil up 1.88% to $50.29
U.S. equities traded mostly higher today following the Fed’s announcement that it plans to start unwinding its $4.5 trillion balance sheet next month. Fed Chair Janet Yellen went on to suggest during her press conference later in the afternoon that the Fed will not halt the implementation of its plans for stimulus reversal until the economy experiences another significant downturn. The Fed concurrently decided to leave its benchmark interest rate unchanged. However, Mrs. Yellen refused to rule out another rate hike before the end of the year. The 10-year Treasury yield also edged higher following the announcement.
Hurricane Maria continued to pummel Puerto Rico with maximum sustained winds of 115 miles per hour. According to the Mayor of San Juan, power is out across the entire island that is home to more than three million people. Despite the procession of deadly hurricanes that have formed over the past month, the Fed indicated in its statement that the storms are unlikely to have a long-lasting impact on the American economy.
We also continued to learn new details about the Graham-Cassidy plan to repeal and replace Obamacare. According to Senator Cassidy’s office, Massachusetts would take the biggest hit following the Republicans’ proposed redistribution of federal healthcare dollars. His staff’s estimates indicate that the Bay State would lose more than $5.8 billion in funding, which represents a 56.89% decline. However, the bill would provide other states with significant surges in healthcare funds. The lucky states include Mississippi, which would see a stratospheric 1,084.03% jump, Kansas, which would see a 749.17% increase, and Oklahoma, which would experience an increase of 624.18%. Although Republicans have a limited amount of available time remaining to pass the bill, it is apparent that the precise whip count is far from settled.
• Existing Home Sales – 5.350M
• EIA Petroleum Status Report, Crude Oil Inventories – 4.6M Barrels
Thanks partially to residual effects from Hurricane Harvey, August’s existing home sales reading clocked in at an annualized rate of 5.350 million. This represents a month-over-month decline of 1.7%. The reading also missed consensus estimates, which projected existing home sales amounting to 5.480 million. According to the report, sales in the South experienced a precipitous 5.7% fall. However, the Midwest saw a gain of 2.4% and the usually less active states that comprise the Northeast experienced a 10.8% jump. Sales of single-family homes fell 2.1%, while condominium sales increased by 1.7%. On the price front, the median cost of an existing home stood at $253,500, which represents a monthly decline of 1.8%.
During the week of September 15, domestic crude oil stockpiles rose by 4.6 million barrels to 472.8 million. However, gasoline inventories fell by 2.1 million barrels and inventories of distillates declined by 5.7 million barrels. Refineries operated at 83.2% of their total operating capacity, but refineries in Texas are still in the process of getting back on their feet. Nevertheless, the number of functioning refineries grew by 5.5% week-over-week, so we are continuing to see clear signs that oil companies are trying hard to resume operations following Hurricanes Harvey and Irma. Despite the inventory build, oil prices rose by nearly 2% today.
Copart (CPRT) released a strong fourth-quarter earnings report that beat estimates for quarterly profit and revenue growth. The Texas-based online vehicle auction and remarketing company generated net margin growth of 22% for the quarter, which is an increase of 120 basis points. The company continues to remain very profitable and enjoys consistent top-line growth. Shares of Copart gained 4.06% over the course of intraday trading.
Bed Bath & Beyond (BBBY) had a lousy day, to say the least. The home goods retailer slashed its full-year outlook and missed its second-quarter earnings forecasts. Same-store sales were also down. Shares of Bed Bath & Beyond were down 15.87% at the close of trading.
Also trading lower today was General Mills (GIS). The Minnesota-based manufacturer and marketer of branded consumer foods fell short of earnings estimates due mostly to weak yogurt and cereal sales. Companies like General Mills have experienced declining demand for their products as consumers increasingly adopt healthier diets. The company’s stock was down 5.88%.
Major anticipated catalyst: Jobless Claims – Expected 303K v. 284K 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.