Darden’s Q1 Earnings to Rise Over 190%, Revenue to Jump 45%

Darden, which operates full-service restaurants in the United States and Canada, is expected to report its fiscal first-quarter earnings of $1.64 per share, which represents year-over-year growth of over 190%, up from $0.56 per share seen in the same period a year ago.

The Orlando-based multi-brand restaurant operator would post year-over-year revenue growth of over 45% to $2.2 billion. In the last four quarters, on average, Darden has beaten earnings estimates over 268%.

The company’s next earnings report is expected to be released on Wednesday, September 23 before the market opens.

According to ZACKS Research, several factors contributed to Darden’s strong fiscal first-quarter results, including increased vaccinations and expanded dining room capacity that likely contributed to the sequential sales increase. The fiscal first-quarter margins may, however, have been hit by increased hourly wages and marketing expenses.

“The Zacks Consensus Estimate for sales at Olive Garden, Fine Dining, and LongHorn Steakhouse is pegged at $1,120 million, $136 million and $508 million, suggesting year-over-year growth of 42.1%, 63.9% and 34.7%, respectively. The same for Other business stands at $433 million, suggesting an improvement of 55.2% from the prior-year quarter,” noted analysts at ZACKS Research.

Darden shares surged nearly 25% so far this year but the stock closed 0.49% lower at $148.69 on Monday.

Analyst Comments

“Best in class casual dining operator with strong brand portfolio. As the largest CDR operator, DRI has substantial scale advantages in shared services which can be levered in a post-Covid environment by improving margins and gaining market share. Lead brand Olive Garden (50% of sales) garners top consumer scores, its comp sales have historically outpaced the industry and recent cost savings have improved unit economics,” noted John Glass, equity analyst at Morgan Stanley.

“Acquisition of Cheddar’s has been more challenging than initially expected, though still provides longer-term growth potential. Strong position relative to peers, scale, operational leadership, unit growth and structurally higher margins drives our OW rating.”

Darden Restaurants Stock Price Forecast

Seventeen analysts who offered stock ratings for Darden Restaurants in the last three months forecast the average price in 12 months of $161.79 with a high forecast of $175.00 and a low forecast of $150.00.

The average price target represents an 8.81% change from the last price of $148.69. From those 17 analysts, 11 rated “Buy”, six rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $167 with a high of $208 under a bull scenario and $105 under the worst-case scenario. The firm gave an “Overweight” rating on the multi-brand restaurant operator’s stock.

Several other analysts have also updated their stock outlook. Deutsche Bank raised the target price to $152 from $145. Oppenheimer lifted the price target to $175 from $165. Truist Securities slashed the target price to $167 from $170.

Check out FX Empire’s earnings calendar

Gold Recovers as Worldwide Equites Sell Off

The worldwide equity selloff began overseas and then continued into the U.S. equities markets. At its low today the Dow Jones industrial average was down 900 points before recovering. The Dow gave up 614 points in trading today and closed at 33,970.47, resulting in a net decline of 1.78%. The NASDAQ composite lost 2.19% and is currently fixed at 14,713.9030. The S&P 500 lost 1.70% and is currently fixed at 4357.73.

gold sept 20

As of 5:56 PM EDT gold futures basis, the most active December 2021 contract is currently up to $13.30 and fixed at $1764.70. Silver did sustain a mild selloff closing lower by 0.41%, and after factoring in today’s decline of a little over nine cents, it is currently fixed at $22.245.

silver sept 20

Reuters reported that “Wall Street plunged on Monday as fear of contagion from a potential collapse of China’s Evergrande prompted a broad selloff and sent investors fleeing equities for safety.”

They also added that “the equity selloff in the United States was a result of concerns of solvency of the Chinese property group Evergrande. “Gold rose on Monday as fears about the solvency of Chinese property group Evergrande sparked a flight to safe-haven assets, but gains were capped by strength in the dollar ahead of the U.S. Federal Reserve’s policy meeting. Spot gold rose 0.5% to $1,762.66 per ounce by 1753 GMT. U.S. gold futures settled 0.8% higher at $1,765.40.”

The Chinese property to developers has accumulated over $300 billion in debt mostly with the Central Bank of China.

The Federal Reserve will meet tomorrow and begin September’s FOMC meeting, which will conclude on Wednesday. Market participants and traders hope to gain more clarity as to the timeline in which the Federal Reserve will begin to taper their monthly asset purchases of $120 billion (80 billion in U.S. debt and 40 billion in mortgage-backed securities).

There is genuine uncertainty as to what actions the Federal Reserve will take in regards to their current monthly asset purchases. Their asset balance sheet has swelled to above $8 trillion in assets. However, their primary focus has been upon maximum employment, a major component of their dual mandate which is maximum employment and annual inflationary levels of around 2%. They have let inflation run much hotter in lieu of achieving their maximum employment goal. Believing that the majority of the current level of inflation is transitory, the Federal Reserve has let inflation run to 5.3%, based upon the latest CPI numbers released last week.

However, the most recent jobs report was extremely disappointing and deeply below expectations and forecasts from economists polled by the Wall Street Journal. The expectation was that the August jobs report would indicate an additional 700,000+ new jobs added to payrolls, and the actual number was a tepid 235,000 new jobs added last month.

The weak August jobs report will be weighed against the most recent report by the U.S. Census Bureau, which indicated robust consumer spending last month, resulting in $618 billion, up 0.8%. Economists polled were looking for August consumer spending to be down between -0.8 to -1.8. If you strip out consumer spending on automobiles and trucks, the actual gain for the month of August is 1.8%.

These two reports show an interesting mix between new jobs added and consumer spending. While the jobs report was disappointing and weak at best, consumer spending rose far past the expectations given by economists. Therefore, the Federal Reserve will be faced with making a decision based on strong consumer spending and weak growth in jobs. That will certainly influence their decision as to when they will begin to taper.

For those who would like more information, simply use this link.

Wishing you, as always, good trading and good health,

Gary Wagner

 

How To Visualize A Market Dip

So that got me thinking. If September is usually negative, is there a way to capture the dip? Well, here’s my way of visualizing a market dip.

I’m all about data…especially Big Money data. My favorite indicator is the Big Money Index. It’s my way to tracking what big institutions are likely doing in stocks.

When it falls, expect red markets. When it rises, get the rally hats out:

Chart, line chart

Description automatically generated

Source: www.mapsignals.com

You can see that it’s in an uptrend because summer-selling has been slowing.

Inside of the BMI are the daily buys and sells. Below you can see how buying has been increasing lately. That’s why the BMI is perking higher. I’ve circled the increased buying:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

But since this article is all about a market dip, look how using MAPsignals data can help us visualize a market dip.

Below is the same chart, but I’ve isolated those big red days. Those are days when there’s a lot of selling in stocks. Look:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

Notice how each of those big red sticks marks the low for the market? That’s the S&P 500 (SPY ETF) I’m using as the market gauge.

But more importantly, look at the 2 week forward performance of SPY after those big sell days. It’s mega juice:

Table

Description automatically generated

Source: MAPsignals, FactSet

That’s how I visualize a market dip with data. But what’s cool is we can see the same similar patterns in ETFs. Below are the daily Big Money buys and sells of ETFs according to MAPsignals. I’ve outlined big red sell days:

Chart, histogram

Description automatically generated

Source: MAPsignals.com

Visually it looks like the stock sells chart. And for good measure, here’s the 2-week return for all of those instances above.

Table

Description automatically generated

Source: MAPsignals, FactSet

Talk about a cool way to see a market dip through the eyes of data.

Here’s the bottom line:

Investors and traders like to talk about buying the dip. And it’s a real phenomenon. Recently, we can see that big sell days for stocks and ETFs have been dips to buy. Will that be the case in the future? Only time will tell.

But, one thing should be apparent. Data can be helpful to a solid trading process.

Disclosure: the author holds no position in SPY, QQQ, DIA, or IWM at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

Wall Street Ends Sharply Lower in Broad Sell-Off

The Nasdaq fell to its lowest level in about a month, and Microsoft Corp, Alphabet Inc, Amazon.com Inc, Apple Inc, Facebook Inc and Tesla Inc were among the biggest drags on the index as well as the S&P 500.

All 11 major S&P 500 sectors were lower, with economically sensitive groups like energy down the most.

Investors also were nervous ahead of the Federal Reserve’s policy meeting this week.

The banking sub-index dropped sharply while U.S. Treasury prices rose as worries about the possible default of Evergrande appeared to affect the broader market.

“You kind of knew that when there was something that caught markets off guard, that it was going to lead to probably a bigger sell-off and you didn’t know what the reason would be,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

“I guess it’s the China news but… it’s not altogether surprising given how bullish people were.”

Wednesday will bring the results of the Fed’s policy meeting, where the central bank is expected to lay the groundwork for a tapering, although the consensus is for an actual announcement to be delayed until the November or December meetings.

Unofficially, the Dow Jones Industrial Average fell 620.22 points, or 1.79%, to 33,964.66, the S&P 500 lost 75.28 points, or 1.70%, to 4,357.71 and the Nasdaq Composite dropped 325.95 points, or 2.17%, to 14,718.02.

The S&P 500 is down sharply from its intra-day record high hit on Sept. 2 and is on track to snap a seven-month winning streak.

Strategists at Morgan Stanley said they expected a 10% correction in the S&P 500 as the Fed starts to unwind its monetary support, adding that signs of stalling economic growth could deepen it to 20%.

The CBOE volatility index, known as Wall Street’s fear gauge, rose.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Caroline Valetkevitch in New York; additional reporting by Devik Jain and Sagarika Jaisinghani in Bengaluru and by Noel Randewich in San Francisco; Editing by Sriraj Kalluvila and Lisa Shumaker)

S&P 500 Update: Anticipated Correction Unfolding. Low-4000s on Tap as Expected

In my last update, see here, I showed by using the Elliott Wave Principle (EWP) that the S&P500 (SPX) had most likely completed a significant-top (wave-iii of 3) and would be heading down to the low-4000s on a break below the August low at SPX4368. Nine days later and the index is already trading at SPX4345. Thus the anticipated correction is unfolding, and the low-4000s remain IMHO in tap with an ideal target of SPX4250+/-20. Allow me to explain below.

Figure 1. S&P500 daily chart with detailed EWP count and technical indicators

Today’s break below the August low makes for a lower low

In my last update, I showed that “since the early May low, the SPX has been in an overlapping set of regular interval rallies, lasting about 20 TDs with 3-day corrections, all bottoming around the 18th of each month. Each low and high was a higher low and a higher high: a Bullish pattern. Hence, because the most recent string of down days is already five, a drop below the August low at SPX4368 (orange wave-4 at the green arrow) will confirm a (red) intermediate wave-iv to ideally SPX4030-4235 is underway. I prefer the upper end of the target zone because, in Bull markets, the downside often disappoints, and the upside surprises.

Well, we got the break lower. Thus we have a lower low, and now SPX4030-4235 must be respected as the logical target zone with SPX4250+/-20 as the preferred narrowed-down level to watch. My premium major market members were already ahead of the curve as I identified five waves down last week and anticipated SPX4400-4300 after a bounce (see my tweet here, for example).

The beauty of the EWP is that we know with certainty in an impulse, the 3rd wave up is followed by a 4th wave correction down and then another 5th wave higher. Intermediate wave-iii of major-3 has topped, and wave-iv is now underway, which means wave-v of major-3 is still pending.

For now, I anticipate the SPX to bottom out soon (green minor wave-a in Figure 1 above) at ideally SPX4310-4335, and at a minimum, provide us with a strong bounce (green minor wave-b) before heading lower again. However, there are by then already enough waves in place to call the correction complete: three waves (a,b,c). Besides, I expect wave-v of wave-3 to complete around SPX4800-5000. Thus it is soon time to look for higher price, be it for a bounce (to possibly as high as SPX4600) or a new rally.

Bottom line: the correction I anticipated nine days ago is unfolding. I am now looking for a bottom soon in the SPX4310-4335 region before expecting a significant bounce at a minimum, possibly already a new rally. Namely, ideally, this correction should last longer and reach SPX4250+/-20, but there are soon enough waves in place to consider it complete. And in a Bull market, it is prudent to respect the upside.

For a look at all of today’s economic events, check out our economic calendar.

China Evergrande Contagion Concerns Rile Global Markets

Shares in Evergrande, which has been scrambling to raise funds to pay its many lenders, suppliers and investors, closed down 10.2% at HK$2.28 on Monday, after earlier plummeting 19% to its weakest level since May 2010.

Regulators have warned that its $305 billion of liabilities could spark broader risks to China’s financial system if its debts are not stabilised.

World shares skidded and the dollar firmed as investors fretted about the spillover risk to the global economy. U.S. stocks were sharply lower, with the S&P 500 down nearly 2%.

A major test comes this week, with Evergrande due to pay $83.5 million in interest relating to its March 2022 bond on Thursday. It has another $47.5 million payment due on Sept. 29 for March 2024 notes.

Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.

In any default scenario, Evergrande, teetering between a messy meltdown, a managed collapse or the less likely prospect of a bailout by Beijing, will need to restructure the bonds, but analysts expect a low recovery ratio for investors.

Evergrande’s troubles also pressured the broader property sector, with Hong Kong-listed shares of small-sized Chinese developer Sinic Holdings down 87%, wiping $1.5 billion off its market value before trading was suspended.

Evergrande executives are working to salvage its business prospects, including by starting to repay investors in its wealth management products with real estate.

“(Evergrande’s) stock will continue to fall, because there’s not yet a solution that appears to be helping the company to ease its liquidity stress, and there are still so many uncertainties about what the company will do in case of a restructuring,” Kington Lin, managing director of Asset Management Department at Canfield Securities Limited, said.

Lin said Evergrande’s shares could fall to below HK$1 if it is forced to sell most of its assets in a restructuring.

“As of right now, I don’t see any systemic risk for the global economy from the Evergrande situation, but there doesn’t need to be any systemic risk in order for markets to be affected,” David Bahnsen, chief investment officer, The Bahnsen Group, a wealth management firm based in Newport Beach, Calif, said in emailed commentary.

There was some confidence, however, that the situation would be contained.

“Beijing has demonstrated in recent years that it is fully able and willing to step in to stem widespread contagion when major financial/corporate institutions fail,” Alvin Tan, FX Strategist at RBC Capital Markets, said in a research note.

DOLLAR BONDS

Despite mounting worries about the future of what was once the country’s top-selling property developer, analysts, however, have played down comparisons to the 2008 collapse of U.S. investment bank Lehman Brothers.

“First, the dollar bonds will likely get restructured, but most of the debt is in global mutual funds, ETFs, and some Chinese companies and not banks or other important financial institutions,” said LPL Financials’ Ryan Detrick.

“Lehman Brothers was held on nearly all other financial institution’s books,” he said. “Secondly, we think the odds do favor the Chinese communist government will get involved should there be a default.”

Policymakers in China have been telling Evergrande’s major lenders to extend interest payments or rollover loans, but market watchers are largely of the view that a direct bailout from the government is unlikely.

The People’s Bank of China, its central bank, and the nation’s banking watchdog summoned Evergrande’s executives in August in a rare move and warned that it needed to reduce its debt risks and prioritise stability.

Trading of the company’s bonds underscore just how dramatically investor expectations of its prospects have deteriorated this year.

The 8.25% March 2022 dollar bond was traded at 29.156 cents on Monday, yielding over 500%, compared to 13.7% at the start of year. The 9.5% March 2024 bond was at 26.4 cents, yielding over 80%, compared to 14.6% at the start of 2021.

PROPERTY PUNISHED

Goldman Sachs said last week that because Evergrande has dollar bonds issued by both the parent and a special purpose vehicle, recoveries in a potential restructuring could differ between the two sets of bonds, and the process may be prolonged.

Investors, meanwhile, are increasingly worried about the contagion risk, mainly in the debt-laden Chinese property sector, which along with the yuan came under pressure on Monday.

The yuan fell to a three-week low of 6.4831 per dollar in offshore trade.

Hong Kong-listed Sinic, which saw massive selling pressure, has nearly $700 million in offshore debts maturing before June 2022, including $246 million due in a month — a bond which has tumbled to around 89 cents on the dollar.

Sinic has a junk rating from Fitch, which downgraded its outlook to negative on Friday.

Other property stocks such as Sunac, China’s No.4 property developer, tumbled 10.5%, while state-backed Greentown China shed around 6.7%.

Guangzhou R&F Properties Co said on Monday it was raising as much as $2.5 billion by borrowing from major shareholders and selling a subsidiary, highlighting the scramble for cash as distress signals spread in the sector.

For a look at all of today’s economic events, check out our economic calendar.

($1 = 7.7863 Hong Kong dollars)

(Reporting by Clare Jim; additional reporting by Tom Westbrook and Alun John; Writing by Sumeet Chatterjee; Editing by Shri Navaratnam; Mark Potter and Alexander Smith)

S&P 500 Price Forecast – Stock Markets Break Trendline

The S&P 500 has fallen hard during the trading session on Monday, breaking below a major trendline. Furthermore, the market is below the 50 day EMA, something that catches a lot of people’s attention. With this being the case, it is very likely that the 4350 level is an area where we have seen a little bit of support. At this point though, it looks as if the market is trying to break down rather significantly, and if that is going to be the case, then I might be a buyer of puts. I will not get crazy to the short side, because quite frankly it is just so difficult to imagine a scenario where I am comfortable shorting a market that is so highly manipulated. At this point, the market is struggling overall, and I would be cautious about anything the Federal Reserve says or does.

S&P 500 Video 21.09.21

The 4300 level being broken probably opens even more stringent selling, but again, I would not be short of this market, rather I would be a buyer of puts. If we turn around to take out the top of the candlestick for the trading session on Monday, that would be a very bullish sign, and eventually make this a “false breakout”, something that causes a lot of trouble for short sellers.

Regardless, this is a market that I think will eventually find a reason to go higher, if for no other reason than the Federal Reserve stepping in and jawboning the market, or perhaps getting involved in the bond market. Yes, there are a lot of concerns out there when it comes to credit situations in China, but that being said Wall Street always seems to have a narrative that it hangs on to to start buying again.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Is Poised to Open Much Lower, Is This a Dip-buying Opportunity?

The broad stock market index broke below its short-term consolidation on Friday, as the S&P 500 index fell below its recent local lows along 4,450 price level. On September 2 the index reached a new record high of 4,545.85. Since then it has lost almost 120 points. This morning stocks are expected to open much lower following big declines in Asia and Europe after news about Evergrande Real Estate Group crisis in China.

The nearest important support level of the broad stock market index is now at 4,300-4,350 and the next support level is at 4,200. On the other hand, the nearest important resistance level is now at 4,400-4,450, marked by the previous support level. The S&P 500 broke below its over four-month-long upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Dow Jones Is Leading Lower

Let’s take a look at the Dow Jones Industrial Average chart. The blue-chip index broke below a potential two-month-long rising wedge downward reversal pattern recently. It remained relatively weaker in August – September, as it didn’t reach a new record high like the S&P 500 and the Nasdaq. Today it may sell off to 34,000 level or lower. The next support level is at around 33,250-33,500 and the resistance level is at 34,500, marked by the recent support level, as we can see on the daily chart:

Apple Breaks Below Upward Trend Line

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. In early September it reached a new record high of $157.26. And since then it has been declining. So it looked like a bull trap trading action. We can still see negative technical divergences between the price and indicators and a potential topping pattern. The stock is breaking below an over two-month-long upward trend line.

September Last Year – S&P 500 Fell Almost 11%

In 2020, the S&P 500 index reached a local high of 3,588.11 on September 2 and in just three weeks it fell 10.6% to local low of 3,209.45 on September 24. This year, September’s downward correction has started from the new record high of 4,545.85 on September 3, so there is a striking similarity between those two trading actions.

Conclusion

The S&P 500 index broke below its short-term consolidation on Friday and today it will most likely accelerate the downtrend from the early September record high. However, later in the day we may see some short-term/ intraday bottoming trading action.

The market seems overbought, and we may see some more profound downward correction soon. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market is extending its downtrend today, as the S&P 500 index is likely to open much below 4,400 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting a 5% or bigger correction from the record high.

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Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Pfizer Close to Long-Term Buying Opportunity

Pfizer Inc. (PFE) and BioNTech SE (BNTX) released positive data on their COVID-19 vaccine for ages 5 to 11 on Monday but the stock is losing ground with the broad market, adding to a five-week slide that’s already relinquished more than 16%.  The decline is roughly tracking the slow rollover of U.S. Delta infections and another slowdown in daily vaccinations. Last week’s FDA advisory meeting didn’t help, with the group declining to recommend broad-based booster shots.

Pulling Back from August Breakout

The pharmaceutical giant has gained 17% so far in 2021 despite the latest downturn, with a good portion of selling pressure generated by a rotation out of pandemic plays. However, the last six months have proved how difficult it will be to transition from pandemic to endemic, especially with billions around the world still unvaccinated. Taken together with Pfizer’s bullish breakout pattern, the current decline should offer a low risk buying opportunity.

Approval for ages 5 to 11 will open eligibility to more than 50 million new vaccinations in the EU and USA. As the business partners noted on Monday, “Pfizer and BioNTech plan to share these data with the FDA, European Medicines Agency (EMA) and other regulators as soon as possible. For the United States, the companies expect to include the data in a near-term submission for Emergency Use Authorization (EUA) as they continue to accumulate the safety and efficacy data required to file for full FDA approval in this age group.”

Wall Street and Technical Outlook

Wall Street consensus is surprisingly lukewarm, with a ‘Hold’ rating based upon 4 ‘Buy’, 15 ‘Hold’, and 1 ‘Underweight’ recommendation. No analysts are recommending that shareholders close positions. Price targets currently range from a low of $39 to a Street-high $61 while the stock is set to open Monday’s session on top of the median $44 target. While this placement indicates that Pfizer is fairly-valued, it’s also likely that analysts are underestimating the vaccine’s long-term revenue potential.

Pfizer topped out at 44.05 in 2018 and sold off to a six-year low during 2020’s pandemic decline. A volatile recovery finally reached the prior peak in August 2021, setting off an immediate breakout that posted an all-time high at 51.86 less than three weeks later. The pullback into September is now approaching a zone of strong support near 40, raising odds for a buy-the-dip wave that confirms the breakout and sets the stage for strong 2022 upside.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Stocks Retreat Amid Global Sell-Off

All Eyes On China

S&P 500 futures are under significant pressure in premarket trading as traders focus on the potential collapse of China Evergrande Group, which has amassed more than $300 billion in liabilities.

Fears of another financial crisis coming out of Asia pushed global indices towards multi-week lows, but it remains to be seen whether the impact of a potential Evergrande default will have widespread consequences.

Traders are also nervous ahead of the Fed meeting, although Fed Chair Jerome Powell will likely try to calm markets and reiterate his usual dovish message on September 22.

Global Rush To Safety

The yield of 10-year Treasuries has moved away from recent highs and is trying to settle below 1.30% as traders buy U.S. government bonds to protect themselves from the potential correction in riskier markets.

The U.S. dollar is also moving higher due to its safe-haven status. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is trying to settle above the resistance at 93.40. In case this attempt is successful, it will move towards yearly highs near 93.75 which may put more pressure on stocks.

Interestingly, gold is gaining ground despite strong dollar as falling yields and demand for safe-haven assets have provided sufficient support. In this environment, gold mining stocks may rebound from yearly lows.

WTI Oil Tries To Settle Below The $70 Level

WTI oil is currently trying to settle below the support at the psychologically important $70 level as traders fear that Evergrande’s financial problems may have a notable negative impact on China’s economy and cut demand for oil.

Most other commodities are also under pressure, and the market mood is very bearish today. Premarket trading indicates that oil-related stocks will find themselves under huge pressure at the beginning of today’s trading session so traders should be prepared for fast moves.

For a look at all of today’s economic events, check out our economic calendar.

Say Bye-Bye to Major Supports. We May Not See Those Levels for a While

And it happened! The bears were talking about this for a long time and it finally happened; a bearish correction. The price broke the long-term up trendline on the SP500 and is aiming lower. The target for the drop is still far away, so it might be nice to buckle up.

The DAX also dropped like a rock after the breakout of the long-term up trendline and the neckline of the triple top formation. The next target: 14100 points.

Although indices are sliding, gold is not climbing higher. A stronger dollar is definitely not helping.

The GBPUSD came back inside the falling wedge pattern. That’s definitely negative.

The CADJPY is aiming for the 38,2% Fibonacci to test it as a crucial support.

The EURNZD is inside a small sideways trend. A breakout from it, will show us a direction.

The EURJPY has failed to create the inverse head and shoulders pattern and dropped lower.

The USDJPY bounced from the upper line of the triangle and brought us a sell signal with the target being on the lower line of this pattern.

For a look at all of today’s economic events, check out our economic calendar.

Preview: What to Expect From Nike’s Q1 Earnings on Thursday

The world’s largest athletic footwear and apparel seller Nike is expected to report its fiscal first-quarter earnings of $1.12 per share, which represents year-over-year growth of about 18%, up from $0.95 per share seen in the same period a year ago.

The Beaverton, Oregon-based footwear retailer would post year-over-year revenue growth of over 18% to $12.6 billion. In the last four quarters, on average, Nike has beaten earnings estimates over 55%.

According to ZACKS Research, for fiscal 2022, the company expects to grow revenues in the low-double digits, surpassing $50 billion because of strong customer demand across its segments.

The company expects revenue growth in the first half of fiscal 2022 to be higher than in the second half. The foreign exchange rate is expected to be a tailwind in fiscal 2022, generating 70 basis points of gains, ZACKS Research added.

Nike shares surged over 10% so far this year but the stock closed 0.75% lower at $156.42 on Friday.

Analyst Comments

“Investors are focused on the Vietnam factory closures impact on FY revenue guidance. Our analysis & mgmt. guidance conservatism suggests minimal risk. But high valuation requires beat & raise quarters – stock price pullback possible & we’re buyers on any weakness. Reiterate Overweight; raise price target to $221,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

Nike (NKE) trades at the high end of its historical valuation range, & investors expect quarterly beats & guidance raises. Unchanged or lowered FY guidance on temporary, Vietnam-driven headwinds could result in a stock pullback. We would be buyers on any potential weakness.”

Nike Stock Price Forecast

Twenty-five analysts who offered stock ratings for Nike in the last three months forecast the average price in 12 months of $187.26 with a high forecast of $221.00 and a low forecast of $168.00.

The average price target represents a 19.72% change from the last price of $156.42. From those 25 analysts, 21 rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $221 with a high of $410 under a bull scenario and $127 under the worst-case scenario. The firm gave an “Overweight” rating on the footwear and apparel seller’s stock.

Several other analysts have also updated their stock outlook. Cowen and company raised the target price to $196 from $181. Oppenheimer upped the price target to $195 from $150. HSBC lifted the target price to $205 from $162.

“Disruption from COVID-19, supply chain pressure and China continue to escalate. Our contacts across the global supply chain suggest Vietnam could reopen by October. Port congestion and freight headwinds could ease into 2H 2022 and the sector’s 10% valuation correction has improved risk/reward,” noted John Kernan, equity analyst at Cowen.

“We are cutting our FY22 Nike sales estimate by 300bps to 9% growth with a robust recovery into FY23.”

Check out FX Empire’s earnings calendar

Investors Are Waiting For An Updated Fed Reserve’s Policy

Bulls seem to be comfortable ahead of the U.S. Federal Reserve’s upcoming policy meeting next week on Tuesday and Wednesday, September 21-22.

Although the US Federal Reserve has signaled that it will start to taper asset purchases sometime this year, there is still a lot of debate about the timing. With the August Employment Report showing a big slowdown in U.S. job growth, some think the Fed might wait a bit longer before adjusting policy.

Bears vs bulls

Most Wall Street analysts think the central bank will wait until its November meeting to announce details for reducing its asset purchases, which most still anticipate will begin in December. St. Louis Fed President James Bullard recently stressed that, regardless of the disappointing August report, the Fed should start tapering soon.

Bullard as well as most bulls view the slowdown in job growth in August as being temporary, largely driven by the impact of the coronavirus Delta variant on consumer-facing industries that scaled back hiring. As such, the slowdown in job growth and other economic activity should only be temporary.

While job growth may be weak, other economic data still paints a picture of a healthy, ongoing recovery. The latest evidence is Retail Sales for August, which defied expectations with a gain of +0.7% as opposed to the decline most were forecasting and after a nearly -2% drop in July.

Bulls take this as a positive sign that U.S. consumer demand has held up in spite of the summer coronavirus surge as well as increasing inflationary concerns. Keep in mind, a lot of Americans had summer plans complicated or ruined completely for a second year in a row and are now heading into the second holiday season under the cloud of Covid.

You have to imagine there is just a crazy amount of pent-up-demand piled on top of existing pent-up-demand at this point and bulls are still confident that it will translate to even stronger economic growth down the road.

What to watch?

Turning to next week, the housing market takes center stage with the NAHB Housing Market Index on Monday; Building Permits and Housing Starts on Tuesday; Existing Home Sales on Wednesday; and New Home Sales on Friday.

There are also some earnings of interest next week including Adobe, AutoZone, Cracker Barrel, and Stitch Fix on Tuesday; General Mills, Jefferies Financial, and KB Home on Wednesday; and Accenture, Costco, Darden Restaurants, and Nike on Thursday.

Technical analysis

SP500 rallied more than 100% from COVID low without a pullback. So, its not surprising we see increased volatility now. The price is testing daily MA50. It has offered support multiple times till now. So, bulls are hoping the price will build a base in coming sessions. The cycles forecast a rally later in October this year. With that in mind, its good to observe price action for some time before considering swing longs. If daily MA500 fails, we may see a long-waited pullback.

ES ##-## (Daily) 2021_09_20 (1_26_55 AM)

E-mini S&P 500 Index (ES) Futures Technical Analysis – Sellers Could Be Targeting 4328.25 – 4278.50

December E-mini S&P 500 Index futures are trading sharply lower during the pre-market session on Monday. After last week’s sell-off in the benchmark index was mostly fueled by domestic issues, this week began with a steep drop in Hong Kong’s Hang Seng Index, pressuring U.S. futures.

In the U.S. last week, investors had to deal with corporate tax worries, the Delta COVID variant, and possible shifts in the U.S. Federal Reserve’s timeline for tapering asset purchases.

At 04:35 GMT, December E-mini S&P 500 Index futures are trading 4385.50, down 36.25 or -0.82%.

The index also closed under the 50-day moving average on Friday. The move is a sign of weakness and it is likely leading to early profit-taking by a number of money managers.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Today’s early weakness signaled a resumption of the downtrend. The next target is the main bottom at 4339.75.

A trade through 4539.50 will change the main trend to up. This is highly unlikely but due to the prolonged move down in terms of price and time, the market is currently inside the window of time for a potentially bullish closing price reversal bottom. This won’t change the trend, but it could lead to a 2 to 3 day counter-trend rally.

The minor trend is also down. A trade through 4478.50 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 4339.75 to 4539.50. The market is trading on the weak side of its retracement zone at 4416.00 to 4439.75, making it resistance.

The intermediate range is 4214.50 to 4539.50. Its retracement zone at 4377.00 to 4338.75 is the next downside target area.

The main range is 4117.00 to 4539.50. Its retracement zone at 4328.25 to 4278.50 is the best downside target and value zone.

Another key area to watch is the potential support cluster at 4338.75 to 4328.25.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index early Monday is likely to be determined by trader reaction to 4421.75.

Bearish Scenario

A sustained move under 4421.75 will indicate the presence of sellers. Taking out the Fib level at 4416.00 indicates the selling is getting stronger. The next downside target is the 50% level at 4377.00.

Watch for a technical bounce on the first test of 4377.00. If it fails, we could see a further break into the main bottom at 4339.75, followed by the support cluster at 4338.75 to 4328.25.

Buyers could step in on a move into the value zone at 4328.25 to 4278.50.

Bullish Scenario

A sustained move over 4421.75 will signal the presence of buyers. This will also put the index in a position to form a closing price reversal bottom. The first upside target is 4439.75, followed by the minor top at 4478.50.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Futures: Down Sharply as Investors Climb the ‘Wall of Worry’

The major U.S. stock index futures are trading sharply lower early Monday following last week’s dismal performance. The sell-off looks like investor liquidation with a slew of reasons likely fueling the move. Investors are definitely climbing the wall of worry ahead of the two-day Fed meeting on Tuesday and Wednesday.

However, there are other factors weighing on the trade including China, supply chain issues, debt ceiling negotiations and the infrastructure/tax bill to name a few. Investors are no doubt reacting to the continuing weakness in Hong Kong and shares of China’s Evergrande Group.

At 03:31 GMT, the benchmark S&P 500 Index futures are trading 4387.00, down 34.75 or -0.79%. The blue chip Dow Jones Industrial Average futures are at 34125.00, 337.00 or -0.98% and the technology-based NASDAQ Composite Index futures are trading 15233.25, down 92.75 or -0.61%.

Hong Kong’s Hang Seng Index drops 2% as Evergrande Shares Plunge More than 10%

Hong Kong’s Hang Seng Index led losses among Asia-Pacific markets in Monday’s trade, with shares of embattled Chinese developer China Evergrande Group continuing to drop. The Hang Seng Index dropped 2.18% in the Monday morning trade, as shares of China Evergrande Group plummeted more than 10% Reuters reported.

Last Week’s Weakness on Wall Street Continuing in Early Trade

The U.S. stock market ended the week sharply lower in a broad sell-off on Friday, ending a week buffeted by strong economic data, corporate tax hike worries, the Delta COVID variant, and possible shifts in the U.S. Federal Reserve’s timeline for tapering asset purchases.

All three major U.S. stock indexes lost ground, with the NASDAQ Composite Index’s weighed down as rising U.S Treasury yields pressured market-leading growth stocks. They also posted weekly losses, with the S&P Index suffering its biggest two-week drop since February.

One worry for investors is a potential hike in corporate taxes which could eat into corporate profits. The Democratic House of Representatives is seeking to raise the top tax rate on corporations to 25.5% from the current 21%.

Meanwhile, consumer sentiment steadied in early September, but it remains depressed, according to a University report, as Americans postpone purchases while inflation remains high.

Investors are also closely monitoring inflation, which is likely to be a hot topic of discussion when the Fed meets on September 21-22. Investors will be watching the Fed’s monetary policy statement for changes in language that could signal a shift in the Fed’s tapering timeline.

For a look at all of today’s economic events, check out our economic calendar.

Adobe Rock-Solid Ahead of Tuesday’s Confessional

Nasdaq-100 component Adobe Inc. (ADBE) reports Q3 2021 earnings after Tuesday’s closing bell, with analysts looking for a profit of $3.02 per-share on $3.9 billion in revenue. If met, earnings-per-share (EPS) will mark an 18% profit increase compared to the same quarter last year. The stock rose nearly 3% after beating Q2 estimates and raising Q3 guidance in June and has added another 16% since that time.

Leader in Digital Transformation

The Silicon Valley blue chip has been an outstanding performer in the last decade, rising more than twenty-fold, and is currently trading near an all-time high. The company is perfectly positioned to benefit from broad-based digital transformation, with a product catalog described by Mizuho analyst Gregg Moskowitz as a “highly comprehensive end-to-end offering that differentiates it from competitors and should enable it to drive more holistic sales across its clouds”.

Moskowitz raised the firm’s target to $695 and reiterated a ‘Buy’ rating on Friday, noting that, “Adobe is slated to report its F3Q (August) earnings results after the close on September 21. Our ADBE checks were once again favorable, and we expect the company to report healthy upside to our & Street estimates. In our view, ADBE’s expansive portfolio of software solutions has made it the gold standard in content creation, consumption, and collaboration”.

Wall Street and Technical Outlook

Wall Street consensus remains pristine despite Adobe’s 30%+ year-to-date return, with a ‘Buy’ rating fueled by 20 ‘Buy’, 2 ‘Overweight’, 4 ‘Hold’, and 1 ‘Underweight’ recommendation. No analysts are recommending that shareholders close positions at this time. Price targets currently range from a low of $550 to a Street-high $750 while the stock closed Friday’s session on top of the median $658 target. This placement suggests that stronger-than expected metrics will be needed to generate higher prices.

Adobe completed a breakout above 2018 resistance in November 2019 and tested new support successfully during 2020’s pandemic decline. The subsequent uptick mounted the February peak at 378 in June, generating a strong uptrend that stalled at 537 in September. The stock mounted that resistance level in June 2021, and has added points at a rapid pace since that time. Even so, long-term price projections show a cluster of hidden resistance just above 700, lowering reward and raising risk potential for new long positions.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings Week Ahead: Lennar, Autozone, FedEx, Nike and Costco Wholesale in Focus

Earnings Calendar For The Week Of September 20

Monday (September 20)

IN THE SPOTLIGHT: LENNAR

Lennar Corp, a home construction and real estate company, is expected to report earnings per share of $3.27 in the fiscal third quarter, which represents year-over-year growth of over 54% from $2.12 per share seen in the same period a year ago.

The Miami, Florida-based company would post year-over-year revenue growth of nearly 24% to around $7.3 billion. For four quarters in a row, the company has exceeded expectations on earnings per share.

“Shares of Lennar have outperformed the industry so far this year. The company is benefiting from effective cost control and focus on making its homebuilding platform more efficient, which in turn resulted in higher operating leverage. Higher demand for new homes backed by declining mortgage rates and low inventory levels bodes well. Focus on the lighter land strategy to boost free cash flow will bolster the balance sheet and thereby drive returns,” noted Analysts at ZACKS Research.

“Moreover, it has provided strong fiscal Q3 homebuilding gross margin guidance, suggesting 420 basis points (bps) increase at mid-point. Also, it has lifted average selling price and margin expectation for fiscal 2021, indicating 6% and 400bps year-over-year growth. However, higher land, labor and material costs are concerning. This may exert pressure on the company’s upcoming quarters as well.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 20

Ticker Company EPS Forecast
LEN Lennar $3.27
HRB H&R Block -$0.34

 

Tuesday (September 21)

IN THE SPOTLIGHT: AUTOZONE, FEDEX

AUTOZONE: The Memphis, Tennessee-based auto parts retailer is expected to report its fiscal fourth-quarter earnings of $29.71 per share, which represents a year-over-year decline of about 4% from $30.93 per share seen in the same period a year ago.

Autozone (AZO) is our top pick in DIY Auto. We see it as a high-quality retailer with the ability to compound earnings/FCF growth over time. While not immune to a tougher macro backdrop (fewer miles driven), we believe AZO is best positioned through any recession given its leading exposure to the more defensive DIY segment (~80% of sales). In addition, its DIFM growth was accelerating pre-COVID and we think it can gain more share in that segment going forward. In our view, ongoing share gains coupled with solid expense management should allow AZO to overcome headwinds from less driving in the near- to medium-term. These advantages seem priced in currently.”

FEDEX: The Memphis, Tennessee-based multinational delivery services company is expected to report its fiscal first-quarter earnings of $5.00 per share, which represents year-over-year growth of about 3% from $4.87 per share seen in the same period a year ago.

The delivery firm would post revenue growth of about 13% to $21.8 billion. In the last four quarters, on average, FedEx has beaten earnings estimates over 28%.

“August quarter remained strong, although we are seeing some delays in shipments, which we expect management to address,” noted Helane Becker, equity analyst at Cowen.

“We are approaching the peak shipping season and expect to see ~50K new hires to handle what is likely to be record demand. Looking ahead, FedEx (FDX) should finally finish the TNT integration; European operations should show that.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 21

Ticker Company EPS Forecast
AZO AutoZone $29.71
FDX FedEx $4.94
ADBE Adobe Systems $3.01
KGF Kingfisher £12.20
CBRL Cracker Barrel Old Country Store $2.33
NEOG Neogen $0.16

 

Wednesday (September 22)

Ticker Company EPS Forecast
KBH Kb Home $1.61
FUL HB Fuller $0.79
BBBY Bed Bath & Beyond Inc. $0.52
UNFI United Natural Foods $0.80
GIS General Mills $0.89

 

Thursday (September 23)

IN THE SPOTLIGHT: NIKE, COSTCO WHOLESALE

NIKE: The world’s largest athletic footwear and apparel seller is expected to report its fiscal first-quarter earnings of $1.12 per share, which represents year-over-year growth of about 18%, up from $0.95 per share seen in the same period a year ago.

The Beaverton, Oregon-based footwear retailer would post year-over-year revenue growth of over 18% to $12.6 billion.

“Investors are focused on the Vietnam factory closures impact on FY revenue guidance. Our analysis & mgmt guidance conservatism suggests minimal risk. But high valuation requires beat & raise quarters – stock price pullback possible & we’re buyers on any weakness. Reiterate Overweight; raise price target to $221,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

Nike (NKE) trades at the high end of its historical valuation range, & investors expect quarterly beats & guidance raises. Unchanged or lowered FY guidance on temporary, Vietnam-driven headwinds could result in a stock pullback. We would be buyers on any potential weakness.”

COSTCO WHOLESALE: The world’s fifth-largest retailer is expected to report its fiscal fourth-quarter earnings of $3.56 per share, which represents year-over-year growth of over 1.4% from $3.51 per share seen in the same period a year ago. The Fridley, Minnesota-based medical company would post revenue growth of about 18% to around $63 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 23

Ticker Company EPS Forecast
ACN Accenture $2.18
DRI Darden Restaurants $1.64
NKE Nike $1.12
COST Costco Wholesale $3.56
MTN Vail Resorts -$3.46
PRGS Progress Software $0.82

 

Friday (September 24)

Ticker Company EPS Forecast
CCL Carnival -$1.43
CUK Carnival -$1.45
CCL Carnival -£1.45

 

The Week Ahead – Central Banks back in Focus with the BoE and the FED in Action

On the Macro

It’s a quiet week ahead on the economic calendar, with 37 stats in focus in the week ending 17th September. In the week prior, 62 stats had also been in focus.

For the Dollar:

Prelim private sector PMIs for September will be in focus on Thursday.

Expect the services PMI to be the key stat of the week.

Other stats include housing sector data that will likely have a muted impact on the Dollar and the broader market.

The main event of the week, however, is the FOMC monetary policy decision on Wednesday.

With the markets expecting the FED to stand pat, the economic and interest rate projections and press conference will be pivotal. FED Chair Powell prepped the markets for the tapering to begin this year. The markets are not expecting any hint of a shift in policy on interest rates, however…

In the week ending 17th September, the Dollar Spot Index rose by 0.66% to 93.195.

For the EUR:

It’s a relatively busy week on the economic data front.

Prelim September private sector PMIs for France, Germany, and the Eurozone will draw plenty of interest on Thursday.

While Germany’s manufacturing PMI is key, expect influence from the entire data set. Market concerns over the economic recovery have tested support for riskier assets. Softer PMI numbers would test EUR support on the day.

For the week, the EUR fell by 0.75% to $1.1725.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

On the economic data front, CBI Industrial Trend Orders and prelim private sector PMIs are due out.

Expect the services PMI for September to be the key stat on Thursday.

While the stats will influence, the BoE’s monetary policy decision on Thursday will be the main event.

Persistent inflationary pressure has raised the prospects of a sooner rather than later move by the BoE. Weak retail sales figures have made things less clear, however.

Expect any dissent to drive the Pound towards $1.40 levels.

The Pound ended the week down by 0.71% to $1.3741.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

Early in the week, house price figures for August are due out. The numbers are not expected to have a material impact on the Loonie, however.

Retail sales figures for July, due out on Thursday, will influence, however. Another sharp increase in spending would deliver the Loonie with much-needed support.

The Loonie ended the week down 0.57% to C$1.2764 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no major stats to provide the Aussie Dollar with direction.

While there are no major stats, the RBA monetary policy meeting minutes on Tuesday will influence. The markets will be looking for forward guidance following the latest lockdown measures.

The Aussie Dollar ended the week down by 1.05% to $0.7279.

For the Kiwi Dollar:

It’s another quiet week ahead.

Early in the week, consumer sentiment figures for the 3rd quarter will be in focus.

Trade data, due out on Friday, will be the key numbers for the week, however.

Away from the economic calendar, however, COVID-19 news updates will also be key.

The Kiwi Dollar ended the week down by 1.03% to $0.7040.

For the Japanese Yen:

It’s a relatively busy week on the economic calendar.

Inflation and prelim private sector PMIs are due out on Friday. We don’t expect the numbers to influence the Yen, however.

On the monetary policy front, the BoJ is in action on Wednesday. We aren’t expecting any surprises, however, as the Delta variant continues to deliver economic uncertainty.

The Japanese Yen rose by 0.01% to ¥109.93 against the U.S Dollar.

Out of China

There are also no major stats due out of China for the markets to consider, with the Chinese markets closed early in the week.

On the monetary policy front, the PBoC is in action. We don’t expect any changes to the Loan Prime Rates, however.

The Chinese Yuan ended the week down by 0.34% to CNY6.4661 against the U.S Dollar.

Geo-Politics

Iran, China, and Russia remain the main areas of interest for the markets. News updates from the Middle East, in particular, will need continued monitoring following recent events in Afghanistan.

The Weekly Wrap – Economic Data and Policy Jitters Delivered a Boost for the Greenback

The Stats

It was a busier week on the economic calendar, in the week ending 17th September.

A total of 61 stats were monitored, which was up from 42 stats in the week prior.

Of the 61 stats, 21 came in ahead forecasts, with 27 economic indicators coming up short of forecasts. There were 13 stats that were in line with forecasts in the week.

Looking at the numbers, 29 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 30 reflected a deterioration from previous.

For the Greenback, upbeat economic data and sentiment towards monetary policy delivered support in the week. In the week ending 17th September, the Dollar Spot Index rose by 0.66% to 93.195. In the previous week, the Dollar had risen by 0.59% to 92.582.

Out of the U.S

Early in the week, inflation figures were in focus.

In August, the annual rate of core inflation softened from 4.3% to 4.0% versus a forecasted 4.2%. While softer than expected, 4% continued to sit well above the FED’s 2% target, leaving tapering on the table.

Mid-week, industrial production and NY Empire State manufacturing figures were market positive.

On Thursday, retail sales, Philly FED Manufacturing PMI, and jobless claims figures were of greater interest, however.

In August, retail sales increased by 0.7% versus a forecasted 0.2% decline. Core retail sales jumped by 1.8% versus a 0.1% decline. In July retail sales had fallen by 1.1% and core retail sales by 0.4%.

Manufacturing numbers were also upbeat, with the Philly FED Manufacturing PMI increasing from 19.4 to 30.7 in September.

Jobless claims figures failed to impress, however, with sub-300k remaining elusive. In the week ending 10th September, initial jobless claims rose from 312k to 332k. Economists had forecast an increase to 330k.

At the end of the week, consumer sentiment improved, albeit moderately. In September, the Michigan Consumer Sentiment Index rose from 70.3 to 71.0, falling short of a forecasted 72.0.

Out of the UK

It was also a busy week. Employment, inflation, and retail sales figures were in focus. The stats were skewed to the positive.

In August, claimant counts fell by a further 58.6k after having fallen by 48.9k in July. In July, the unemployment rate fell from 4.7% to 4.6%.

The UK’s annual rate of inflation accelerated from 2.0% to 3.25 in August, also delivering Pound support.

At the end of the week, retail sales disappointed, however. Month-on-month, core retail sales fell by 1.2% in August, following a 3.2% slide in July. Retail sales fell by 0.9% after having fallen by 2.8% in July. Economists had forecast a pickup in spending.

In the week, the Pound fell by 0.71% to end the week at $1.3741. In the week prior, the Pound had fallen by 0.23% to $1.3839.

The FTSE100 ended the week down by 0.93%, following a 1.53% loss from the previous week.

Out of the Eurozone

Economic data included wage growth, industrial production, trade, and finalized inflation figures for the Eurozone.

Finalized inflation figures for Spain, France, and Italy were also out but had a muted impact on the EUR.

In the 2nd quarter, wage fell by 0.4%, year-on-year, partially reversing a 2.1% increase recorded in the previous quarter.

Industrial production and trade data were positive, however.

Production increased by 1.5%, reversing a 0.1% fall from June, with the Eurozone’s trade surplus widening from €17.7bn to €20.7bn.

At the end of the week, finalized inflation figures for the Eurozone were in line with prelim figures. The Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August.

For the week, the EUR fell by 0.75% to $1.1725. In the week prior, the EUR had fallen by 0.56% to $1.1814.

The CAC40 slid by 1.40%, with the DAX30 and the EuroStoxx600 ending the week with losses of 0.77% and 0.96% respectively.

For the Loonie

Economic data included manufacturing sales, inflation, and wholesale sales figures.

The stats were mixed in the week.

In July, both manufacturing sales and wholesale sales disappointed with falls of 1.5% and 2.1% respectively.

Providing support, however, was a pickup in the annual rate of inflation from 3.3% to 3.5%.

The pickup in inflationary pressure and rising oil prices were not enough to support the Loonie against the Greenback.

In the week ending 17th September, the Loonie fell by 0.57% to C$1.2764. In the week prior, the Loonie had fallen by 1.34% to C$1.2692.

Elsewhere

It was another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar fell by 1.05% to $0.7279, with the Kiwi Dollar ending the week down by 1.03% to $0.7040.

For the Aussie Dollar

Business and consumer confidence figures were in focus in the 1st half of the week.

In spite of the latest lockdown measures, the stats were skewed to the positive.

The NAB Business Confidence Index rose from -8 to -5 in August.

More significantly, the Westpac Consumer Sentiment Index increased by 2.0% in September. The index had fallen by 4.4% in August.

On Thursday, employment figures disappointed, however.

In August, full employment fell by 68k following a 4.2k decline in July. Employment tumbled by 146.3k, however, versus a forecasted 90.0k decline. In July, employment had risen by 2.2k.

According to the ABS,

  • The unemployment rate fell from 4.6% to 4.5%, with the participation rate declining from 66.0% to 65.2%.
  • Year-on-year, the number of unemployed was down by 298,000.

For the Kiwi Dollar

It was also a mixed week on the economic data front.

2nd quarter GDP numbers impressed, with the NZ economy expanding by 2.8%, quarter-on-quarter. The economy had expanded by a more modest 1.4% in the previous quarter.

On the negative, however, was a slide in the Business PMI from 62.6 to 40.1 in August. The figures reflected the impact of the latest lockdown measures on production, justifying the RBNZ’s decision to leave the cash rate unchanged.

For the Japanese Yen

It was a relatively quiet week, with the numbers skewed to the negative.

According to finalized figures, industrial production fell by 1.5% in July. While in line with prelim figures, this was a partial reversal of a 6.5% jump from June.

In August, Japan’s trade balance fell from a ¥439.4bn surplus to a ¥635.4bn deficit. Exports rose by 26.2%, year-on-year, after having been up by 37% in July.

The Japanese Yen rose by 0.01% to ¥109.93 against the U.S Dollar. In the week prior, the Yen had fallen by 0.21% to ¥109.94.

Out of China

Fixed asset investment and industrial production figures were in focus mid-week.

There were yet more disappointing numbers from China for the markets to consider.

In August, fixed asset investment increased by 8.9%, year-on-year. This was softer than a 10.3% increase in July.

More significantly, industrial production was up by 5.3% in August versus 6.4% in July.

In the week ending 17th September, the Chinese Yuan fell by 0.34% to CNY6.4661. In the week prior, the Yuan had ended the week up by 0.18% to CNY6.4443.

The CSI300 and the Hang Seng ended the week down by 3.14% and by 4.90% respectively.

Wall Street Closes Rollercoaster Week Sharply Lower

All three major U.S. stock indexes lost ground, with the Nasdaq Composite Index’s weighed down as rising U.S. Treasury yields pressured market-leading growth stocks.

They also posted weekly losses, with the S&P index suffering its biggest two-week drop since February.

“The market is struggling with prospects for tighter fiscal policy due to tax increases, and tighter monetary policy due to Fed tapering,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

“Equity markets are also a little softer due to today’s weak Consumer Sentiment data,” Carter added. “It’s triggering concerns that the Delta variant could slow economic growth.”

A potential hike in corporate taxes could eat into earnings also weigh on markets, with leading Democrats seeking to raise the top tax rate on corporations to 26.5% from the current 21%.

While consumer sentiment steadied this month it remains depressed, according to a University of Michigan report, as Americans postpone purchases while inflation remains high.

Inflation is likely to be a major issue next week, when the Federal Open Markets Committee holds its two-day monetary policy meeting. Market participants will be watching closely for changes in nuance which could signal a shift in the Fed’s tapering timeline.

“It has been a week of mixed economic data and we are focused clearly on what will come out of the Fed meeting next week,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Helena, Montana.

The Dow Jones Industrial Average fell 166.44 points, or 0.48%, to 34,584.88; the S&P 500 lost 40.76 points, or 0.91%, at 4,432.99; and the Nasdaq Composite dropped 137.96 points, or 0.91%, to 15,043.97.

The S&P 500 ended below its 50-day moving average, which in recent history has proven a rather sturdy support level.

Of the 11 major sectors in the S&P 500, all but healthcare ended in the red, with materials and utilities suffering the biggest percentage drops.

COVID vaccine manufacturers Pfizer Inc and Moderna Inc dropped 1.3% and 2.4%, respectively, as U.S. health officials moved the debate over booster doses to a panel of independent experts.

U.S. Steel Corp shed 8.0% after it unveiled a $3 billion mini-mill investment plan.

Robinhood Markets Inc rose 1.0% after Cathie Wood’s ARK Invest bought $14.7 million worth of shares in the trading platform.

Volume and volatility spiked toward the end of the session due to “triple witching,” which is the quarterly, simultaneous expiration of stock options, stock index futures, and stock index options contracts.

Volume on U.S. exchanges was 15.51 billion shares, compared with the 9.70 billion average over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.97-to-1 ratio; on Nasdaq, a 1.00-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and two new lows; the Nasdaq Composite recorded 67 new highs and 82 new lows.

(Reporting by Stephen Culp; Additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; Editing by Richard Chang)