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Markets I Trading Lull Engulfs Stocks and Commodities
Hello. Amrith Ramkumar here previewing Tuesday trading.
It's a jam-packed day of earnings. Twitter, Harley-Davidson, Procter
& Gamble, Coca-Cola and United Technologies just posted results, and
Lockheed Martin and Verizon's numbers will be released shortly.
Snap and Texas Instruments highlight the group reporting after the market closes.
Stock futures are slightly down after major indexes wavered
Monday. Following another quiet session, I explain why large intraday
swings have disappeared simulataneously from stock and commodity markets
in recent weeks.
Markets in a Minute
Global stocks were mostly lower, as oil prices jumped again after a
surprise move from the U.S. to curb Iranian oil imports and investors
awaited a fresh batch of earnings for clues on the health of the world
Stocks and commodities have been trading similarly in recent weeks.
An unusual period of calm has
blanketed trading of stocks and commodities in recent days, befuddling
some analysts who had expected activity to pick up at the start of
The differences between daily highs and lows for stocks and
commodities have slumped to their lowest levels in months as many risky
investments have wobbled in April. The lull during trading
sessions is the latest sign many investors are cautious after the almost
uninterrupted rise in those markets since the start of the year.
A decline in trading volumes
and outflows from stock funds have also painted a mixed picture of
investors’ risk appetite, even with the S&P 500 up 16% in 2019 and
the S&P GSCI commodity gauge up 22%.
Although the early round of first-quarter earnings reports hasn’t been
as bad as some analysts had feared, those reports also haven’t sparked a
fresh round of buying. And some investors say they are skeptical the
recent rally will continue to new peaks.
“We’re not rushing for the exits here in terms of stocks, but we don’t
expect much more,” said Jeff Garden, chief investment officer at Lido
Advisors. “We expect things to take a step back in the coming months.”
The gap between the S&P 500’s daily highs and lows shrank
to 12.6 points on average during the week ended April 12, the smallest
such range since mid-August, according to Dow Jones Market Data. It stayed low at 16.9 points last week and was at 13.2 Monday.
The trend has been similar for commodities, which have rocketed higher alongside stocks as some analysts project an uptick in economic growth and steady demand for materials.
The average daily range for the S&P GSCI commodity index, heavily
weighted toward oil and other energy products, had dropped below 4.5
points in recent weeks for the first time since January 2018 before
The quiet trading comes with many investors struggling to put together a clear picture of economic data. The result is that many riskier assets are trading similarly until investors feel confident about the direction of global growth.
The rolling correlation between the S&P 500 and S&P GSCI index
rose to 0.96 last week for the first time since 2011, according to a Dow
Jones Market Data analysis of 50-day periods.
Correlation is measured on a scale of minus-1 to 1. A reading of
minus-1 means two assets are moving in opposite directions, while a
correlation of 1 means they are moving in tandem.
What do you make of the recent lull in trading activity for stocks and commodities? Let the author know your thoughts at email@example.com.
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U.S. crude-oil prices rose
2.7% to $65.70 a barrel Monday—their highest close in nearly six
months. Oil has now rebounded 45% in 2019. Monday's rise came after the
U.S. ended waivers for countries to Iranian crude.
Kimberly-Clark shares rose 5.4% Monday, their largest one-day advance
since October 2009. The climb put shares of the consumer-products
company at their highest level since June 2017 and followed stronger-than-expected first-quarter results.
On this day in 1996, Bre-X Minerals, an obscure Calgary-based company
claiming to have discovered more than 30 million ounces of gold in
Indonesia, was listed on the Toronto Stock Exchange. The stock rose to
$192.50 within minutes. Over the next year, it turned out that the gold didn't exist. One of Bre-X’s executives commited suicide by jumping out of a helicopter, and the company went bankrupt on Nov. 5, 1997.
New-home sales for March are expected to climb at an annual rate of 650,000, compared with 667,000 last month. The figures are slated for 10 a.m. ET.
The Richmond Fed manufacturing survey for April is also scheduled for 10 a.m.
Eurozone consumer confidence for April is out at 10 a.m.
A new report shows 82% of polled retirees are optimistic about their
ability to live comfortably in retirement. PHOTO: RHONA WISE/AFP/GETTY
Workers and retirees are feeling better about retirement finances. With the U.S. economy strong and stocks near record levels, retirees’ and workers’ confidence in having enough money for retirement has risen over the past year to all-time highs, according to a long-running survey released Tuesday.
As Uber nears its debut, the NYSE plans an IPO test. The New York Stock Exchange will give trading firms an opportunity to test systems as it gears up for the blockbuster debut of ride-hailing service Uber Technologies as soon as next month.
Oil prices surged as President Trump ended waivers for Iran’s crude. Oil prices surged to a nearly six-month high after the Trump administration said it would end waivers that allow countries to import Iranian oil, part of a U.S. campaign to deprive Iran of a major source of revenue.
Beyond Meat set its IPO terms, seeking a valuation up to $1.2 billion. Beyond Meat has set terms of its IPO that could raise roughly $184 million
at the high end of its estimated price range, as the plant-based meat
substitute startup moves closer to its planned Wall Street debut.
Coffee prices have plunged even though we can’t stop drinking the stuff. Call it the coffee paradox. The brewed beverage has never been more popular, but the price of beans is at its lowest point in over a decade and down by a quarter since October.
Herman Cain withdrew from the Fed board nomination process. Mr. Cain said he did so primarily because of the salary, not the Senate opposition he faced, in a setback for President Trump’s efforts to place a political ally on the central bank.
What We've Heard on the Street
“Health-care stocks have a Washington, D.C., problem that is likely to linger.”