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Stock Market Outlook for September 2, 2016

 

Public construction spending realizes the largest July contraction in the history of the report.

 

Real Time Economic Calendar provided by Investing.com.

 

**NEW** As part of the ongoing process to offer new and up-to-date information regarding seasonal and technical investing, we are adding a section to the daily reports that details the stocks that are entering their period of seasonal strength, based on average historical start dates.   Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities.   As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.

Stocks Entering Period of Seasonal Strength Today:

  • No stocks identified for today

 

 

The Markets

Stocks ended around the flatline on Thursday as investors brace for Friday’s non-farm employment report.  Analysts are forecasting a seasonally adjusted gain in payrolls of 175,000, or an increase of 0.12%.  Non-adjusted, the payroll gain in August averages 0.2%, implying actual payroll growth of 288,000.  Manufacturing employment warrants particular attention in the report given the boost that the seasonal adjustment factor had on July’s data.  Whatever the report reveals, we’ll have the breakdown available in Tuesday’s report, after the long weekend.

Setting the stage for Friday’s release was the weekly report on initial jobless claims, the level of which continues to hold around the lows of the year.  The headline print showed a rise in initial claims of 2,000 to 263,000, below the consensus estimate calling for 265,000.  The non-adjusted change through the end of August continues to hover above the seasonal trend as the economy remains around full employment.  Initial clams typically hit the low for the year in the month of September, then rising through the fourth quarter.

In other economic news, a report on construction spending was released during Thursday’s session.  The headline print showed that construction spending was unchanged (0.0%) in July, missing estimates calling for a gain of 0.6%.  Stripping out seasonal adjustments, total construction spending increased by 0.9%, which is light compared to the 1.3% average gain for the month of July.  A very rare July decline in public construction spending acted as a drag on the overall report.  Public spending was lower by 1.2%, a divergence from the average gain of 2.9%.  Only three other occurrences over the past 20 years have seen a decline in this segment during the month of July, the last being 2011 when spending was lower by 1.1%.  Private non-residential construction continues to trend above average, while private residential construction is lagging the seasonal norm, a factor of the dwindling availability of new plots of land on which to build.  Construction activity typically peaks in August, turning lower into the fall.

And finally for today, the weekly report on natural gas in storage showed a rather pronounced gain, at least compared to reports from recent weeks.  Inventory levels increased by 51 billion cubic feet (bcf), multiple times greater than last week’s increase of 11 bcf.  Looking at the year-to-date change, the pace continues to lag the seasonal norm, the result of stronger than average demand and lower than average production.  The pace remains very shallow going into hurricane season, which could lead to supply disruptions through the fall.  Supplies typically peak for the year in November, just as the heating season gets underway.  The price of natural gas shed around 3.3% following the report, trading back to its 50-day moving average.  Resistance is apparent at $2.90.

Sentiment on Thursday, as gauged by the put-call ratio, ended bearish at 1.01.

 

 

 

 

 

 

 

 

Seasonal charts of companies reporting earnings today:

  • No significant earnings reports expected for today

 

S&P 500 Index

 

 

TSE Composite