Market Perspective for September 11, 2017

Equities opened higher on Monday after Hurricane Irma weakened rapidly on Sunday. SPDR S&P Insurance (KIE) rose 3 percent at the opening to its highest level in two weeks. The 10-year Treasury yield rebounded above 2.1 percent for the largest one-day rally in nearly a month. The odds of a December rate hike jumped 10 percent in the futures market to 41 percent. SPDR Utilities (XLU) hit a new 52-week high.

U.S. Gasoline (UGA) has reversed about half of its storm-related rally, while oil climbed.  Chemical companies also advanced strongly. DowDuPont (DWDP) climbed near its 52-week high on Monday.

Building material companies fell on Monday as investors reassessed the cost of rebuilding. Martin Marietta Materials (MLM) fell nearly 4 percent and Vulcan Materials (VMC) nearly 3 percent. Martin Marietta Materials had gained 9 percent in the wake of Hurricane Harvey.

Healthcare also achieved a new 52-week high on Monday. Pharmaceuticals and healthcare providers led the sector, while biotechnology saw a slight decline in early trading. Although the overall biotech sector was down, key large-cap stocks Amgen (AMGN) and AbbVie (ABBV) rose to new 52-week highs. In the past three weeks, AbbVie has gained 23 percent, Gilead Sciences (GILD) 17 percent, Biogen (BIIB) 16 percent and Amgen (AMGN) 11 percent.

This week a slew of third-quarter economic data will be released. Tuesday will bring the JOLTS report for July. Economists forecast 5.97 million job openings. August inflation data will be out on Wednesday and Thursday. First, the producer price index is expected to have risen 0.3 percent, well above July’s decline of 0.1 percent. The CPI is also forecast to rise 0.3 percent, with core prices rising 0.2 percent. Retail sales for August will be available on Friday. Analysts predict a rise of 0.1 percent, 0.4 percent ex-autos. Business inventories for July and consumer sentiment in September will also be out on Friday.

China will report fixed-asset investment, real estate investment, industrial production and new loans this week. Canadian housing starts in August beat expectations. The July home price index will be out later this week. The Canadian central bank hiked interest rates last week, fully reversing cuts made as oil prices plummeted between late 2014 and early 2016. The cuts overheated an already booming housing market that is starting to unravel in cities such as Toronto.

We are in the lull before third-quarter earnings season kicks off in October, but a few notable firms will continue to stream in.  Analysts predict Oracle (ORCL) earned 55 cents per share, up from 49 cents last year. Oracle is a top-10 holding in many technology funds.

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