Diamonds and Dogs

5/24/17

 The S&P 500 (+0.1%) is fighting for its fifth straight win today and currently sits right at the 2,400 mark, which acted as a level of resistance for the benchmark index yesterday. The Dow (+0.2%) and the Nasdaq (+0.2%) trade just a tick above the S&P 500.

Today's session has been range-bound with the major averages refusing to deviate from their opening levels. Similarly, investors in the Treasury and currency markets have displayed caution ahead of the FOMC minutes for the May 2-3 meeting; the report will cross the wires at 14:00 ET. The benchmark 10-yr yield is one basis point higher at 2.29% while the U.S. Dollar Index (97.33, +0.05) trades a tick above its flat line.

Crude oil ($51.22/bbl, -0.5%) clung to its flat line for most of the morning session, but has since hit some selling pressure. The Energy Information Administration (EIA) reported a larger than expected draw in U.S. crude stocks for the week ended May 19 (-4.4 million barrels actual vs -2.4 million barrels consensus). However, the report prompted little to no movement as investors remain focused on tomorrow's OPEC/non-OPEC production meeting.

Saudi Arabia, Iraq, Algeria, and Russia all support a nine-month extension of the OPEC/non-OPEC supply cut and will be lobbying for other nations to agree. However, Kuwait and the United Arab Emirates have said they need time for further analysis before coming to a decision tomorrow. The market expects an extension and, possibly, an increase in the magnitude of the supply cuts. The decision is expected to be announced tomorrow at 11:00 am ET.

The energy sector (-0.7%) trades with the telecom services sector (-0.6%) at the bottom of today's leaderboard. The financials (-0.1%) and industrials (-0.1%) groups also trade in negative territory, but the remaining sectors hold gains between 0.2% (consumer staples) and 0.6% (materials).

In U.S. corporate news, retailers are down after producing another largely disappointing batch of earnings this morning; Lowe's (LOW 79.76, -2.57) is down 3.1% on downbeat earnings, Tiffany & Co. (TIF 85.57, -7.57) has lost 8.1% on worse than expected revenues, and Advanced Auto Parts (AAP 134.32, -6.34) has dropped 4.5% after missing top and bottom line estimates. The SPDR S&P 500 Retail ETF (XRT 40.32, -0.23) is down 0.6%.

Investors received several economic reports in the first half of Wednesday's session, including April Existing Home Sales, the March FHFA Housing Price Index, and the weekly MBA Mortgage Applications Index:

Existing home sales for April decreased 2.3% from March to an annualized rate of 5.57 million units while the Briefing.com consensus expected a reading of 5.65 million. The prior month's reading was revised to 5.70 million from 5.71 million.

The key takeaway from the report remains the same: existing home sales are being impeded by a lack of affordable supply, particularly in the lower- and mid-market price range.

The FHFA Housing Price Index for March increased 0.6%, which followed an unrevised increase of 0.8% in February.

The weekly MBA Mortgage Applications Index increased 4.4% to follow last week's 4.1% decrease.