Equity indexes closed last week in the red with the S&p500 index (SPX) traded 2,343.98, down -1.24%, the Dow Jones Industrial (INDU) traded 20,596.72, down -1.48%, and the Russell 2000 Index (RTY) traded 1,354.64, down -2.13%. Total option volume last week came in at 91,637,234 contracts traded, with a daily average of 18 million contracts, slightly higher than the average March daily volume of 17.3 million contracts. The SPX index traded 1,196,669 option contracts on Friday and the while the VIX saw 593,344 contracts trade. After weeks of what can only be described as catatonic, volatility was trading higher with April VIX futures (UXJ) trading 14.50, up +4.13, as spot VIX traded 14.52, +12.04.
The failure to bring the President Trump & Speaker Ryan version of the Obama care repeal to a vote last week is weighing heavy on the markets this morning. Equity futures were treading heavy this morning as S&P500 futures (ES) traded 2,323.50, -21 points before NY-open breaching the 50-day moving average. The S&P500 index (SPX) is set to open at the lowest level in over six weeks.
In large part, the market’s concerns with the failure to pass a President Trump’s healthcare bill have more to do with Trump’s economic agenda and what it means for economic growth. The administration was counting on the cost savings from the new healthcare bill, along with the border tax initiative, to finance tax reform (read tax cuts) and increased infrastructure spending. Trump and his administration will likely move on to tax reform next but with funding in question and faced with a rebellious GOP he may be facing an uphill battle.
U.S. dollar index futures (DX) were also lower this morning traded 98.72, -0.73% as investors seemed to be disappointed with the failure of health care reform as well as concerns that the US dollar is overvalued. The index has fallen nearly 2% since the election. Oil futures (CL) were trading lower down -1.06% to $47.47 per barrel over uncertainty whether the OPEC cuts would be extended until the summer. Treasury futures and precious metals were higher this morning as risk-on trades were unwound.
This week we have fourteen Fed speakers on the docket with Evans and Kaplan kicking it off today. Chairwoman Yellen speaks tomorrow at the National Community Reinvestment Coalition annual conference.
Economic data last week was slightly negative. On the positive side of things, Durable Goods rose 1.7%, Earnings for Q1 show an expected YoY growth of 9.1% according to FactSet, and New Home Sales increased 6.1%. On the downside, Jobless Claims rose to 258,000, and Existing Home Sales fell 3%.
This week’s economic calendar:
- Monday: Dallas Fed Manufacturing
- Tuesday: Wholesale Inventories, Conference Board Consumer Confidence, Richmond Fed Manufacturing Index
- Wednesday: MBA Mortgage Apps, Pending Home Sales
- Thursday: GDP Annualized (Q4), Personal Consumption, GDP Price Index, Core PCE, Initial Claims
- Friday: Personal Spending, PCE Deflator, Chicago Purchasing Manager, U. of Michigan Sentiment