Stocks opened higher this morning (Dow +271 pts; SPX +.84%) on talks of restarting China and US trade dialogue. Interest sensitive and globally affected sectors — materials, real estate, and energy — are dragging. On the other hand, communications, staples, and tech are up in early trading. The VIX Index is holding its ground at 19.9. European markets closed mixed, whereas Asian markets were all lower. Oil is flat; WTI crude is trading at about $53.90/barrel. The dollar is currently stronger at the moment. Bonds are trading flat to higher, as yields rise slightly. Junk bonds are up about .38% after some better than expected reports on the economy, mainly in manufacturing data.
We have a slow news week when it comes to economic data. US Core Durables (spiked 2.1% in July from prior month levels) performed well. Economists were projecting a much smaller gain (1.2%). Despite this good news, one key component of these orders, aircraft orders, accounted for the positive print. However, excluding aircraft orders and other components, capital spending for U.S. firms are lower, compared to the last two years. Keep in mind, this data is countered by a decent Manufacturing index report from Dallas Fed’s Manufacturing. General business activity climbed nine points to 2.7 in July.
On the company earnings front, expect a slow news week as well. Of note will be quarterly earnings announcement this Thursday by Ultra Beauty (ULTA). How it performs could be a better indicator of the domestic economy, since the consumer accounts for 70% of the GDP for the U.S. economy. They have 100% of their business focused on the United States. The stock is up 2.5% this morning.