The bulls were unable to follow through on the Tuesday rebound in a mixed and choppy day though energy, health care, and utilities enjoyed some buying activity.  With the 2^nd quarter coming to an end watch for the possibility of some end-of-quarter window dressing but keep in mind earnings, Fed uncertainty, and the coming holiday could produce choppy low-volume price action in the afternoons.  However, price volatility is likely with GDP, Jobless Claims, and Housing numbers pending.

Asian markets mostly declined as we slept with the tech-heavy Hong Kong exchange leading the selling down 1.24% on the day. However, European markets are working to extend yesterday’s relief rally with only the FTSE struggling with a slight decline.  U.S. futures point to a bullish open ahead of market-moving economic data that could quickly improve or reverse market conditions.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AYI, GBX, LNN, MKC, NKE, PAYX, PRGS, RAD, SMPL, & SGH.

News & Technicals’

The Federal Reserve’s annual stress test revealed that all 23 of the U.S. banks that participated in the exercise could withstand a severe recession and maintain their lending activities. However, the test also showed a wide range of loan loss rates among the banks, depending on their exposure to different types of loans. Credit cards were the most vulnerable to defaults, resulting in a high loss rate of 14.7% for Capital One, while Charles Schwab had the lowest loss rate of 1.3% due to its focus on brokerage services. The stress test results could pave the way for some banks, such as JPMorgan Chase and Wells Fargo, to announce higher dividends and share buybacks on Friday after the market closes.

A massive healthcare fraud scheme that targeted programs for the elderly and disabled was busted by the Department of Justice, which announced charges against 78 people for their involvement. The DOJ said the fraudsters submitted $2.5 billion in false claims and used the proceeds to fund lavish lifestyles, buying expensive cars, jewelry, and yachts. Some of the defendants allegedly exploited telemedicine services to make fraudulent claims, while others allegedly billed for prescription drugs that were not medically necessary or not provided at all.

The market had a mixed and choppy day on Wednesday, with the S&P 500 barely moving, the Dow losing 73 points, and the Nasdaq rising 0.3%. Some sectors that benefit from economic growth, such as consumer discretionary, communication services, and energy, outperformed others that are more defensive, such as utilities, consumer staples, and health care.  The 10-year Treasury yield stayed around 3.75%, in nearly a 100 basis point inversion with 2-year bonds. This morning all eyes are focused on the pending GDP, Jobless Claims, & Home Sales numbers with a smattering of earnings as we wind down the quarter.  Expect some price volatility this morning keeping in mind we could see some end-of-quarter window dressing.  However, we could also see volumes begin to decline as traders head out to extend their holiday.

Trade Wisely,

Doug