T3’s Take 3: A Record High in a Serious Snoozefest

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1) New All-Time Highs… and Not Much Else

The S&P 500 opened higher today and quickly made another record high at 2185.44.

However, the index quickly settled into a tight trading range, extending the summer snoozefest.

The S&P has not made a 1% move since July 8, a span of 21 trading days.

This action is reminiscent of the exceedingly boring April-May stretch, which is odd considering that we’re in the middle of earnings season with plenty of central banks news and economic data surprises.

Health care was weak today after drug giant Allergan (AGN) reported a revenue miss, though to be fair, the sector rose just rose 12% in a straight line off the post-Brexit lows.

The S&P fell -0.1% to 2180.86 today, and the Nasdaq and Russell 2000 also posted small losses.

2) Crude Oil Bounces Back

Oil’s revival off the August 3 low continued today on OPEC bullishness, with WTI crude hitting $43 for the first time since July 27.

OPEC President Mohammad Al Sada said today that the current bear market in oil is “only temporary,” and that higher crude oil demand will push up prices later this year.

OPEC will also meet in Algeria next month to continue discussions about a possible output ceiling, though it’s not clear that the meeting will result in any actual output changes.

While the equity markets were lackluster overall, crude oil’s bounce drove solid gains in energy stocks, particularly oil service names. The Vaneck Vectors Oil Service ETF (OIH) rose 2.3% to $28.96 today.

The strong oil action also boosted the high-yield bond market, which is sensitive to oil prices.

 3) Not Completely Awful Is Good Enough

 FactSet just updated their second-quarter earnings season stats for S&P 500 companies so let's take a look at just how awful things are:

• 69% of companies are beating earnings estimates (vs. 5-year average of 67%)
• 54% of companies are beating sales estimates (vs. 5-year average of 55%)
• Q2 earnings have declined -3.5%, which is less awful than the -5.5% estimated as of June 30.
• Health care and tech have had the highest percentage of companies reporting earnings beats

This means that the same trend that's persisted for several quarters is still in place — earnings are nothing to write home about, but they are just a little better than expected.

And that’s enough to get investors to hold their noses and buy. 

Or maybe they're just fooled by central banks drenching the market in monetary perfume?

Tuesday's Trading Calendar

US Economics (Time Zone: EDT)

06:00 NFIB Small Business Optimism (Jul): exp. 94.5, prior 94.5
08:30 Nonfarm Productivity (2Q P): exp. 0.40%, prior -0.60%
08:30 Unit Labor Costs (2Q P): exp. 1.80%, prior 4.50%
10:00 Wholesale Inventories MoM (Jun): exp. 0.00%, prior 0.10%
10:00 Wholesale Trade Sales MoM (Jun): exp. 0.50%, prior 0.50%
10:00 IBD/TIPP Economic Optimism (Aug): exp. 47.3, prior 45.5
12:00 DOE Short-Term Crude Outlook (Aug): prior 52.15
12:00 DOE Short-Term Mogas Outlook (Aug): prior 2.28
12:00 DOE Short-Term Diesel Outlook (Aug): prior 2.71
12:00 DOE Short-Term Ht Oil Outlook (Aug): prior 2.64
12:00 DOE Short-Term NatGas Outlook (Aug): prior 10.57
Mortgage Delinquencies (2Q): prior 4.77%
MBA Mortgage Foreclosures (2Q): prior 1.74%

Global Economics

04:30 GBP Manufacturing Production
04:30 GBP Goods Trade Balance
23:05 AUD RBA Gov Stevens Speaks

Earnings

Before the Open:

Bitauto Holdings (BITA)
Coach Inc (COH)
Incyte Corp (INCY)
Norwegian Cruise Line (NCLH)
Wayfair (W)

After the Close:

Clean Energy Fuels (CLNE)
Cyberark Software (CYBR)
Exone (XONE)
Fossil Group (FOSL)
Infinity Pharma (INFI)
Solar City (SCTY)
SunPower (SPWR)
Twilio (TWLO)
Walt Disney (DIS)
Yelp Inc (YELP)