The futures were in the red this morning ahead of the release of a few data points. This included the producer price index for November, which recorded wholesale price increases of 0.4% month over month, and exceeded economists’ forecast. When excluding volatile food and energy prices, wholesale prices were up 0.2% month over month. On an annualized basis, these figures were up 3.0% and 3.4%, respectively. Elsewhere, initial jobless claims came in at a seasonally adjusted 242,000, which was higher than expected. The futures market tanked further after the release of these reports, and technology names were hit harder than others. All told, this suggests a weak start to the trading day.
Yesterday’s trading was affected by the release of Consumer Price Index data, which showed that prices were up 2.7% (up 0.3% month over month) compared to the prior-year period. Core prices, which exclude food and energy and are a key input to the Federal Reserve’s interest-rate policy decisions, were up 3.3%. Traders took this outcome positively and generally bought stocks in the early session. The S&P 500 and NASDAQ largely trended higher throughout the day, ending not too far from their daily highs. However, the Dow Jones Industrial Average fell in the first part of the trading session and failed to recover lost ground throughout the day. All told, the S&P 500 rose 49 points (up 0.82%) and the NASDAQ increased 348 points (up 1.77%), setting an all-time high and eclipsing 20,000 for the first time. The Dow Jones Industrial Average finished off 99 points (down 0.22%). Market breadth was slightly positive, with advancers outpacing decliners by a 1.1-to-1.0 ratio. Moreover, consumer discretionary stocks were amongst the best performers on the day, while healthcare-related issues were amongst the weakest.
In commodity news, oil prices rose rapidly yesterday, as news of a large drawdown in crude oil inventories more than offset news of higher gasoline inventories. Elsewhere, U.S. Treasury bond yields were mixed, with short-term rates falling, while long-term rates rose. This steepening of the yield curve is usually a positive for banking stocks, which borrow short and lend long. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, declined yesterday, as traders bought less options protection.
A few economic data points will be released tomorrow, including the Import Price Index for November from the Bureau of Labor Statistics. On the earnings front, the docket is quite empty of news, as only a handful of companies are slated to report quarterly results. That said, large retailer Costco (COST) will report earnings and its outlook after the close today. - John E. Seibert III
At the time of this article’s writing, the author held positions in none of the companies mentioned.
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