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     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3922 Registered: 05-2011 Posted From: 24.164.46.35 Rating: N/A |
Closing Stock Market Summary The S&P 500 fell 1.4% on Thursday, as the growth stocks succumbed to renewed selling interest in spite of lower interest rates. The Nasdaq Composite fell 2.5% while the Dow Jones Industrial Average (-0.5%) and Russell 2000 (-0.8%) declined more modestly. The information technology (-2.7%), consumer discretionary (-2.1%), and communication services (-1.4%) sectors -- which contain the mega-caps -- underperformed along with the health care sector (-1.6%). The utilities (+0.5%), industrials (+0.2%), and consumer staples (+0.2%) sectors were the only sectors that closed higher. The retreat in growth stocks started shortly after the open, even as the Treasury market remained calm and the 10-yr yield declined by one basis point to 1.71%. Some surmised that the recent rebound in growth stocks presented a good opportunity to take profits on the belief that growth will underperform value this year. The latter stems from the Fed's plans to tighten policy, possibly starting in March, to help keep inflation in check. On a related note, Fed Vice Chair nominee Lael Brainard told the Senate Banking Committee in her confirmation hearing that the Fed's most important task is to rein in inflation while sustaining an inclusive recovery. Investors received more inflation data today in the Producer Price Index for December. The index for final demand increased just 0.2% m/m (Briefing.com consensus 0.4%) amid a sharp decline in oil prices, but it's important to note that oil prices have since reclaimed those losses. WTI crude futures decreased 0.7%, or $0.55, to $81.96/bbl today. The 2-yr yield, meanwhile, was unchanged at 0.89%. The U.S. Dollar Index decreased 0.1% to 94.87. In earnings news, Taiwan Semi (TSM 139.19, +6.96, +5.3%), Delta Air Lines (DAL 41.47, +0.86, +2.1%), and KB Home (KBH 49.38, +7.00, +16.5%) each beat EPS estimates, with TSM also guiding Q1 revenue above consensus. As a reminder, several big banks will report earnings prior to Friday's open. Delta's earnings report catalyzed the gains in the airline space, evident in the 2% increase in the U.S. Global Jets ETF (JETS 22.55, +0.49, +2.2%). While TSM jumped 5%, the Philadelphia Semiconductor Index still dropped 2.3% as the chip stocks followed the other growth stocks lower. As an aside, the S&P 500 fell below its 50-day moving average (4681) on a closing basis. Reviewing Thursday's economic data: The December Producer Price Index showed that the index for final demand increased 0.2% month-over-month (Briefing.com consensus 0.4%) while the index for final demand, less foods and energy, increased 0.5% (Briefing.com consensus 0.4%). That left the year-over-year increases on an unadjusted basis at 9.7% and 8.3%, respectively. The key takeaway from the report is that most categories that saw decreases in December were due to a sharp drop in the price of oil at the end of November. That drop was reversed entirely in December and early January, so these savings will prove to be temporary. Initial claims for the week ending January 8 increased by 23,000 to 230,000 (Briefing.com consensus 202,000) from last week's unrevised level while continuing claims decreased by 194,000 to 1.559 million from last week's revised level of 1.753 mln (from 1.754 mln). The key takeaway from the report is that roughly half of last week's increase in claims was owed to higher claims in states like New York, Pennsylvania, Connecticut, Washington, and Michigan. These increases took place as new coronavirus cases in these areas reached record highs. Looking ahead, investors will receive Retail Sales for December, the preliminary University of Michigan Index of Consumer Sentiment for January, Industrial Production and Capacity Utilization for December, and Import and Export Prices for December on Friday. Dow Jones Industrial Average -0.6% YTD S&P 500 -2.3% YTD Russell 2000 -3.8% YTD Nasdaq Composite -5.4% YTD |