Market Summary
from Briefing.comIndustry Watch
Strong: Financials
Weak: Energy, Health Care, Real Estate, Utilities, Materials
- Crude oil retreats in reaction to bearish API inventory data
- FOMC announces 25-basis point rate hike, as expected
[BRIEFING.COM] The stock market ended the midweek session on a lower note, extending its retreat after the Federal Open Market Committee announced a 25-basis point rate hike. The S&P 500 settled lower by 0.8% while the Russell 2000 (-1.2%) underperformed.
Going into today's session, market participants were all but sure that the Fed would raise rates for the first time since last December. The central bank lived up to that expectation, but the accompanying "dot plot" indicated that policymakers expect to raise rates three times in 2017. This is at odds with the fed funds futures market, which expects just two hikes in 2017.
During her press conference, Fed Chair Janet Yellen was asked if fiscal policies that fail to boost productivity could prompt the Fed to be more aggressive when it comes to hiking rates, but Ms. Yellen's response only acknowledged the presence of considerable uncertainty on the fiscal front.
Treasuries retreated in reaction to the rate increase while the U.S. Dollar Index (102.10, +1.04) jumped 1.0% to mark a fresh high for the year. As for Treasuries, short-dated issues bore the brunt of today's selling while the long end remained anchored. The 2-yr yield jumped eight basis points to 1.25% while the 10-yr yield rose five basis points to 2.52%. The long bond ended slightly lower with its yield increasing one basis point to 3.14%.
All eleven sectors ended the day in negative territory with rate-sensitive groups leading the retreat. Real estate (-1.9%) and utilities (-2.0%) settled near the bottom of the leaderboard while consumer staples (-1.0%) and telecom services (-1.0%) posted slimmer losses. The health care sector (-0.4%) ended a bit ahead of the market thanks to the outperformance among biotech names. The iShares Nasdaq Biotechnology ETF (IBB 269.42, +0.37) added 0.1%.
Most cyclical sectors struggled at the start while technology (-0.3%) and financials (-0.6%) displayed early strength. The financial sector surged in immediate reaction to the rate hike, but reversed just below its high from December 8. The economically-sensitive sector remains higher by 4.2% for the month, trading only behind telecom services (month-to-date +4.8%).
The energy sector (-2.1%) settled at the bottom of the leaderboard, pressured by daylong weakness in crude oil. The energy component sank 3.7% to $51.03/bbl, beginning its retreat after yesterday's bearish API inventory report. Crude saw no respite from a bullish inventory report that was released by the Energy Information Administration this morning.
With all eyes on the Fed, stock-specific news was relegated to the backburner, masking press reports from China that suggested an unnamed U.S. automaker will be fined for monopolistic behavior. General Motors (GM 35.95, -1.41) lost 3.8% while Ford (F 12.53, -0.24) surrendered 1.9%.
Investor participation was ahead of average with more than 1.2 billion shares changing hands at the NYSE floor.
Economic data included Retail Sales, PPI, Industrial Production, and Business Inventories:
Going into today's session, market participants were all but sure that the Fed would raise rates for the first time since last December. The central bank lived up to that expectation, but the accompanying "dot plot" indicated that policymakers expect to raise rates three times in 2017. This is at odds with the fed funds futures market, which expects just two hikes in 2017.
During her press conference, Fed Chair Janet Yellen was asked if fiscal policies that fail to boost productivity could prompt the Fed to be more aggressive when it comes to hiking rates, but Ms. Yellen's response only acknowledged the presence of considerable uncertainty on the fiscal front.
Treasuries retreated in reaction to the rate increase while the U.S. Dollar Index (102.10, +1.04) jumped 1.0% to mark a fresh high for the year. As for Treasuries, short-dated issues bore the brunt of today's selling while the long end remained anchored. The 2-yr yield jumped eight basis points to 1.25% while the 10-yr yield rose five basis points to 2.52%. The long bond ended slightly lower with its yield increasing one basis point to 3.14%.
All eleven sectors ended the day in negative territory with rate-sensitive groups leading the retreat. Real estate (-1.9%) and utilities (-2.0%) settled near the bottom of the leaderboard while consumer staples (-1.0%) and telecom services (-1.0%) posted slimmer losses. The health care sector (-0.4%) ended a bit ahead of the market thanks to the outperformance among biotech names. The iShares Nasdaq Biotechnology ETF (IBB 269.42, +0.37) added 0.1%.
Most cyclical sectors struggled at the start while technology (-0.3%) and financials (-0.6%) displayed early strength. The financial sector surged in immediate reaction to the rate hike, but reversed just below its high from December 8. The economically-sensitive sector remains higher by 4.2% for the month, trading only behind telecom services (month-to-date +4.8%).
The energy sector (-2.1%) settled at the bottom of the leaderboard, pressured by daylong weakness in crude oil. The energy component sank 3.7% to $51.03/bbl, beginning its retreat after yesterday's bearish API inventory report. Crude saw no respite from a bullish inventory report that was released by the Energy Information Administration this morning.
With all eyes on the Fed, stock-specific news was relegated to the backburner, masking press reports from China that suggested an unnamed U.S. automaker will be fined for monopolistic behavior. General Motors (GM 35.95, -1.41) lost 3.8% while Ford (F 12.53, -0.24) surrendered 1.9%.
Investor participation was ahead of average with more than 1.2 billion shares changing hands at the NYSE floor.
Economic data included Retail Sales, PPI, Industrial Production, and Business Inventories:
- Retail sales increased just 0.1% (Briefing.com consensus +0.3%) after a downwardly revised 0.6% increase (from +0.8%) for October. A 0.5% decline in auto sales was the main drag on total retail sales
- Excluding autos, retail sales were up 0.2% (Briefing.com consensus +0.4%), aided by modest sales increases in most retail categories
- Both the final demand indexes for PPI and core-PPI, which excludes food and energy, were up 0.4% in November against the Briefing.com consensus estimates of +0.1% and +0.2%, respectively
- With prices rising at the producer level, some angst may arise about higher consumer inflation going forward
- Industrial production declined 0.4% in November following an upwardly revised 0.1% increase (from 0.0%) in October. Taking the revision into account, the decline in November was largely in-line with the Briefing.com consensus estimate that called for a 0.3% decline
- Business inventories declined 0.2% in October (Briefing.com consensus -0.1%) versus a downwardly revised unchanged reading (from +0.1%) for September
- Sales increased 0.8% on top of an upwardly revised 0.8% increase (from +0.7%) for September
- The weekly MBA Mortgage Index fell 4.0% to follow last week's 0.7% decline
- Russell 2000 +19.5% YTD
- Dow Jones Industrial Average +13.6% YTD
- S&P 500 +10.2% YTD
- Nasdaq Composite +8.6% YTD
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Economic Data
from Briefing.com| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Dec 14 | 07:00 | MBA Mortgage Index | 12/10 | -4.0% | NA | NA | -0.7% | |
| Dec 14 | 08:30 | Retail Sales | Nov | 0.1% | 0.4% | 0.3% | 0.6% | 0.8% |
| Dec 14 | 08:30 | Retail Sales ex-auto | Nov | 0.2% | 0.5% | 0.4% | 0.6% | 0.8% |
| Dec 14 | 08:30 | PPI | Nov | 0.4% | 0.1% | 0.1% | 0.0% | -- |
| Dec 14 | 08:30 | Core PPI | Nov | 0.4% | 0.2% | 0.2% | -0.2% | -- |
| Dec 14 | 09:15 | Industrial Production | Nov | -0.4% | -0.3% | -0.1% | 0.1% | 0.0% |
| Dec 14 | 09:15 | Capacity Utilization | Nov | 75.0% | 75.0% | 75.1% | 75.4% | 75.3% |
| Dec 14 | 10:00 | Business Inventories | Oct | -0.2% | NA | -0.1% | 0.0% | 0.1% |
| Dec 14 | 10:30 | Crude Inventories | 12/10 | -2.600M | NA | NA | -2.389M | |
| Dec 14 | 14:00 | FOMC Rate Decision | Dec | 0.625% | 0.625% | 0.625% | 0.375% |
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Technical Update
DOW JONES INDUSTRIAL AVERAGE19792.53 -118.68 (-0.60%)
Volume: 408.43 Mil above average of 127.92 Mil
Range: 19748.67 - 19966.43
S&P500 INDEX
2253.28 -18.44 (-0.81%)
Volume: 2660.46 Mil above average of 859.29 Mil
Range: 2248.44 - 2276.2
DOW JONES TRANSPORTATION AVERAGE
9218.36 -127.49 (-1.36%)
Volume: 63.19 Mil above average of 23.92 Mil
Range: 9207.85 - 9362.5
NASDAQ COMPOSITE
5436.669922 -27.16 (-0.50%)
Volume: 1974.15 Mil above average of 1869.38 Mil
Range: 5425.72998 - 5476.25
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Market Internal
NYSE :Higher than average volume @ 1045.2M vs 927.4M
Decliners outpaced Advancers(adv/dec): 584M/2395M
New highs outpaced low(high/low): 88/63
NASDAQ :
Higher than average volume @ 1955.1M vs 1851.8M
Decliners outpaced Advancers(adv/dec): 766M/2099M
New highs outpaced low(high/low): 124/68
Decliners outpaced Advancers by 3.33 to 1 on higher volumes 3000.3 (+7.95%) than avg 2779 (-0.15%)
VOLATILITY S&P500 (VIX) :
13.19 +0.47 (+3.69%)
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Bonds, Currencies & Commodities
from Briefing.comBonds
Hawkish Dot Plot Dents Treasuries and Stocks
- The spread between 2 and 30-year Treasuries narrowed sharply today (-7 basis points to 189 bps) as the upward revision to the FOMC's dot plot forecasts pushed investors to position for a more hawkish Federal Reserve in 2017. The Summary of Economic Projections showed that the median forecast for 2017 was three 25-basis point rate hikes, up from two in September. While the scheduled shift in voting membership from regional Fed presidents like Esther George and Loretta Mester to Chicago Fed President Evans and Minneapolis Fed Kashkari may limit the pass-through of the FOMC participants' expectations into actual rate hikes, the news hit financial markets that were already sensitive to upward moves in interest rates and the greenback The U.S. Dollar Index now trades up 0.76% to 101.84 and the 2-year yield went as high as 1.26%, its highest level of the recovery. Earlier in the session, retail sales and industrial production data for November missed expectations but the PPIs -- both core and headline -- rose more quickly than expected. The S&P 500 now trades down 0.78% to 2,254.1
- Yield Check:
- 2-yr: +8 bps to 1.25%
- 5-yr: +9 bps to 2.00%
- 10-yr: +5 bps to 2.52%
- 30-yr: +1 bps to 3.14%
- News:
- The FOMC voted unanimously to raise the target range for the Fed funds rate by 25 basis points to 0.50-0.75%, the second rate hike since the financial crisis
- The committee's Summary of Economic Projections showed that participants -- a group that includes non-voting policymakers on the FOMC -- forecast three 25-basis point rate hikes in 2017, up from only two in September
- U.S. retail sales grew 0.1% m/m in November, missing the Briefing.com consensus of 0.3%. October's growth was revised down to 0.6% from 0.8%
- Retail sales excluding automobiles were up 0.2% m/m, missing the Briefing.com consensus of 0.4%. October's growth was also revised down to 0.6% from 0.8%
- The producer price index was up 0.4% m/m in November, well ahead of the Briefing.com consensus of 0.1%. October saw no change
- The core producer price index was up 0.4% m/m, missing its Briefing.com consensus of 0.2%. The core PPI was down 0.2% in October
- U.S. industrial production declined 0.4% m/m in November, missing the Briefing.com consensus for a drop of 0.1%. October's change was revised up to 0.01% from 0.0%
- Manufacturing production, which strips out mining and utilities from industrial production, fell 0.1%. October saw a 0.3% jump in manufacturing production, revised up from 0.2%
- The underperformance of industrial production to manufacturing was related to unseasonably warm weather. Utility output declined 4.4% mm/ after falling 2.8% in October
- U.S. business inventories fell 0.2% m/m in October, missing the Briefing.com consensus for just a 0.1% decline. The September change was +0.1%
- The FOMC voted unanimously to raise the target range for the Fed funds rate by 25 basis points to 0.50-0.75%, the second rate hike since the financial crisis
- Commodities:
- WTI crude: -4.00% to $50.86/bbl.
- Gold: -0.90% to $1,148.5/troy oz.
- Copper: unch at $2.5995/lb.
- Currencies:
- EUR/USD: -0.86% to 1.0544
- USD/JPY: +1.24% to 116.50
- Data out Thursday:
- November CPI and Core CPI (08:30 ET)
- Initial Jobless Claims for the week ending 12/10 and Continuing Jobless Claims for the week ending 12/03 (08:30 ET)
- December Philadelphia Fed (08:30 ET)
- December Empire Manufacturing (08:30 ET)
- Q3 Current Account Balance (08:30 ET)
- December NAHB Housing Market Index (10:00 ET)
- Natural Gas Inventories for the week ending 12/10 (10:30 ET)
- October Net Long-Term TIC Flows (16:00 ET)
Currencies
Commodities
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Preview: Thursday, 15 December 2016
Economic Data
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Dec 15 | 08:30 | CPI | Nov | 0.2% | 0.2% | 0.4% | ||
| Dec 15 | 08:30 | Core CPI | Nov | 0.2% | 0.2% | 0.1% | ||
| Dec 15 | 08:30 | Initial Claims | 12/10 | 253K | 256K | 258K | ||
| Dec 15 | 08:30 | Continuing Claims | 12/03 | NA | NA | 2005K | ||
| Dec 15 | 08:30 | Philadelphia Fed | Dec | 10.5 | 9.0 | 7.6 | ||
| Dec 15 | 08:30 | Empire Manufacturing | Dec | 3.5 | 3.0 | 1.5 | ||
| Dec 15 | 08:30 | Current Account Balance | Q3 | -$112.5B | -$111.6B | -$119.9B | ||
| Dec 15 | 10:00 | NAHB Housing Market Index | Dec | 64 | 63 | 63 | ||
| Dec 15 | 10:30 | Natural Gas Inventories | 12/10 | NA | NA | -42 bcf | ||
| Dec 15 | 16:00 | Net Long-Term TIC Flows | Oct | NA | NA | -$26.2B |
Other Events of Interest
Earnings
Commentary
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Direction for 15 December 2016: UP
Direction for 15 December 2016: UP
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