Closing Comment — Thursday, December 08, 2022
DJIA: 33,781.48, up 183.56
S&P 500: 3,963.51, up 29.59
Nasdaq: 11,082.00, up 123.45
Stocks rebound; oil slides
U.S. equities finished higher as Wall Street looked ahead to upcoming inflation data and next week’s Federal reserve (Fed) meeting. Tomorrow, the November Producer Price Index (PPI) data is set to be released and is expected to show wholesale prices have eased. The Dow added 183 points, while the Nasdaq Composite climbed 1.1%. The S&P 500 advanced 0.8%. Nine of 11 S&P 500 sectors finished in positive territory, with Information Technology pacing gains.
On the data front, initial jobless claims increased to 230,000 in the week ended December 3, up from the prior week’s 226,000 print. While claims increased, they remain near historic lows and provide minimal evidence of a softening labor market. Treasury yields climbed as investors remain uncertain about the future course of interest rate hikes from the Fed. The yield on the benchmark 10-year note climbed eight basis points (0.08%) to 3.49%, while the yield on the 30-year bond increased two basis points (0.02%) to 3.44%. The yield on the two-year note, which is more sensitive to changes in Fed policy, gained seven basis points (0.07%) to 4.32%. In commodities, West Texas Intermediate (WTI) crude reversed earlier gains to fall 0.8% to $71.45/barrel following reports a major crude pipeline from Canada to the U.S. is resuming services after being shut due to a leak. Today’s moves brought the domestic benchmark to a fresh 2022 low. The U.S. Dollar Index slipped 0.3% as investors look towards next week’s rate decisions from the Fed, the European Central Bank, and the Bank of England.
Opening Comment — Thursday, December 08, 2022
DJIA: 33,597.92, up 1.58
S&P 500: 3,933.92, down 7.34
Nasdaq: 10,958.55, down 56.34
Stocks attempt to rebound
U.S. equity futures are higher Thursday as Wall Street attempts to shake-off this week’s market rout. Investors are beginning to turn their attention to next week’s inflation data and the Federal Reserve (Fed) monetary policy meeting. Recent economic data has suggested the economy remains robust, and could lead to the Fed raising interest rates for longer. The Dow is adding 0.3%, while the S&P 500 is climbing 0.4% in pre-market action. The Nasdaq 100 is trading 0.4% above fair value on the GLOBEX. Yesterday, stocks were mostly lower as Wall Street weighed recession risks. The Dow gained 1 point, while the Nasdaq Composite fell 0.5%. The S&P 500 declined 0.2%. MBA mortgage applications fell 1.9% in the week ended December 2. Meanwhile, nonfarm productivity for the third quarter was upwardly revised, while unit labor costs were downwardly revised. On the data front today, initial jobless claims for the week ended December 3 came in at 230,000, up from the prior week’s upwardly revised 226,000 print.
Overnight in Asia, China is continuing to ease their COVID-19 restrictions, allowing those who are diagnosed with the virus to quarantine at home. In Hong Kong, reports suggest officials are considering dropping their outdoor mask rule and reducing the quarantine period for travelers and those who come in close contact with confirmed cases. Elsewhere, Japan’s third-quarter Gross Domestic Product (GDP) was revised to show a contraction of 0.8% rather than a 1.1% contraction. Across the pond, investors are looking towards the European Central Bank (ECB) and Bank of England (BOE) policy meetings slated for next week. In the United Kingdom, recent data has shown the beginnings of a slowdown in the labor market as the economy remains on the brink of a recession. In FOREX trading, the U.S. Dollar Index is climbing 0.2% against a basket of major currencies as investors look towards next week’s central bank policy meetings and the release of U.S. inflation data.
Over in the commodity pits, West Texas Intermediate (WTI) crude is climbing 1.1% to $72.79/barrel amid optimism over potential increased demand as China reopens. Also boosting prices are reports some Russian oil tankers have been delayed following the implementation of the Group of Seven’s (G7) price cap. Yesterday, the domestic benchmark notched a fresh 2022 low amid heightened recessionary concerns. Meanwhile, the Energy Information Administration has reported U.S. crude stockpiles fell in the latest week, while gasoline inventories climbed. In the metals complex, spot gold is slipping 0.1% to $1783.00/ounce as investors try to gauge the future course of interest rate hikes. A stronger U.S. dollar is also pressuring prices, as it makes the yellow metal more expensive to foreign buyers.