Closing Stock Market Summary
The stock market registered broad based losses today. The Russell 2000 underperformed other major indices, declining 2.7%, while the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite declined 0.8%, 0.8%, and 1.2%, respectively.
Early selling, driven by profit-taking activity, had the major indices trading down ahead of the 2:00 p.m. ET release of the minutes for the December 12-13 FOMC meeting. The market experienced some volatility in response to the minutes, ultimately settling near session lows. The S&P 500 briefly slipped below the 4,700 level at its low of the day.
In discussing the policy outlook, the committee viewed the policy rate as likely at or near its peak for this tightening cycle. The Fed made it clear, however, that it isn't divorcing itself entirely from the idea that it might still have to raise rates again.
Rate cut expectations have decreased slightly following this release. The probability of 25 basis points rate cut at March FOMC meeting stands at 70.8% versus 79.0% yesterday and the probability of 25 basis points rate cut to at May FOMC meeting is 60.3% versus 73.6% yesterday.
Just about everything participated in downside moves today. Eight of the 11 S&P 500 sectors logged a decline with five of those sectors falling more than 1.0%. The real estate sector (-2.4%) saw the largest decline by a wide margin followed by the consumer discretionary sector (-1.9%).
Meanwhile, the energy sector outperformed, gaining 1.5%, as oil prices climbed ($72.82/bbl, +2.29, +3.3%).
Early selling in the Treasury market started to dissipated before 2:00 ET, but yields hit their intraday lows following the release. The 2-yr note yield declined one basis point to 4.32% and the 10-yr note yield fell four basis points to 3.91%.
Dow Jones industrial Average: -0.7%
S&P 500: -1.4%
S&P Midcap 400: -2.6%
Nasdaq Composite: -2.8%
Russell 2000: -3.4%
Reviewing today's economic data:
Weekly MBA Mortgage Applications Index -9.4%; Prior -1.5%
December ISM Manufacturing Index 47.4% (consensus 47.1%); Prior 46.7%
The key takeaway from the report is that the manufacturing sector remains stuck in contraction, but the report was not devoid of good market news, as the Prices Index sliding to 45.2% from 49.9% reflects a further easing of inflation pressures.
November JOLTS - Job Openings 8.790 mln; Prior was revised to 8.852 mln from 8.733 mln
Looking ahead, Thursday's economic calendar features:
8:15 ET: December ADP Employment Change (consensus 114,000; prior 103,000)
8:30 ET: Weekly Initial Claims ( consensus 220,000; prior 218,000) and Continuing Claims (prior 1.875 mln)
9:45 ET: Final December S&P Global U.S. Services PMI (prior 50.8)
10:30 ET: Weekly natural gas inventories (prior -87 bcf)
11:00 ET: Weekly crude oil inventories (prior -6.911 mln)