Economic data on Friday will be limited to the preliminary December IHS Markit Manufacturing PMI (prior 47.7) and Services PMI (prior 46.2) at 9:45 a.m. ET.
Closing Stock Market SummaryIt was a trend-down day for the stock market amid growing recession concerns. On the heels of the FOMC rate hike yesterday, market participants received a slate of generally disappointing economic data today that exacerbated the market's recession concerns.The main concern for market participants is that the Fed may overtighten and trigger a deeper economic setback in the U.S. That thinking stoked a belief that 2023 earnings estimates are too high, so today's trade reflected a general buyers' strike as investors rein in their willingness to pay a premium for earnings that are likely to be subject to downward revision.The slowdown issue is not confined to the U.S., though, as other central banks have also been raising rates -- and pointing to the likelihood of more rate hikes to come -- to get inflation under control.Since yesterday's close, the ECB, Bank of England, Swiss National Bank, and Hong Kong Monetary Authority all raised their benchmark rates by 50 basis points. The Norges Bank raised its benchmark rate by 25 basis points.Today's economic reports only added fuel to the recession concerns. China's November retail sales, industrial production, and fixed asset investment data was all weaker than expected. The November retail sales and industrial production in the U.S., as well as the December Philadelphia Fed Index and New York Empire State Manufacturing Survey, were also weaker than expected.The broad based retreat brought the S&P 500 below the 3,900 level after the index reached 4,100 on Tuesday. All 11 S&P 500 sectors closed in the red with losses ranging from 0.5% (energy) to 3.8% (communication services). The information technology sector (-3.8%) was another influential laggard.Mega cap stocks dragged on index level performance. The Vanguard Mega Cap Growth ETF (MGK) closed down 3.3% versus a 2.2% loss in the Invesco S&P 500 Equal Weight ETF (RSP) and a 2.5% loss in the S&P 500. Growth stocks in general fared worse than value stocks. The Russell 3000 Growth Index was down 3.0% while the Russell 3000 Value Index was down 2.1%.The 2-yr Treasury note yield fell one basis point to 4.25% and the 10-yr note yield fell five basis points to 3.45%. The U.S. Dollar Index jumped 0.8% to 104.64.
- Dow Jones Industrial Average: -8.6% YTD
- S&P Midcap 400: -14.1% YTD
- Russell 2000: -21.0% YTD
- S&P 500: -18.3% YTD
- Nasdaq Composite: -30.9% YTD
Reviewing today's economic data:
- November Retail Sales -0.6% (Bconsensus -0.1%); Prior 1.3%; November Retail Sales ex-auto -0.2% (consensus 0.2%); Prior was revised to 1.2% from 1.3%
- The key takeaway from the report is that monthly sales declines were logged in nearly every discretionary category. The exceptions were miscellaneous store retailers (+0.5%) and food services and drinking places (+0.9%).
- Weekly Initial Claims 211K ( consensus 227K); Prior was revised to 231K from 230K; Weekly Continuing Claims 1.671 mln; Prior was revised to 1.670 mln from 1.671 mln
- The key takeaway from this report is that the low level of initial claims -- a leading indicator -- fits the Fed's own narrative that it needs to keep raising rates, which in turn will contribute to the market's concerns that the Fed will overdue things with its rate hikes and force a hard landing for the economy.
- December Philadelphia Fed Index -13.8 (Briefing.com consensus -10.0); Prior -19.4
- December Empire State Manufacturing -11.2 (Briefing.com consensus -1.0); Prior 4.5
- November Industrial Production -0.2% (Briefing.com consensus 0.1%); Prior -0.1%; November Capacity Utilization 79.7% (Briefing.com consensus 80.0%); Prior 79.9%
- The key takeaway from the report is that there was broad-based weakness in the manufacturing sector. The indexes for durable and nondurable manufacturing were both down 0.6% while the index for other manufacturing dropped 0.4%.
- October Business Inventories 0.3% (Briefing.com consensus 0.4%); Prior was revised to 0.2% from 0.4%
- Weekly EIA Natural Gas Inventories showed a draw of 50 bcf versus a draw of 21 bcf last week