Closing Stock Market SummaryThe major indices registered some decent gains at their highs for the session, but closed a good bit off their best levels of the day; however, a rally effort in the last 10 minutes saved them from a negative finish. The market was a little choppy early on due to some uneven performances in the mega cap space, but the main indices settled into a narrow range with sizable gains until the release of the FOMC Minutes for the December 13-14 meeting at 2:00 p.m. ET.
There wasn't anything too surprising in the release, but the market did experience some post-Minutes volatility with participants seemingly reacting to the following: "No participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023."
Despite the major indices closing off their highs, market internals reflected a decent positive bias. Advancers led decliners by a 4-to-1 margin at the NYSE and a greater than 2-to-1 margin at the Nasdaq. The Invesco S&P 500 Equal Weight ETF (RSP) was up 1.6% versus a 0.5% gain in the Vanguard Mega Cap Growth ETF (MGK) and a 0.8% gain in the S&P 500.
Ultimately, the S&P 500 was able to settle just a whisker above the 3,850 level, which has been a resistance point since mid-December. Additionally, it logged a net gain for the Santa Claus rally period (the last five trading sessions of the year and the first two trading sessions of the new year), which, historically has been regarded as a positive sign for the start of the new year.
Microsoft (MSFT 229.10, -10.48, -4.4%), which was downgraded to Neutral from Buy at UBS on concerns about weaker growth for the Azure and Office 365 businesses, Alphabet (GOOG 88.71, -0.99, -1.1%), and Amazon.com (AMZN 85.14, -0.68, -0.8%) were among the more influential drags on the market while Apple (AAPL 126.36, +1.29, +1.0%), Tesla (TSLA 113.64, +5.54, +5.1%), and Meta Platforms (META 127.37, +2.63, +2.1%) helped out the rebound effort.
Dow component Salesforce (CRM 139.59, +4.81, +3.6%) was another notable winner today following reports that it will be pursuing a restructuring effort that will include the elimination of roughly 10% of its staff and select real estate exits and and office space reductions.
All 11 S&P 500 sectors were able to register a gain with real estate (+2.3%) and materials (+1.7%) leading the outperformers. Meanwhile, the energy (+0.1%), health care (+0.3%), and information technology (+0.3%) sectors fell to the bottom of the pack.
The 2-yr Treasury note yield settled the session unchanged at 4.37% while the 10-yr note yield fell seven basis points to 3.71%.
- Dow Jones Industrial Average: 0.2% YTD
- S&P Midcap 400: +0.8% YTD
- S&P 500: +0.2% YTD
- Russell 2000: +0.7% YTD
- Nasdaq Composite: -0.4% YTD
Reviewing today's economic data:
- The MBA Mortgage Applications Index for the week ending December 31 fell 13.2% from two weeks earlier with purchase applications declining 12.2% and refinancing applications falling 16.3%.
- The December ISM Manufacturing Index dropped to 48.4% ( consensus 48.5%) from 49.0% in October. The dividing line between expansion and contraction is 50.0%, so the sub-50.0% reading for December reflects a general contraction in manufacturing activity. The ISM for December hit its lowest level since May 2020, and marks the second straight month with a sub-50.0% reading.
- The key takeaway from the report is that manufacturing activity contracted in December for the second straight month, demonstrating that the cumulative effect of rate hikes around the globe is adversely impacting demand while at the same time curtailing inflation pressures.
- JOLTS - Job Openings increased to 10.458 million in November from a revised total of 10.512 million in October (from 10.334 million).
Looking ahead to Thursday, market participants will receive the following economic data:
- 08:15 ET: December ADP Employment Change Report ( consensus 148K; Prior 127K)
- 08:30 ET: Initial Jobless Claims for week ending Dec. 31 ( consensus 225K; Prior 225K) and Continuing Jobless Claims for week ending Dec. 24 (Prior 1710K)
- 08:30 ET: November Trade Balance ( consensus -$76.4B; Prior -$78.2B)
- 09:45 ET: December Final IHS Markit Services PMI (Prior 44.4)
- 10:30 ET: EIA Natural Gas Inventories (Prior -213 bcf)
- 11:00 ET: EIA Crude Oil Inventories (Prior 0.718M)