Closing Stock Market Summary
The stock market closed out this solid week on a somewhat mixed note. The Nasdaq Composite climbed 0.4% and the Dow Jones Industrial Average gained 0.2%. Meanwhile, the S&P 500 closed little changed from yesterday and the Russell 2000 declined 0.8%.
There was a brief spike in the afternoon trade that was likely related to today's huge quarterly options and futures expiration, which led to heavy volume at the NYSE and Nasdaq throughout the session. Increased activity was also related to a rebalance of the S&P 500 and Nasdaq 100.
Mega cap stocks, growth stocks, and semiconductor stocks exhibited relative strength while the "rest" of the market traded down. The Vanguard Mega Cap Growth ETF (MGK) registered a 0.4% gain; the Russell 3000 Growth Index saw a 0.4% gain; and the PHLX Semiconductor Index climbed 0.5%. Meanwhile, the equal-weighted S&P 500 fell 0.7%.
Decliners had a better than 2-to-1 lead over advancers at the NYSE and a 3-to-2 lead at the Nasdaq.
Three of the S&P 500 sectors closed higher, boosted by their mega cap constituents, while eight sectors declined. The information technology sector (+0.7%) saw the biggest gain while the utiltiies sector (-1.7%) registered the biggest loss.
Selling efforts had been driven by a lingering sense that stocks are overbought on a short-term basis. Still, selling was modest considering the scope of recent gains. The S&P 500 closed 14.6% higher than its late October low.
The negative bias had also been related in part to New York Fed President Williams (FOMC voter) in a CNBC interview seemingly contradicting Fed Chair Powell's remarks on Wednesday.
He said that it is premature to think about the timing of rate cuts, but Mr. Powell indicated that the committee discussed at this week's meeting when the timing would be appropriate to dial back policy restraint.
Atlanta Fed President Bostic (2024 FOMC voter) told Reuters, meanwhile, that he expects two rate cuts in 2024, starting in the second half of the year.
Treasuries had a volatile response to the commentary from Fed President Williams, but things calmed down as the session progressed. The 2-yr note jumped to 4.50% from 4.41% after his remarks, but settled at 4.46%, which is six basis points higher than yesterday. The 10-yr note yield moved from 3.92% to 3.98%, but settled unchanged from yesterday at 3.93%.
Some generally soft industrial production data for November, and further slippage in the preliminary December S&P Global US Manufacturing PMI to 48.2 from the final reading of 49.4 for November, helped spur some rebound action in the Treasury market.
- Nasdaq Composite: +41.5%
- S&P 500: +22.9%
- Dow Jones industrial Average: +12.5%
- S&P Midcap 400: +13.0%
- Russell 2000: +12.7%
Reviewing today's economic data:
- December Empire State Manufacturing -14.5 (consensus 3.0); Prior 9.1
- November Industrial Production 0.2% (consensus 0.2%); Prior was revised to -0.9% from -0.6%; November Capacity Utilization 78.8% (consensus 79.1%); Prior was revised to 78.7% from 78.9%
- The key takeaway from the report is that industrial production was boosted by the end of the UAW strike, which bolstered manufacturing output. Excluding motor vehicles and parts, the index for manufacturing decreased 0.2%.
- December S&P Global US Manufacturing PMI - Prelim 48.2; Prior 49.4
- December S&P Global US Services PMI - Prelim 51.3; Prior 50.8
Looking ahead, economic data is limited to the December NAHB Housing Market Index (prior 34) at 10:00 a.m. ET.