Closing Stock Market Summary
The stock market is reportedly overbought, overvalued, and due for a pullback. Granted not everyone sees it that way, which is why the expected pullback still didn't happen today. On the contrary, the major indices found higher ground today, supported by mega-cap leadership and their own resilience to selling interest.
Meta Platforms (META 469.59, +14.87, +3.3%), NVIDIA (NVDA 700.99, +18.76, +2.8%), Microsoft (MSFT 414.05, +8.56, +2.1%), Alphabet (GOOG 146.68, +1.27, +0.9%), Amazon.com (AMZN 170.53, +1.38, +0.8%) and Eli Lilly (LLY 724.84, +19.81, +2.8%) provided a load of market-cap weighted influence on the major indices.
The only failure today --if one wants to call it that -- was the inability of the S&P 500 to hit the 5,000 level. It came oh, so close, topping out at 4,999.89 in the final hour of trading. Nonetheless, it still managed to log all-time intraday and closing highs in today's trade, garnering added support from outsized moves in the likes of Enphase Energy (ENPH 117.51, +17.00, +16.9%), Emerson Electric (EMR 104.04, +9.78, +10.4%), Chipotle Mexican Grill (CMG 2664.90, +177.16, +7.1%), Ford (F 12.80, +0.73, +6.0%), and CVS Health (CVS 76.04, +2.28, +3.1%) following their earnings reports.
On the flip side, Snap (SNAP 11.41, -6.05, -34.6%), which is not an S&P 500 component, plummeted 35% after coming up shy of Q4 revenue estimates and issuing disappointing Q1 adjusted EBITDA guidance. Dow component Amgen (AMGN 295.87, -20.20, -6.4%) was another notable laggard following its earnings results.
Contending for the most notable mover of note today was New York Community Bancorp (NYCB 4.50, +0.30, +7.1%). Following a Moody's downgrade of its long-term issuer rating to junk status (Ba2), shares of NYCB fell as much as 14.3% before staging a massive comeback effort that was presumably exacerbated by short-covering activity.
The turnaround there carried over to other regional bank stocks and was evident in the SPDR S&P Regional Banking ETF (KRE), which ended the session down just 0.3% after being down as much as 2.8% earlier in the day.
The S&P 500 financial sector managed to close 0.7% higher, but it was the information technology (+1.4%), consumer discretionary (+1.1%), communication services (+0.9%), and materials (+0.8%) sectors that stood atop the leaderboard when the closing bell rang.
The Vanguard Mega-Cap Growth ETF (MGK) jumped 1.3% today while the Invesco S&P 500 Equal-Weight ETF (RSP) rose a more modest 0.4%.
The Treasury market bobbed and weaved today, having digested a remark from Minneapolis Fed President Kashkari (non-FOMC voter) that two to three rate cuts this year are appropriate based on what he knows now, a contention from Fed Governor Kugler (FOMC voter) that the current target range for the fed funds rate may need to be held there for longer if progress on disinflation stalls, and a $42 billion 10-yr note auction that was met with strong demand. The 2-yr note yield settled up two basis points at 4.42% while the 10-yr note yield also settled up two basis points to 4.11%. Thursday will feature a $25 billion 30-yr bond auction.
- Nasdaq Composite: +5.0% YTD
- S&P 500: +4.7% YTD
- Dow Jones Industrial Average: +2.6% YTD
- S&P Midcap 400: -0.7% YTD
- Russell 2000: -3.8% YTD
Reviewing today's economic data:
- MBA Mortgage Applications Index +3.7% wk/wk with refinance applications +12% and purchase applications -1%.
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The trade deficit widened to $62.2 billion in December (consensus -$62.0 billion) from an upwardly revised $61.9 billion (from -$63.2 billion) in November. Exports were $3.9 billion more than November exports and imports were $4.2 billion more than November imports.
- The key takeaway from the report is that exports and imports both increased in a welcome sign for global trade.
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Consumer Credit increased by $1.6 bln in December (consensus $16.3 bln) following a downwardly revised $23.5 bln (from $23.8 bln) in November. Revolving credit increased by $1.1 bln in December to $1.314 trln. Nonrevolving credit increased by $0.5 bln to $3.696 trln.
- The key takeaway from the report is that the slowdown in credit expansion, both for revolving and nonrevolving debt, fits with banks tightening their lending standards and demand for credit lessening in the face of higher interest rates.
Thursday's economic calendar features:
- 8:30 ET: Weekly Initial Claims (consensus 218,000; prior 224,000) and Continuing Claims (prior 1.898 mln)
- 10:00 ET: December Wholesale Inventories (consensus 0.4%; prior -0.2%)
- 10:30 ET: Weekly natural gas inventories (prior -197 bcf)