Closing Stock Market Summary
The stock market had a decent showing today. The major indices added modest gains, continuing a rally that began after yesterday's CPI data. The S&P 500 closed just above the 4,500 level with a 0.2% gain, which was still impressive considering the S&P 500 is up 9.4% since October 27.
The thinking that the Fed is done raising rates contributed to the positive bias following another batch of economic data that seemed consistent with a soft landing scenario for the economy.
Total retail sales declined 0.1% month-over-month in October (Briefing.com consensus -0.3%) and sales, excluding autos, increased just 0.1% (Briefing.com consensus -0.2%). The retail sales data are not adjusted for inflation, so these weak month-over-month changes signify a weakening in demand for goods.
Separately, the Producer Price Index for final demand declined 0.5% month-over-month (Briefing.com consensus 0.1%) and was up just 1.3% year-over-year versus 2.1% in September. Excluding food and energy, the index for final demand was unchanged month-over-month (Briefing.com consensus 0.3%) and up 2.4% year-over-year versus 2.7% in September.
The positive bias was also supported by a huge gain in Target (TGT 130.46, +19.67, +17.8%) following its better-than-expected earnings results and a lingering fear of missing out on further gains during a seasonally strong time of year for the market.
Seven of the 11 S&P 500 sectors closed with a gain led by consumer staples (+0.7%), communication services (+0.6%), and financials (+0.6%). The energy (-0.3%), utilities (-0.3%), and information technology (-0.1%) sectors, meanwhile, fell to the bottom of the pack.
In spite of today's pleasing economic data, Treasuries experienced some selling after yesterday's big gains. The 2-yr note yield rose nine basis points today to 4.91% after plunging 22 basis points yesterday. The 10-yr note yield climbed nine basis points to 4.54% after declining 19 basis points yesterday.
Notably, President Biden and President Xi met today at the APEC Summit. Both leaders gave introductory remarks, but there was no public discussion of policy issues. President Biden will hold a press conference tonight at 7:15 p.m. ET.
- Nasdaq Composite: +34.8% YTD
- S&P 500: +17.3% YTD
- Dow Jones Industrial Average: +5.6% YTD
- S&P Midcap 400: +4.6% YTD
- Russell 2000: +2.3% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 2.8%; Prior 2.5%
- October Retail Sales -0.1% ( consensus -0.3%); Prior was revised to 0.9% from 0.7%; October Retail Sales ex-auto 0.1% ( consensus -0.2%); Prior was revised to 0.8% from 0.6%
- The key takeaway from the report is that it isn't adjusted for inflation, so it is clear to see that consumer demand for goods in October fell off noticeably from September.
- October PPI -0.5% ( consensus 0.1%); Prior was revised to 0.4% from 0.5%; October Core PPI 0.0% (consensus 0.3%); Prior was revised to 0.2% from 0.3%
- The key takeaway from the report is that it reflects a sharp moderation in prices at the wholesale level, which should remain relatively subdued barring a future jump in energy prices, as the index for unprocessed goods for intermediate demand was down 1.4%.
- November Empire State Manufacturing 9.1 (consensus -5.0); Prior -4.6
- September Business Inventories 0.4% ( consensus 0.4%); Prior 0.4%
Looking ahead, Thursday's economic calendar features:
- 8:30 ET: Weekly Initial Claims ( consensus 220,000; prior 217,000), Continuing Claims (prior 1.834 mln), October Import Price Index (prior 0.1%), Import Prices ex-oil (prior -0.2%), Export Price Index (prior 0.7%), Export Prices ex-agriculture (prior 1.0%), and Philadelphia Fed Survey ( consensus -7.5; prior -9.0)
- 9:15 ET: October Industrial Production ( consensus -0.4%; prior 0.3%) and Capacity Utilization (consensus 79.4%; prior 79.7%)
- 10:00 ET: November NAHB Housing Market Index consensus 40; prior 40)
- 10:30 ET: Weekly natural gas inventories
- 16:00 ET: September Net Long-Term TIC Flows (prior $63.5 bln)