Closing Stock Market SummaryThe stock market kicked off today's session on a mixed note. The main indices oscillated around their flat lines in the first half of the day as investors awaited Fed Chair Powell's "Conversation with David Rubenstein" at the Economic Club of Washington, D.C. at 12:40 p.m. ET.
Mr. Powell didn't say anything too surprising, but the market responded with some volatile price action nonetheless. The main indices initially shot higher, a move that was attributed to Mr. Powell's relatively calm demeanor when asked about Friday's stronger than expected January jobs report.
That initial upside momentum quickly gave way to selling pressure, though, after Mr. Powell said that the Fed will react to the incoming data and will do more rate hikes if the data suggest that is necessary. That disclaimer has been provided by him in the past, however, so it was not surprising either. He also said that the Fed has a significant road ahead to get inflation down to 2.0% and that he doesn't think it will be a quick move to 2.0%.
The aforementioned reversal in the major indices saw the S&P 500 breach support at the 4,100 level, where buyers stepped in (again) and a technical rebound effort took root, supported by short-covering activity. Ultimately, the main indices closed near their best levels of the day.
The late afternoon push higher also coincided with Microsoft's (MSFT 267.56, +10.79, +4.2%) announcement of its new AI-powered Microsoft Bing search engine and Edge browser. Other AI peers traded up in solidarity, bolstering the broader market. Alphabet (GOOG 108.04, +4.57, +4.4%), Baidu (BIDU 160.22, +17.40, +12.2%), and NVIDIA (NVDA 221.73, +10.84, +5.1%) were standouts in that regard.
Most of the S&P 500 sectors closed with a gain led by energy (+3.1%), communication services (+2.5%), and information technology (+2.5%). The consumer staples (-0.4%), real estate (-0.3%), and utilities (-0.1%) sectors were alone in the red by the closing bell.
The Treasury market also experienced some whipsaw price action as Fed Chair Powell spoke, but yields ultimately settled at levels seen before the commentary started. The 2-yr note yield was unchanged at 4.46% and the 10-yr note yield rose four basis points to 3.67%.
- Nasdaq Composite: +15.7% YTD
- Russell 2000: +12.0% YTD
- S&P Midcap 400: +11.0% YTD
- S&P 500: +8.5% YTD
- Dow Jones Industrial Average: +3.1% YTD
Reviewing today's economic data:
- December Trade Balance -$67.4 bln ( consensus -$68.5 bln); Prior was revised to -$61.0 bln from -$61.5 bln
- The key takeaway from the report is that it reflected a slowdown in global trade, evidenced by a $2.1 billion decline in the three-month moving average for the goods and services deficit to $68.6 billion that resulted from a $2.6 billion decrease in average exports and a $4.7 billion decrease in average imports.
- Consumer credit increased by $11.6 bln in November (consensus $24.5 bln) following an upwardly revised $33.1 bln (from $27.9 bln) in November.
- The key takeaway from the report is that total consumer credit expansion slowed in December, with higher interest rates crimping loan demand. Nonrevolving credit saw its smallest expansion ($4.3 billion) since August 2020.
Looking ahead to Wednesday, market participants will receive the following economic data:
- 7:00 ET: Weekly MBA Mortgage Index (prior -9.0%)
- 10:00 ET: December Wholesale Inventories ( consensus 0.5%; prior 1.0%)
- 10:30 ET: Weekly crude oil inventories (prior 4.14 mln)