U.S. equities were able to again chip away at the massive losses from last week, closing with modest gains, but the global markets appeared to remain skittish on the heels of the recent spike in volatility and ahead of key domestic inflation data tomorrow. In equity news, PepsiCo’s earnings report was mixed and Under Armour rallied on its revenue figures. Treasury yields were mixed after a recent rally and the U.S. dollar remained under pressure, despite an upbeat read on small business optimism, while crude oil prices diverged and gold was higher.
The Dow Jones Industrial Average (DJIA) rose 39 points (0.2%) to 24,640, the S&P 500 Index advanced 7 points (0.3%) to 2,663, and the NASDAQ Composite added 32 points (0.5%) to 7,014. In moderate volume, 806 million shares were traded on the NYSE and 1.8 billion shares changed hands on the NASDAQ. WTI crude oil lost $0.10 to $59.19 per barrel and wholesale gasoline gained $0.01 to $1.69 per gallon. Elsewhere, the Bloomberg gold spot price increased $6.84 to $1,329.54 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.6% lower at 89.70.
The National Federation of Independent Business (NFIB) Small Business Optimism Index for January rose to 106.9, from December’s unrevised 104.9 level, versus the Bloomberg expectation of a slight gain to 105.3. The index moved closer to a record high of 108.0 posted in 1983, with business owners expressing that now was a good time to expand and the NFIB noting that the new tax law produced the most recent boost to small business optimism.
Treasuries were mixed, as the yield on the 2-year note rose 3 basis points (bps) to 2.11%, while the yield on the 10-year note is declined 4 bps to 2.82%, and the 30-year bond rate dipped 3 basis points to 3.11%.
Bond yields diverged in the wake of a recent jump and the U.S. dollar extended yesterday’s decline that followed a bounce off multi-year lows as of late. The markets are awaiting tomorrow’s first dose of inflation data amid a docket chock-full of reports. The Consumer Price Index (CPI) is expected show prices rose 0.3% month-over-month (m/m) in January, after December’s 0.1% gain and decelerate to a 1.9% y/y rate, from the 2.1% pace in the month prior. The core CPI, which excludes food and energy, is projected to rise 0.2% m/m after December’s 0.3% increase, while posting a 1.7% y/y pace, after the prior month’s 1.8% rise. January retail sales are also expected, with economists anticipating a 0.2% m/m increase, while ex-autos sales are expected to have gained 0.5% m/m. Sales ex-auto and gas are forecasted to have risen 0.3% m/m for January, and the retail sales control group, a measure used to calculate GDP, is estimated to have moved 0.4% higher. Business inventories are also on tap, forecasted to be 0.3% m/m higher for January, and MBA Mortgage Applications will round out the docket.
Schwab Center for Financial Research – Market Analysis Group
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