Investors Fence Sit Ahead of Fed…..
U.S. equities finished modestly lower and nearly where they began today in a choppy session, as investors await tomorrow’s Fed decision. The Street sifted through a host of mixed earnings results from Dow members Johnson & Johnson, American Express, 3M and Verizon Communications, as well as GE. Progress on the COVID-19 vaccine front also remained top of mind as new cases persist and variants remain a source of uncertainty. Outside of earnings, Beyond Meat jumped after announcing a partnership with PepsiCo. In economic news, Consumer Confidence improved more than expected as expectations outweighed a dampened assessment of current conditions, home prices rose, while manufacturing activity in the Richmond area surprisingly slowed. Treasuries were little changed and the U.S. dollar was lower, while gold and crude oil prices slipped. Europe finished broadly higher, aided by positive earnings results from UBS, while markets in Asia also finished to the downside.
The Dow Jones Industrial Average lost 23 points (0.1%) to 30,937, the S&P 500 Index was down 6 points (0.2%) at 3,850, and the Nasdaq Composite shed 10 points (0.1%) to 13,626. In heavy volume, 1.0 billion shares were traded on the NYSE and 6.6 billion shares changed hands on the Nasdaq. WTI crude oil lost $0.16 to $52.61 per barrel. Elsewhere, the Bloomberg gold spot price was $4.06 lower $1,851.87 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.3% to the downside to 90.16.
Consumer Confidence improves slightly as Fed began first meeting of 2021…..
The Conference Board’s Consumer Confidence Index increased to 89.3 in January from December’s downwardly revised 87.1 level, and versus the Bloomberg consensus estimate calling for a slight improvement to 89.0. The positive read came as a decline for the Present Situation Index portion of the survey was more than offset by a solid gain in the Expectations Index of business conditions for the next six months. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—moved further into negative territory, posting a reading of -3.2 following the -1.9-level posted in December.
The 20-city composite S&P CoreLogic Case-Shiller Home Price Index posted a 9.08% y/y gain in home prices in November, versus estimates of an 8.70% increase. Compared to the prior month, home prices were up 1.42% on a seasonally adjusted basis, above forecasts of a 1.00% gain.
The Richmond Fed Manufacturing Activity Index surprisingly fell but remained in expansion territory (a reading above zero) for this month. The index dropped to 14 from December’s 19 reading, where it was expected to remain. Growth in new orders and shipments decelerated but employment expanded at a faster pace month-over-month.
Finally, the Federal Open Market Committee (FOMC) began its two-day monetary policy meeting today, which will conclude with tomorrow’s statement and the customary press conference from Fed Chairman Jerome Powell. Powell’s comments are likely to be highly scrutinized given the backdrop of optimism of a second half economic recovery in 2021, rising inflation expectations, the recent steepening of the Treasury yield curve, Fedspeak as of late suggesting mixed feelings regarding tweaking asset purchases, and the disappointing start to the rollout of vaccines.
Treasuries were little changed, as the rates on the 2-year and 10-year notes were flat at 0.12% and 1.03%, respectively, while the yield on the 30-year bond ticked 1 basis point higher to 1.80%.
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