Stocks Lower, Dow Snaps Winning Streak…..

After spending most of the day in the green, U.S. equities finished the second-to-last day of 2021 lower in light trading, with the S&P 500 falling short of closing with a record for 71 times this year, and the Dow snapping a 6-day winning streak. The moves came amid some resiliency in the face of expectations that the Fed could accelerate its monetary tightening campaign and as inflation pressures persist, with worries surrounding the omicron variant and its ultimate impact cooling amid the possibility that it may be relatively less severe despite the rapidity of its transmissibility. In economic news, jobless claims fell and continuing claims hit a post-pandemic low, while manufacturing activity in Chicago accelerated more than expected. On the equity front, Biogen gave back most of yesterday’s rally after Samsung denied reports that it was in talks to buy the U.S. drug maker, and Micron Technology warned of production disruptions due to lock downs in China. Treasuries were higher, pressuring yields, and the U.S. dollar ticked to the upside, while gold and crude oil prices ended higher. Europe finished mixed, but held on to solid yearly gains, while markets in Asia also diverged.

The Dow Jones Industrial Average fell 91 points (0.3%) to 36,398, the S&P 500 Index lost 14 points (0.3%) to 4,779, and the Nasdaq Composite shed 25 points (0.2%) to 15,742. In lighter volume, 3.1 billion shares of NYSE-listed stocks were traded, and 3.7 billion shares changed hands on the Nasdaq. WTI crude oil moved $0.43 higher to $76.99 per barrel. Elsewhere, the gold spot price rose $12.10 to $1,817.90 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was 0.1% higher at 96.00.

Weekly initial jobless claims came in at a level of 198,000 for the week ended December 25, versus the Bloomberg consensus estimate of 206,000 which would have matched the prior week’s upwardly-revised level. The four-week moving average declined by 7,250 to 199,250, and continuing claims for the week ended December 18 fell by 140,000 to 1,716,000, south of estimates of 1,868,000. The four-week moving average of continuing claims dropped by 59,500 to 1,859,500, a new post-COVID low.

The Chicago PMI accelerated more than expected and further into a level depicting expansion (a reading above 50). The index rose to 63.1 in December from November’s 61.8 reading, versus estimates calling for an increase to 62.0. The stronger-than-expected report came as growth in new orders and production both rose at faster paces, supplier delivery times decelerated, along with prices paid, while employment fell and signaled contraction.

Treasuries were higher, as the yield on the 2-year note lost 1 basis point (bp) to 0.74%, while the yields on the 10-year note and the 30-year bond declined 3 bps to 1.52% and 1.93%, respectively.

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