Stocks Lower in Another Volatile Trading Session…..
In keeping with an all-to-familiar theme to begin the new year, U.S. equities finished lower in a bumpy trading session, with the Dow again swinging within a 1,000-point range. The Fed kicked off its two-day monetary policy meeting today, and although it is not expected to raise rates at this get-together, the possibility of a more aggressive stance in the wake of persistent inflationary pressures remains the major catalyst in the volatility. Earnings season has begun to heat up this week, with Dow members IBM, 3M, American Express, and Johnson & Johnson all reporting better-than-expected earnings results. In economic news, home prices rose more than expected in November, consumer confidence declined, and regional manufacturing cooled a bit more than forecasts. Treasuries were lower, lifting yields, and the U.S. dollar gained modest ground, while gold and crude oil prices rose. Europe rebounded modestly from yesterday’s tumble, despite the continued angst over events surrounding Russia and Ukraine, while markets in Asia were lower, continuing a rocky start to the new year.
The Dow Jones Industrial Average lost 67 points (0.2%) to 34,298, the S&P 500 Index decreased 54 points (1.2%) to 4,356, and the Nasdaq Composite fell 316 points (2.3%) to 13,539. In heavy volume, 5.1 billion shares of NYSE-listed stocks were traded, and 4.9 billion shares changed hands on the Nasdaq. WTI crude oil jumped $2.29 to $85.60 per barrel. Elsewhere, the gold spot price traded $7.30 higher to $1,849.00 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.1% to 95.99.
The Conference Board’s Consumer Confidence Index fell to 113.8 in January from December’s downwardly-revised 115.2 level, and versus the Bloomberg estimate calling for a reading of 111.2. The overall index was dragged by the Expectations Index of business conditions for the next six months portion of the index, which fell to 90.8 from December’s 95.4 level, while the Present Situation Index portion of the survey increased to 148.2 from the previous month’s 144.8 level. On employment, the labor differential—consumers’ appraisal of jobs being “plentiful” minus being “hard to get”—fell to 43.8 from the 44.2 level posted in November.
The Richmond Fed Manufacturing Activity Index remained in expansion territory (a reading above zero), but dipped more than expected to 8 from December’s 16 reading, below forecasts of 14. New order volume fell but remained in positive territory. Capacity utilization also fell but remained positive, while shipments increased, and order backlogs decreased with both in positive territory.
The 20-city composite S&P CoreLogic Case-Shiller Home Price Index showed an 18.29% year-over-year (y/y) gain in home prices in November, slightly above estimates of an 18.00% rise. Compared to the prior month, home prices were up 1.18% on a seasonally adjusted basis, compared to forecasts of a 0.93% gain.
Treasuries were lower, as the yield on the 2-year note was up 7 basis points (bps) at 1.03%, while the yields on the 10-year note and 30-year bond rose 5 bps to 1.78% and 2.13%, respectively.
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