Stocks Added to Yesterday’s Losses Amid Mixed Economic Data…..

U.S. stocks were lower, adding to yesterday’s sharp draw down, as investors remain concerned regarding the Fed’s monetary policy decisions and its ultimate impact on the economy. Economic data was mixed, as housing starts came in above estimates, building permits missed forecasts, and jobless claims unexpectedly dropped, while Philadelphia’s manufacturing output improved more than expected but remained contractionary. Q4 earnings season continued to heat up, as Dow member Procter & Gamble matched estimates, while Discover Financial Services topped forecasts but offered cautious guidance about charge offs, and Allstate Corporation issued a Q4 profit warning. Treasury yields gained modest ground, and the U.S. dollar declined, while crude oil and gold prices rose. Asian stocks finished mixed and markets in Europe saw widespread losses, trimming some of its strong start to 2023.

The Dow Jones Industrial Average lost 252 points (0.8%) to 33,045, the S&P 500 Index decreased 30 points (0.8%) to 3,899, and the Nasdaq Composite fell 105 points (1.0%) to 10,852. In moderate volume, 3.8 billion shares of NYSE-listed stocks were traded, and 4.6 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.88 to $80.68 per barrel. Elsewhere, the gold spot price was up $28.00 to $1,935.00 per ounce, and the Dollar Index declined 0.3% to 102.07.

Housing construction activity mixed, jobless claims drop…..

Housing starts for December declined 1.4% month-over-month (m/m) to an annual pace of 1,382,000 units, versus the Bloomberg consensus estimate of a drop to a 1,358,000-unit pace, and compared to November’s downwardly revised 1,401,000-unit level. Building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, declined by 1.6% m/m to an annual rate of 1,330,000, below expectations calling for an increase to 1,365,000 units, and compared to the upwardly revised 1,351,000-unit pace posted in November.

Weekly initial jobless claims came in at a level of 190,000 for the week ended January 14, below estimates of 214,000 and compared to the prior week’s unrevised 205,000 level. The four-week moving average decreased by 6,500 to 206,000, and continuing claims for the week ended January 7 rose by 17,000 to 1,647,000, south of estimates calling for 1,655,000. The four-week moving average of continuing claims declined by 5,500 to 1,673,000.

The Philly Fed Manufacturing Business Outlook Index improved but remained in contraction territory (a reading below zero) for January. The index rose to -8.9 from December’s -13.7 level, and versus estimates of an improvement to a reading of -11.0. New orders improved but continued to be negative, while shipments and employment both jumped into expansion territory. Prices paid continued to slow but remained elevated and prices received accelerated. Delivery times continued to contract and inventories grew.

Bond yields have been choppy as of late but are up solidly over the past year as the markets react to aggressive Fed monetary policy actions. Treasury rates were higher, as the yield on the 2-year note increased 4 bps to 4.14%, the yield on the 10-year note gained 1 bp to 3.39%, and the 30-year bond rate rose 3 bps to 3.56%.

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