Market Update: Thursday, February 23, 2017


  • Stocks search for direction in early trading. (9:57am ET) Following a mixed session that saw the major averages close little changed, stocks are near flat again today. Yesterday’s session saw the S&P 500 and Nasdaq both lose 0.1%, while the Dow (+0.2%) managed to post its ninth consecutive daily gain. Utilities (+0.4%) and materials (+0.3%) were the best performers on the day, while energy dropped 1.6% as oil closed below $54/barrel. Equities in Asia closed mostly lower overnight; the Shanghai Composite lost 0.3% and Japan’s Nikkei finished flat. European markets are similarly little changed (STOXX Europe 600 +0.1%) as the euro and French politics remain in focus. Interest rates are moving lower across the board this morning; the yield on the 10-year note sits at 2.40%. Meanwhile, the dollar is slightly lower following yesterday’s release of Federal Reserve (Fed) minutes, WTI crude oil ($54.70/barrel) is up 2.1%, and COMEX gold ($1250/oz.) is up 1.3% and looking to break out of a multi-week consolidation.


  • No signal from claims. Initial claims for unemployment insurance remained pinned close to 40-year-plus lows in the latest week, and continue to suggest that the labor market is tightening. Our work has found that claims do provide a recession signal when they rise between 75,000 and 100,000 over a six-month period. Six months ago, claims were running in the 260,000 to 270,000 per week level. Over the last four weeks, claims have averaged 241,000 per week, so claims are running roughly 20,000 below six-month-ago levels and are not signaling a recession.
  • FOMC minutes. The Fed released the minutes of the January 31-February 1, 2017 Federal Open Market Committee (FOMC) meeting yesterday at 2 PM ET. The minutes noted that while “many” FOMC participants expressed the view that “it might be appropriate to raise the fed funds rate again “fairly soon” if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the Committee’s maximum-employment and inflation objectives increased.” Comments from Fed officials since that meeting have largely echoed those views, but the “center of gravity” at the Fed (Yellen, Dudley and Fischer) has been more cautious in its comments.  The Fed’s Beige Book is due out on March 1, 2017, Vice Chair Fischer and Chair Yellen deliver speeches on March 3 and the next FOMC decision is due on March 15. The fed funds futures market puts the odds of a March rate hike at 34%, but odds of a hike at the May (62%) and June (75%) meetings are well over 50%.
  • Dow win streak hits nine. The Dow is up nine days in a row for the first time since July 2016. It hasn’t been up 10 days in a row since March 2013. Since 1900, there have now been 32 nine-day win streaks, with the longest reaching 13 in a row in January 1987. What makes this current win streak so rare is it has taken place while also making record highs. The nine consecutive all-time highs is the most since 12 in a row during that January 1987 run. In fact, since 1900, the Dow has made record highs on nine consecutive days only five times.
  • Technology continues to soar. The FTSE US Technology Index is up an incredible 15 days in a row, an all-time record (previous record was 12 in July 2009). Incredibly, tech has been higher all 15 trading days this February, and with four more trading days left, has a shot at the record 18 up days during a month set in August 2000. Tech has been the true leader this year, which is impressive given the post-election weakness on potential policy concerns. Those concerns didn’t pan out and tech is close to breaking above its peak from 2000.



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  • New Home Sales (Jan)


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Past performance is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted.

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