Market Update: Monday, December 11, 2017

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Market Recap

  • Stocks advanced Friday on jobs report, stopgap bill agreement, Brexit progress; bringing S&P 500 Index (+0.5%), Nasdaq (+1.0%), Dow (+0.2%) into positive territory on the week. On the day: S&P 500 (+0.6%), Nasdaq (+0.4%), Dow (+0.5%).
  • Broad-based sector gains as telecommunications, healthcare led; technology lagged but still advanced.
  • Positive breadth on NYSE (1.5:1), Nasdaq (1.3:1) amid light volume (~88% of 3-day avg.).
  • Treasury yield curve steepened; 10-yr. yield +1 basis point (+0.01%) to 2.38%.
  • Commodities: WTI crude oil +1.1% to $57.33/bbl., COMEX gold -0.3% to $1250/oz., industrial metals mixed but notably lower on the week.
  • Economic data: Nonfarm payrolls +228k vs. +195k expected, wage growth still lagging, unemployment rate static at 4.1%; stopgap bill funds gov’t until Dec. 22, Brexit progress enabled negotiations to move on to trade topics.

Overnight & This Morning

  • S&P 500 little changed after paring slight gains on reports of an explosion at a midtown Manhattan subway station.
  • European equity markets little changed overall, except for the U.K. FTSE (+0.5%).
  • Asian markets broadly higher overnight. Japan’s Nikkei +0.6% to a 26-year high, Shanghai Composite +1.0%, Hang Seng +1.1%.
  • Fixed income: 10-yr. yield down one basis point (0.01%) at 2.36%.
  • Commodities: WTI crude +0.3% to $57.53/bbl., copper unchanged, gold little changed to $1249/oz.; U.S. dollar -0.1%.
  • Economic calendar today includes job openings and labor turnover.
  • Bitcoin futures began trading on the CBOE.

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Macro Notes

  • The week ahead dominated by central banks. Central banks will dominate the news cycle this week, although the Federal Reserve is not expected to offer any surprises with a quarter point interest rate hike virtually fully priced in at Wednesday’s meeting; Chair Janet Yellen will deliver her last formal press conference. The European Central Bank (ECB) and Bank of England will meet on Thursday. The ECB may provide more details on its tapering plans. This week’s U.S. data calendar includes small business optimism, job openings and labor turnover, consumer and producer inflation, retail sales, and industrial production. Overseas data highlights include money supply and loan growth, retail sales and industrial production for China, and a plethora of manufacturing, inflation, and sentiment data in Japan.
  • Companies remained generally upbeat during third quarter earnings season, based on the Corporate Beige Book Barometer. As discussed in our latest Weekly Market Commentary, due out later today, the positive tone from management teams appears to support a positive near-term earnings outlook even without factoring the potential benefits from tax reform. Hurricane impacts were widespread, with the word “hurricane” mentioned at least once during the earnings conference calls of 298 S&P 500 companies, according to FactSet.
  • Another amazing streak. The S&P 500 has officially gone 52 consecutive weeks without a 2% weekly change higher or lower. This is only the second time in history it has gone a full year without a 2% weekly change. The longest streak ever was 79 consecutive weeks without a 2% change in the mid-’60s.
  • Can the S&P 500 go 12 for 12? Incredibly, the S&P 500 has been up on a total return basis all 11 months so far this year. There have been streaks of 12 consecutively higher months before, but never have all 12 months of one calendar year been higher. Today on the LPL Research blog we will take a closer look at this rare phenomena.

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Click Here for our detailed Weekly Economic Calendar

Monday

  • Jolts Job Openings (Oct)
  • Italy: Retail Sales (Oct)
  • Germany: First Quarter Manpower Employment Outlook
  • Turkey: GDP (Q3)
  • ECB: Nowotny
  • Bank of Italy: Monthly Report “Money & Banks”
  • Japan: Machine Tool Orders (Nov)
  • China: Manpower Survey (Q1)
  • Japan: PPI (Nov)
  • Japan: Tertiary Industry Index (Oct)

Tuesday

  • National Federation of Independent Business Small Business Optimism (Nov)
  • PPI (Nov)
  • Monthly Budget Statement (Nov)
  • UK: CPI & PPI (Nov)
  • Germany: ZEW Survey (Dec)
  • Eurozone: ZEW Survey (DEC)
  • Russia: GDP (Q3)
  • BOJ: Outright Bond Purchase
  • Japan: Core Machine Orders (Oct)

Wednesday

  • MBA Mortgage Applications (Dec 8)
  • CPI (Nov)
  • Core CPI (Nov)
  • Real Avg Weekly & Hourly Earnings (Nov)
  • FOMC Rate Decision
  • Yellen (Dove)
  • Germany: CPI (Nov)
  • Germany: Wholesale Price Index (Nov)
  • Italy: Industrial Production (Oct)
  • UK: Jobless Claims Change (Nov)
  • Eurozone: Industrial Production (Oct)
  • Eurozone: Employment (Q3)
  • Japan: Nikkei Japan Mfg PMI (Dec)
  • Japan: Industrial Production & Capacity Utilization (Oct)
  • China: Retail Sales (Nov)
  • China: Industrial Production (Nov)

Thursday

  • Weekly Jobless Claims (Dec 9)
  • Import & Export Price Indexes (Nov)
  • Retail Sales (Nov)
  • Markit Mfg & Svs PMI (Dec)
  • Business Inventories (Oct)
  • France: CPI (Nov)
  • France: Markit France Mfg PMI (Dec)
  • Germany: Markit Germany Mfg & Svs PMI (Dec)
  • Italy: CPI (Nov)
  • Eurozone: Markit Eurozone Mfg & Svs PMI (Dec)
  • UK: Retail Sales (Nov)
  • BOE: Bank Rate
  • ECB: Main Refinancing Rate
  • ECB: Draghi
  • Bank of Canada: Poloz
  • Bank of Mexico: Overnight Rate
  • Japan: Tankan Survey (Q4)
  • China: Foreign Direct Investment (Nov)

Friday

  • Empire Manufacturing Index (Dec)
  • Industrial Production & Capacity Utilization (Nov)
  • Manufacturing Production (Nov)
  • Total Net Treasury Int’l Capital Flows (Oct)
  • Eurozone: Trade Balance (Oct)
  • ECB: Nowotny
  • Bank of Russia: Key Rate

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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Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, disease, and regulatory developments.

Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.

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Currency risk is a form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

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