Market Update: Wednesday, January 17, 2018

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Market Recap

  • Major indexes shed early gains to finish lower. No clear catalysts for sell-off; Dow (-0.04%) lost footing after breaking through 26,000. S&P 500 Index -0.4%, Nasdaq -0.5%, Russell 2000 -1.2%.
  • Most sectors lower. REITs (+0.5%), healthcare (+0.5%), consumer staples (+0.4%) the only advancers; energy (-1.2%) the biggest decliner with oil’s pause amid multi-week rally.
  • Negative market breadth (NYSE 2:1, Nasdaq 2:1) amid elevated volume (~130% of 30-day avg.).
  • Treasuries flat-to-stronger; 10-year yield -1 basis point (-0.01%) to 2.54%.
  • Commodities: WTI crude oil -0.8% to $63.79/bbl., COMEX gold +0.3% to $1339/oz., industrial metals mixed to lower.
  • Economic data: Empire State Manufacturing data for December came up short (17.7 vs. 19.0) and fell vs. prior month’s upwardly revised reading (19.6), but remains at expansionary levels.

Overnight & This Morning

  • U.S. equities opened higher, rebounding after Tuesday’s slight dip.
  • European stocks pulling back, following U.S. performance. Lack of economic drivers put Brexit negotiations back to forefront. STOXX Europe 600 -0.2%, DAX -0.7%, FTSE 100 -0.3%.
  • Asian markets finished mixed. Better-than-expected data heightening interest in Bank of Japan’s policy meeting next week. Nikkei -0.4%, Hang Seng +0.3%, Shanghai Composite +0.2%.
  • Treasury yields edge higher; 10-yr. yield +2 basis points (+0.02%) to 2.56%.
  • Commodities: Oil slightly lower (-0.1% to ~$64.64/bbl.); gold -0.1% to ~$1335/oz., industrial metals broadly lower.
  • Economic releases: Mixed results this morning as U.S. industrial production figures came in above expectations (0.9% vs. 0.4% month over month), but manufacturing lagged (0.1% vs. 0.3% month over month).

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Macro Notes

  • Is the yield curve suggesting that a recession is looming? The U.S. Treasury yield curve has received a lot of attention in recent months as the difference between short- and long-term yields has fallen. Today on the LPL Research blog we’ll discuss the potential implications of a flattening yield curve.

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Click Here for our detailed Weekly Economic Calendar

Wednesday

  • MBA Mortgage Applications (Jan 12)
  • Industrial Production & Capacity Utilization (Dec)
  • National Association of Home Builders Housing Market Index (Jan)
  • Total Net Treasury Int’l Capital Flows (Nov)
  • Beige Book
  • Evans (Dove)
  • Mester (Hawk)
  • Eurozone: CPI (Dec)
  • ECB: Nowotny
  • Bank of Canada: Rate Decision
  • Japan: Industrial Production & Capacity Utilization (Nov)
  • China: GDP (Q4)
  • China: Retail Sales (Dec)
  • China: Industrial Production (Dec)

Thursday

Friday

  • U. of Michigan Sentiment (Jan)

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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