Retail Sales Decline | Daily Market Update

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Wednesday, December 16, 2020

Daily Insights

Small caps lead as stocks open higher. Stocks opened higher this morning with small caps leading the way as the Russell 2000 Index prepares to continue its pace for its best quarter in the index’s history.

  • European stocks are firmly higher in midday trading, led by the German DAX.
  • Asian equities finished mostly higher, with the Shanghai Composite the lone decliner.

Big retail sales miss. Retail sales for the month of November declined for the first time in seven months, down 1.1% month over month according to the US Census Bureau, and missing Bloomberg expectations calling for a decline of 0.3%. October numbers were also revised lower, marking the first decline since March and April, showing how rising COVID-19 cases and subsequent restrictions on activity are posing a threat to the economic recovery.

Fed decision today. The Federal Reserve (Fed) finishes its two-day policy meeting today at 2 p.m. ET with the release of the Fed’s policy statement, updated economic projections, and a press conference by Fed Chair Jerome Powell. The Fed won’t change rates any time soon, but could potentially signal additional support.

Time for Santa? Historically, December is one of the best months of the year for stocks. But what most don’t realize is the majority of those gains take place the second half of the month. Today on the LPL Research blog we discuss the chances of a Santa Claus rally in 2020.

Technical update. Stocks surged Tuesday, with the best breadth on the NYSE in more than a month. This marks the fifth time since the beginning of November that advancers have outnumbered decliners by at least 5:1, a positive sign accumulation. Treasury yields are spiking this morning, pushing up toward 0.94%. A close above 0.97% would signal a breakout and potentially begin a move toward 1.35%.

COVID-19 news. The broader trend in new COVID-19 cases has been flattening this week as post-Thanksgiving restrictions have helped curb the risks of a post-holiday surge (source: COVID Tracking Project).

  • The United States reported new daily case growth of 198,000 (source: Johns Hopkins)
  • While aggregate hospitalization numbers have flattened, ICU occupancy in Arizona and Mississippi has surpassed 90% capacity.
  • Cases in Western Europe are on the rise, prompting the Netherlands to announce a new 5-week national lockdown.

 

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