Reply To: Traders Market Weekly: Inflation and Bank Earnings

#50695
Truman
Participant

Dow -31.65 at 33104.65, Nasdaq -24.62 at 10362.28, S&P +1.56 at 3825.70

The 2-yr note yield, at 4.31% shortly before the releases, rose to 4.38%. The 10-yr note yield, at 3.67% a short time ago, shot up to 3.71%.

There’s still some underlying strength in the market despite the index level deterioration. The Invesco S&P 500 Equal Weight ETF (RSP) is up 0.7% while the S&P 500 trades flat.

The December ISM Manufacturing Index dropped to 48.4% (consensus 48.5%) from 49.0% in October. The dividing line between expansion and contraction is 50.0%, so the sub-50.0% reading for December reflects a general contraction in manufacturing activity. The ISM for December hit its lowest level since May 2020, and marks the second straight month with a sub-50.0% reading. The key takeaway from the report is that manufacturing activity contracted in December for the second straight month, demonstrating that the cumulative effect of rate hikes around the globe is adversely impacting demand while at the same time curtailing inflation pressures.