Traders Market Weekly: Inflation and Bank Earnings

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    Ten of the 11 S&P 500 sectors closed in the red.

    The real estate (-2.9%) and utilities (-2.2%) the worst while energy (+2.0%) was alone in positive territory.

    Separately, the mega cap stocks also traded weakly, applying some added pressure on the major indices. (AMZN 83.12, -2.02, -2.4%) was a notable drag in that respect, weighing on the consumer discretionary sector (-1.0%), after announcing plans to cut ~18,000 positions.

    Dow Jones Industrial Average: -0.8% YTD
    S&P Midcap 400: flat YTD
    S&P 500: -0.8% YTD
    Russell 2000: -0.5% YTD
    Nasdaq Composite: -1.5% YTD


    The only “+” I saw today is that each day CONGRESS is shutdown, is a victory for MAIN STREET USA – lol
    I don’t know what else to say as I believe we are in ROUND#10 as BOTH sides need to balance budget
    and many other improvements … #45 has nominated & voted by a few …. WOW – can you even imagine – lol

    and another good 1 for playlist 🙂


    YAY – the mother of all reports reported 233K+ more jobs but less wage growth than predicted
    Maybe FOMC can slow some in jamming on brakes to USA economy … DOW is rockin’ up @ 500+ points


    and how I loved this group in past … a great Friday “boogie woogie” JAM from 1980s


    Tesla (TSLA 103.45, -6.92, -6.3%): cuts China prices, according to WSJ
    Southwest Air (LUV 32.85, -0.68, -2.0%): expects to report a Q4 net loss driven by a preliminary estimated fourth quarter 2022 pre-tax negative impact in the range of $725-825 mln
    World Wrestling (WWE 79.50, +7.46, +10.4%): trades higher on report Vince McMahon plans to return, according to WSJ citing sources
    Silvergate (SI 10.81, -1.76, -14.0%): downgraded to Neutral from Overweight at JPMorgan
    Baxter (BAX 52.90, +0.33, +0.6%): announces strategic actions to enhance operational effectiveness, accelerate innovation for patients and drive value for shareholders
    Bank of America (BAC 33.80, -0.27, -0.8%) and JPMorgan Chase (JPM 134.45, -0.90, -0.7%): downgraded to Hold from Buy at Deutsche Bank


    Equity indices in the Asia-Pacific region were mixed on Friday following the poor showing from Wall Street on Thursday.
    Japan’s Nikkei: +0.6% (-0.5% for the week),
    Hong Kong’s Hang Seng: -0.3% (+6.1% for the week),
    China’s Shanghai Composite: +0.1% (+2.2% for the week),
    India’s Sensex: -0.8% (-1.6% for the week),
    South Korea’s Kospi: +1.1% (+2.4% for the week),
    Australia’s All Ordinaries: +0.7% (+1.2% for the week).


    Japan’s December Services PMI 51.1 (expected 51.7; last 50.3)
    Japan’s Nikkei (+0.6%) was a winning standout, aided by export stocks that reacted well to a weakening yen.
    The 10-yr JGB hit the yield curve control ceiling of 0.50%; and the BOJ announced an unscheduled JPY300 bln 5-10yr purchase operation.
    Hong Kong’s Hang Seng (-0.3%) faded slightly on Friday to close out a big week (+6.1%).
    Chinese markets were reportedly helped by news that China is planning to relax its “three red lines” restrictions and make it easier for property developers to use more leverage when borrowing, according to Bloomberg.
    Samsung Electronics reported a 69% yr/yr drop in its Q4 operating profit.


    Major European indices are tracking mostly higher with modest gains in front of the release of the U.S. employment report.

    STOXX Europe 600: +0.2% (+3.6% for the week),
    Germany’s DAX: -0.1% (+3.6% for the week),
    U.K.’s FTSE 100: +0.3% (+2.7% for the week),
    France’s CAC 40: +0.3% (+4.7% for the week),
    Italy’s FTSE MIB: +0.5% (+5.3% for the week),
    Spain’s IBEX 35: +0.3% (+5.0% for the week).


    Eurozone’s December CPI -0.3% m/m (expected +0.8%; last -0.1%) and +9.2% yr/yr (expected +9.7%; last +10.1%); December Core CPI +0.6% m/m (expected -0.1%; last 0.0%) and +5.2% yr/yr (expected +5.0%; last +5.0%); December Retail Sales +0.8% m/m (expected +0.5%; last -1.5%) and -2.8% yr/yr (expected -3.3%; last -2.6%); December Business and Consumer Survey 95.8 (expected 94.7; last 94.0); December Consumer Confidence -22.2 (expected -22.2; last -22.2)
    UK’s December Halifax House Price Index -1.5% m/m (last -2.4%) and +2.0% yr/yr (last +4.6%); December Construction PMI 48.8 (expected 49.6; last 50.4)
    Germany’s November Factory Orders -5.3% m/m (expected -0.5%; last +0.6%); November Retail Sales +1.1% m/m (expected +1.0%; last -2.8%) and -5.9% yr/yr (expected -2.8%; last -5.0%)
    France’s November Consumer Spending +0.5% m/m (expected +1.0%; last -2.7%)
    The positive bias has been attributed in large part to a December CPI report for the eurozone that showed a yr/yr moderation from November and contributed to the peak inflation narrative, as well as some hope that the ECB may not have to raise rates as much as feared.
    Better-than-expected retail sales data for Germany and the eurozone has also played a part in boosting investor sentiment.
    The major bourses are on track to close the week with gains ranging from 2.7-5.3%. EUR/USD -0.3% to 1.0488.


    The ISM Non-Manufacturing Index for December dropped to 49.6% (consensus 55.0%) from 56.5% in November. The dividing line between expansion and contraction is 50.0%.

    The key takeaway from the report is that business activity for the non-manufacturing sector, which comprises the largest swath of U.S. economic activity, contracted for the first time since May 2020, reflecting a clear slowdown in economic activity that is a byproduct of rising interest rates and weakening demand.

    Factory orders declined 1.8% month-over-month in November (consensus -0.4%) following a downwardly revised 0.4% increase (from 1.0%) in October. Shipments of manufactured goods declined 0.6% month-over-month after increasing 0.2% in October.

    The key takeaway from the report is that it shows a clear slowdown in manufacturing activity with declines in new orders for both durable goods and nondurable goods. The 1.8% month-over-month decline in factory orders was the largest since April 2020.


    Dow 33449.64 +519.63 (1.58%)
    Nasdaq 10457.27 +152.11 (1.48%)
    SP 500 3868.35 +60.25 (1.58%)
    10-yr Note +34/32 3.577

    NYSE Adv 2605 Dec 362 Vol 252 mln
    Nasdaq Adv 3190 Dec 1142 Vol 2.5 bln

    Strong: Consumer Staples, Energy, Materials, Utilities, Industrials, Financials, Real Estate

    Moving the Market

    — Positive reaction to the better than feared December Employment Situation Report

    — Relative weakness in the mega cap space weighing on index performance

    — Big pullback in Treasury yields from earlier highs

    — S&P 500 pushing past resistance at 3,850

    Value stocks are outpacing growth stocks today, but both spaces enjoy sizable gains. The Russell 3000 Growth Index is up 1.5% versus a 1.8% gain in the Russell 3000 Value Index.

    The S&P 500 financials sector (+1.9%) is one of today’s “worst” performers. Components Bank of America (BAC 34.45, +0.38, +1.0%) and JPMorgan (JPM 137.37, +2.02, +1.5%) exhibit decent gains despite both receiving a downgrade today to Hold from Buy at Deutsche Bank.

    Treasury yields plunge as market reached new highs

    Every S&P 500 sector pushed into positive territory as the market reached new highs. Materials (+2.9%) sits atop the leaderboard while health care (+0.6%) brings up the rear.

    The recent upside moves coincided with Treasury yields taking a turn lower. The 2-yr note yield is down 16 basis points to 4.29% and the 10-yr note yield is down 14 basis points to 3.58%.

    The CBOE Volatility Index is down 4.0% or 0.90 to 21.56.

    Small and mid cap stocks outpace larger peers

    Small and mid cap stocks are faring better than their larger peers today. The Russell 2000 (+1.7%) and the S&P Mid Cap 400 (+1.9%) show bigger gains than the three major averages.

    The U.S. Dollar Index plunged after this morning’s data releases, down 0.7% to 104.31.


    Dow 33,630.61 700.53 2.13%
    S&P 500 3,895.08 86.98 2.28%
    Nasdaq 10,569.29 264.05 2.56%
    VIX 21.03 -1.43 -6.37%
    Gold 1,871.90 31.30 1.70%
    Oil 73.67 0.00 0.00%

    One of FAV all-time & 1 of best piano JAMs ever in this great TEXAS boogie woogie
    Young Nicolette Larson (pigtails) & other stars were in this great supergroup in 1977 🙂



    January 8 -14 2023 FEAR NOT Brave Investors Where have we been and where are we going? Join our weekly market thread on Traders Community… The Week Th
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