The S&P and NASDAQ closed lower for the fourth consecutive day and the Dow closed lower for the third consecutive day with the catalyst the Hawkish Fed minutes. Despite the US adding the lowest number of new jobs in twelve months in December with just 199,000 the bond market spooked on average hourly earnings (M/M) rising 0.6%. This brought similar negative reactions to the stock markets. Oil began the day over $80 cut came down with risk assets and world Russia looking to move troops away from the Ukraine border. The S&P 500 again found technical support at the 50-day moving average of 4675.
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Market Closes
Energy
- WTI crude futures settled at $78.90, down -$0.56 or 0.7% off a high of high price of $80.47, the highest level since November 16. WTI is up over 26% from its low on December 2 at $62.43. The price is around 8% from its October high at $85.41.
- February Nymex natural gas (NGG22) on Friday closed up by +0.104 (+2.73%).
- Freezing temperatures in the Central U.S. and below-normal temperatures on the East Coast. Atmospheric G2 on Friday said that colder-than-normal temperatures are expected in the Northeast from Jan 12-16, and below-normal temperatures are expected to persist across the northern half of the U.S. through Jan 21.
- BNEF data showed gas flows to U.S. export terminals Friday were up +2.4% w/w at 12.2 bcf, modestly below the Dec 19 record of 13.1 bcf.
Metals and FX
- U.S. Dollar Index fell 0.6% to 95.75.
- February gold (GCG22) futures settled $8.20 higher (+0.5%) to $1,797.40/oz, trimming weekly losses to -1.7%
- March silver (SIH22) closed up +0.219 (+0.99%).
- Bitcoin weaker at 43014 after breaking the channel
Stocks
- Dow industrial average felt -4.9 points or -0.01% at 36231.60, lower for the third consecutive day. All-time high at 36952.65.
- S&P index fell 19.0 points or -0.40% at 4677.04, All-time high at 4818.62
- NASDAQ index fell 144.95 points or -0.96% at 14935.91, closed lower for the fourth consecutive day, now down nearly 8% from its all-time high. NASDAQ had its worst week since February
- Russell 2000 fell -26.56 points or -1.2% at 2179.81, Russell 2000 closes 11% from its all-time high
- Russell 3000 Growth Index fell 1.1% while the Russell 3000 Value Index rose 0.2%.
- Apple 172.17▲ 0.17 (0.099%)
- The obsession of Apple hitting 3 trillion market at $182.86 was achieved (182.94 high)
- NYSE Adv 1648 Dec 1571 Vol 903.0 mln
- Nasdaq Adv 1898 Dec 2514 Vol 4.2 bln
Ark of the Covenant not as it appears
ARK ETF
- ARKK 84.46▼ 1.12 (1.31%)
- ARKG 54.27▼ 0.79 (1.43%)
- ARKX 17.97▼ 0.12 (0.66%)
- ARKF 36.45▼ 0.35 (0.95%)
- ARKW 106.76▼ 2.02 (1.86%)
Cboe Daily Market Ratios:
S&P 500 sector watch:
- 9 of the 11 S&P 500 sectors closed lower
- Energy (+1.46%) and financials (+1.15%) sectors rose more than 1.0%, extending their weekly gains to more than 10.61% and 5.37%, respectively.
- S&P 500 Utilities (-1.06%) information technology (-1.01%) and consumer discretionary (-1.65%) sectors underperformed
Markets YTD
- Dow Jones Industrial Average -0.3% YTD
- S&P 500 -1.9% YTD
- Russell 2000 -2.9% YTD
- Nasdaq Composite -4.5% YTD
Europe
- UK FTSE 100 -1.0%
- German DAX -1.4%
- French CAC -1.8%
- Spain IBEX -0.2%
- Italy MIB -1.7%
Asia
- Japan’s Nikkei: UNCH (-1.1% for the week)
- Hong Kong’s Hang Seng: +1.8% (+0.4% for the week)
- China’s Shanghai Composite: -0.2% (-1.7% for the week)
- India’s Sensex: +0.2% (+2.6% for the week)
- South Korea’s Kospi: +1.2% (-0.8% for the week)
- Australia’s ASX All Ordinaries: +1.2% (-0.1% for the week).
Bonds
- The 10-yr yield hit 1.80% but ended the session at 1.77%, or four basis points above yesterday’s settlement.
- The 2-yr yield decreased two basis points to 0.87%.
Key Treasury Bond Auctions Along Yield Curve Next Week with Newly Hawkish Fed – TRADERS COMMUNITY
Following the turmoil in the market this week following the Federal Reserve System Chairman Jerome Powell took a decidedly hawkish tone today at last month’s FOMC and the release of Minutes yesterday which sent US stock markets sharply lower. In the Treasury market the 2-yr yield, which tracks expectations for the fed funds rate, rose seven basis points to 0.83%. The 10-yr yield settled the session four basis points higher at 1.71%, with growing expectations for a run-up to 2.00%.
News Highlights
US in December added 199k non-farm payrolls jobs, less than forecasted 450k. November previous 210K revised to +249K. Wages increased more than expected and the jobless rate fell to the lowest since February 2020 to 3.9%. US Average Hourly Earnings (M/M) rose 0.6%. Change in private payrolls +211K Change in manufacturing payrolls +26K
Into The Vortex – EIA Reports Draw of -31 Bcf in Natural Gas Storage – TRADERS COMMUNITY
Into New Year and U.S. domestic natural gas demand for heating has weakened Atmospheric G2 models said that warmer-than-normal temperatures in the eastern U.S. should continue to curb heating demand. Last week EIA reported a lower-than-expected draw of -31 Bcf of working gas in storage lower than expected. With the global energy crisis LNG exports continue to grow but we balance supply shortages with deliverability.
ISM Non-Manufacturing Index Backs Off Record High in December – TRADERS COMMUNITY
The ISM Non-Manufacturing Index for December pulled back to 62.0% (consensus 67.1%) from a record high 69.1% in November as the Omicron variant runs roughshod over the economy. The Prices Index increased to 82.5% from 82.3% in November. Earlier the ISM Manufacturing Prices Index fell to 68.2% from 82.4%. However, the services is 80% of the US economy, making it an inflation risk.
Around The Barrel – Gasoline and Distillate Builds for Year End Crude Tax Assessment
Welcome to 2022, WTI Oil futures have rallied after OPEC+ holds the status quo. We had Gasoline builds on expected year-end inventory release for tax assessment on December 31 on crude barrels. Last week EIA reported US Crude last Week crude drew -2144Kbbl (incl +2577kbbl build at Cushing). Gasoline stocks drew +10128kbbl. Utilization fell +.1% to 89.7%. Production +200k to 11,800 kbpd.
Looking ahead:
- Big events for the market include testimony from Fed Chairman Jerome Powell Tuesday and inflation reports on consumer and producer prices.
- The week also marks the beginning of the fourth-quarter earnings season, with big banks JPMorgan Chase, Citigroup and Wells Fargo reporting Friday.
Trust you all had a great day, sleep well and get your trading plan sorted.
Any questions please feel free to ask them below. Trade Smart!