Wholesale Prices Confirm Last Week’s CPI Print, Markets Yawn, 10Yr Holds Steady, Crude Falls to $80 Support (Nov 18 Market Recap).
Indices
- Dow 33,745 -2 or -0.01%.
- Nasdaq 11,146 -177 or -1.6%.
- S&P 3,965 -27 or –0.68%.
- USD10Y 3.818% +0.5bp or +0.13%.
- WTI Crude $80.08 bbl -$11.72 or –12.76%.
Wholesale Prices Confirm Last Week’s CPI Print
All in all, it was a boring week. The highlight of the five trading days was that wholesale prices (PPI) continued to decline and thus confirmed last week’s positive CPI print. Wholesale prices have now declined 3.69% YoY since the peak of +11.66% was recorded this March. The rest of the week provided plenty of cross currents; strength in retail sales, Empire State Manufacturing, and initial jobless claims seemed to suggest that the Fed may not be near its terminal rate while retail earnings, tech layoffs (Amazon and Twitter), Housing Starts, Existing Housing Sales, and Philly Fed Manufacturing all seemed to suggest that rate hikes have made their presence strongly felt.
Markets Yawn, 10Yr Holds Steady, Crude Falls to $80 Support.
Neither the markets nor the U.S. 10-year yield offered much of an opinion on the Fed’s next move as the indices and the benchmark 10-year yield finished the week mostly flat. The Nasdaq was the exception where hawkish Fed comments, Amazon layoffs, and Elon Musk endeavoring to destroy both Twitter and Tesla in one fell swoop pressured the index to underperform. The CME Fed Watch Tool was slightly less optimistic regarding the next rate hike, as the probability of a 50bp rate hike in December fell to 75.8% vs 80.6% a week ago.
Crude had a tough week, with WTI falling nearly 13% to the $80 level, well below the $92.14/bbl price it traded at the day prior to the Russian invasion of Ukraine. WTI is now up 6% YTD although it has found support at these levels as recently as this September. Lack of Chinese demand and U.S. recession fears are most often cited for the weakness in crude.
Quiet Week Except for Wednesday!
Markets will be closed on Thursday in observance of Thanksgiving Day, and it will be a week marked by light volumes as many trading desks will be lightly staffed. However, as a result of the holiday, there will be a data dump on Wednesday including; Initial Jobless Claims, Manufacturing and Services PMI, New Home Sales, Consumer Sentiment, Inflation Expectations and not least of all, the minutes from the Fed’s last meeting will be released!
Economic Calendar
- Monday – Nothing scheduled.
- Tuesday – Nothing scheduled.
- Wednesday – October Durable Goods Orders, Initial Jobless Claims, November Flash S&P US Manufacturing PMI, November Flash S&P US Services PMI, November Final University of Michigan Consumer Sentiment, November Final University of Michigan 5-year Inflation Expectations, October New Home Sales, FOMC minutes.
- Thursday – Markets Closed in Observance of Thanksgiving.
- Friday – Nothing scheduled.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
November 18 Daily Trading Recap…
Monday – Dow -211 to 33,536 Nasdaq –127 to 11,196, S&P -35 to 3,957, USD10Y +5.2bp to 3.865%
- Ten of eleven S&P sectors traded down today, led lower by Real Estate, Consumer Discretionary, and Financials.
- Inflation expectations are beginning to creep higher; the NY Fed 1-year inflation expectation rose to 5.9% vs 5.4% last month and the 5-year expectation rose to 2.4% vs 2.2% last month.
- Fed Vice Chair Brainard said today that it may be soon to consider a slower pace of rate increases.
- Amazon (AMZN) is will supposedly layoff as many as 10,000 workers starting this week, according to the New York Times (subscription required).
Tuesday – Dow +56 to 33,592, Nasdaq +162 to 11,358, S&P +34 to 3,991, USD10Y –6.6bp to 3.799%.
- Nine of eleven S&P sectors traded higher today, led by Communication Services, Consumer Discretionary, and Technology.
- More positive inflation news: October Wholesale Prices (PPI) fell to +7.75% YoY down from +8.25 last month. MoM, the PPI rose +0.22%, down slightly from last month’s +0.25% print but still halving expectations of +0.4%.
- November Empire State Manufacturing easily beat expectations at 4.5 vs expectations of –6.0 and last month’s -9.1 print.
- Earnings: Walmart (WMT) beat their earnings and revenue numbers and boosted full-year guidance; WMT traded up 6.54% in the regular session. Home Depot (HD) beat their numbers and traded up 1.63% during the normal session.
Wednesday – Dow –39 to 33,553, Nasdaq -174 to 11,183, S&P –33 to 3,958, USD10Y -10.7bp to 3.692%.
- Nine of eleven S&P sectors traded down today, led lower by Energy, Consumer Discretionary, and Technology.
- October Retail Sales were slightly better than expected at +1.3% vs 1.2% expected and last month’s flat print.
- Earnings: Target (TGT) was a big disappointment, beating revenues, missing their earnings estimates and guiding down their fourth-quarter forecasts; TGT traded down 13.14% in the regular session. Lowe’s (LOW) reported strong numbers and reiterated their guidance; LOW traded up 3% intraday. TJX Companies (TJX) traded up 5% on strong numbers and named a new CFO. Nvidia (NVDA) bear revenues but missed earnings and issued guidance lower than Street expectations; NVDA traded up 1.78% post-close.
Thursday – Dow –7 to 33,546, Nasdaq -38 to 11,114 S&P -12 to 3,946, USD10Y +8.3bp to 3.775%
- Eight of eleven S&P sectors traded lower today, led lower by Utilities, Consumer Discretionary, and Materials.
- Jobless claims fell slightly to 222,000 claims vs 225,000 expected and last week’s revised print of 226,000 (originally 225,000 claims). Continuing claims ticked up to 1.507 million.
- November Philadelphia Fed Manufacturing Index was atrocious at –19.4 vs expectations of –6 and last month’s -8.7 print.
- October Housing Starts beat expectations at 1.43 million units but were lower vs last month’s 1.49 million units.
- Earnings: Kohl’s (KSS) reported but had already preannounced a miss, announced their CEO is leaving in December and withdrew their full year guidance; despite the aforementioned, KSS traded up 5.44% in the regular session. Gap Stores (GPS) beat revenues and traded up +7.4% post-close. Applied Materials (AMAT) traded up 3.21% in the extended session after beating their revenue and earnings estimates.
Friday – Dow +199 to 33,745, Nasdaq +1 to 11,146, S&P +18 to 3,965, USD10Y +4.3bp to 3.818%.
- Nine of eleven S&P sectors traded higher today led by Utilities, Real Estate, and Healthcare.
- October Existing Home Sales beat expectations at 4.43 million units vs expectations of 4.39 million but were still down significantly from last month’s 4.71 million print.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
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