Stocks Move in a Range After Inflation Data, Energy Outperforms
3:57 pm Friday, December 23rd, 2022
The stock market kicked off this first day of the so-called Santa Claus rally period (last five trading days of the year plus the first two trading sessions of the new year) on a mixed note with all the major indices moving in a range.
The initial negative bias was primarily a reaction to a November Personal Income and Spending Report that showed no growth in real spending and PCE and core-PCE inflation rates that are still too high on a year-over-year basis (5.5% and 4.7%, respectively) for the Fed’s liking.
This report meshed with a Durable Goods Orders Report for November that was weaker than expected and was subsequently followed by economic data at 10:00 a.m. ET that showed new home sales were stronger than expected in November and that easing inflation pressures helped boost consumer sentiment in December.
The 10:00 a.m. ET data releases coincided with the S&P 500 slipping below the 3,800 level, so their welcome positive tone offered a measure of support to the broader market and fueled some bargain hunting activity. The main indices were able to reclaim the bulk of their early losses with the S&P 500 and Dow Jones Industrial Average trading comfortably in positive territory. The Nasdaq, though, continues to dip in and out of the red.
Mega cap stocks have seen some volatile action amid thinner holiday trading conditions. Currently, they lag the broader market as evidenced by the Vanguard Mega Cap Growth ETF (MGK) trading flat versus a 0.3% gain in both the S&P 500 and the Invesco S&P 500 Equal Weight ETF (RSP).
Tesla (TSLA) is a losing standout for the group, again. This comes after CEO Elon Musk said in an interview that he will not sell Tesla shares for 18-24 months and buybacks will depend on the economy, according to The Wall Street Journal.
Nine of the 11 S&P 500 sectors trade in the green, albeit with modest gains. The only exception is the energy sector (+2.6%), which is bolstered by rising oil prices ($79.90/bbl, +2.41, +3.1%). WTI crude oil futures are responding to Russia’s Deputy Prime Minister Novak saying that his country may reduce its oil output by up to 7% early next year.
Meanwhile, the influential information technology sector (-0.3%) sits in last place, but is well off earlier lows when it was down 1.4%.
Market internals reveal mixed action. Advancers lead decliners by a 3-to-2 margin at the NYSE while decliners lead advancers by an 11-to-10 margin at the Nasdaq.
The Treasury market is a bit weaker today with selling interest picking up after the 8:30 a.m. ET data releases. The 2-yr note yield is up six basis points to 4.31% and the 10-yr note yield up six basis points to 3.73%.
