US equity markets closed at the mid-price point yesterday though in negative territory. The NASDAQ slipped 0.35% while the Dow Industrials and S&P 500 both ticked 0.07% lower. Rising volume metrics on the NYSE and NASDAQ finally broke by contracting 10.45% and 9.92% respectively. The sharp drop off in volume is a sign that investors elected to step away from discounted prices ahead of Fed Chair Yellen’s testimony in Washington today.
I do not believe that sellers are exhausted as some have suggested yesterday morning. Rather, yesterday’s trade, as illustrated by intraday volatility, was more of an indication that there remains more uncertainty residing in investors outlooks than exhaustion.
From a sector standpoint, Consumer Discretionary outperformed to the upside by gaining 1.26%. Materials (+0.83%) and Health Care (+0.68) also closed in the green. Otherwise, every other major market sector lost ground on the day. Leadership lower was provided by the energy sector which lost 2.55% off the back of crude’s sharp trade below $30/bbl to close at $27.94/bbl. Crude pricing will increasingly be dominated by consumption and less by storage capacity or other variables. However, there is a local as opposed to a global consideration, storage capacity has been reached here in the United States. The recent lifting of export bans for crude should help provide some limited exhaust relief for crude but the fact remains that as a country, we have run out of room for storage.
Yesterday’s Economic Calendar again left investors with mixed signals. The NFIB Small Business Optimism Index confounded those calling for a stall. Consensus was calling for 94.9. It was 93.9 for the month of January. The JOLTS Report number for December was 5.607M versus expectations of 5.346M. Wholesale Trade hit consensus at -0.1%.
Today’s calendar has two very significant events. Chair Yellen on Capitol Hill and the EIA Petroleum Status Report – in that order of importance.