Let’s be clear, yesterday’s performance by US equities was nothing to write home about but then again, we weren’t expecting much, right? That said, and though markets did register a second consecutive losing session, something of note did transpire which may well end up providing some lift to markets today – markets that seem to have stubbed their toe this week, thanks to OPEC.
From a purely data driven perspective, all three major indices once again lost ground yesterday. The Dow Industrials (-0.90%) and S&P 500 (-0.64%) out performed to the downside while the NASDAQ rallied from a 1.1% intraday selloff to close nearly unchanged (-0.06%). Much of the pressure on the Dow and S&P yesterday came as a result of follow through institutional selling in the energy sector as crude oil instability continues to rattle through those indices which have greater exposure to energy than the NASDAQ. To my point, Dow sector components Industrials (-2.13%) and Energy (-1.87%) led the way lower for the broader Dow industrial Index. Volume was gain elevated but mixed, rising on the NYSE (+3.34%) and slipping on the NASDAQ (-2.44%). Additionally, the Russell 2K (-0.04%) which has even less relative exposure to energy also closed nearly unchanged.
Not only did we see some positive intraday price action for the NASDAQ and Russell 2K, we also saw a degree of moderation in the selling of crude. Crude WTI did trade to a new multi-year low of $36.64/bbl yesterday before settling in with a modest decline of less than one percent. This does not signal that the down draft is over. We simply saw some moderation in velocity and may as a result see some near term stability. That would be very therapeutic for the broader equity market and allow for some lift in prices. Of course today’s EIA Status Report could very well upend that effort.
The release of the monthly NFIB Small Business Optimism Index yesterday, for November, was fractionally weaker than consensus expectations but not disruptively so. It came in at 94.8 versus 96. Last month’s reading was 96.1. Given the sharp nature of recent price action, I suspect many market participants expected the reading to reflect a meaningful pullback in small business confidence. Two things to keep in mind in that regard; both October and November were solid months from an equity market perspective and to the extent that it impacts the NFIB data, optimism was the dominant theme. Additionally, the recent volatility that has dominated equity markets has all come in December and as a result is not tangential to yesterday’s data for November. If we see a strong finish to the year our weak start for the month will be drowned our by a solid finish. If.