Yesterday’s economic data had two principle themes. Weekly jobless claims came in at 271K, matching expectations. Leading Indicators came in at 0.4%, stronger than consensus expectations that were calling for 0.2%. Neither data point ran counter to the narrative laid out by the Fed leading up to Wednesday’s rate hike. Constructive data aside, markets resumed their move lower after a three day hiatus.
All three major equity indices once again logged losses. The S&P 500 (-1.50%) led the way while the Dow Industrials (-1.42%) and NASDAQ (-1.35%) followed closely behind. Interestingly though, volume ran lighter than Wednesday’s with the NYSE (-6.45%) and NASDAQ (-5.35) both seeing a drop in institutional activity. The result allowed for markets to avoid a distribution day. Every major market sector lost ground with leadership provided by energy and financials. Internals on both the NYSE and NASDAQ were solidly negative – it wasn’t close.
The primary culprit for the rather sudden shift in investor outlook is a familiar one; crude oil. Crude once again overwhelmed the broader market driving energy industrials and materials substantially lower. Crude’s relentless move lower has informed the entire equity landscape in ways that only crude oil can. Another possible cause for the move lower yesterday lies in the schedule. Today is quadruple witching – the last of the calendar year. It is entirely possible that at least some portion of the day’s trade was a function of traders legging into it.
Otherwise, we open with the majors having posted a solid week – a week dominated by the Fed. Look for monthly money supply data to reemerge in relevance for investors as they scavenge for data points that speak to money supply growth and velocity in the new world of rising rates – gradual or not.