Equity Markets Dig out of a Deep Hole

The 4266.84 low put in by the Nasdaq and the 1829.08 low put in by the S&P 500, both on February 11th, have managed to hold despite the heightened volatility fueled by of crude oil’s reckless price action. Though crude did manage to close with a gain of 1.223% yesterday, closing at $32.26/bbl, the intraday trade was anything but placid.

In fact, crude’s sharp reversal lower in the overnight set the stage for a dramatically lower open for US equities. The opening tick however was the low of the day as equity markets spent the day digging themselves out of a -260 point Dow hole in the face of disappointing economic data and in the process managed a positive close.

All three major market indices closed positive with the small caps slightly outperforming. The Nasdaq gained 0.87% while the Dow Industrials and S&P 500 added 0.32% and 0.44% respectively. Volume on both the NYSE (+11.12%) and Nasdaq (12.15%) expanded as well. From a market sector standpoint, technology, materials and consumer discretionary outperformed the broader market while energy, the equity market’s nemesis, closed slightly above even for the day.

February’s Purchasing Manager’s Index (PMI) data, released yesterday, was not only lighter than consensus at 49.8, it was below the low end of the expected range for the month, which was 52.8. New home sales – level – SAAR figures for January were also a tad lighter than consensus coming in at 494k. Consensus was calling for 520k. The EIA Petroleum Status Report for the previous week was mixed. Crude inventories rose to 3.5 M barrels from last week’s 2.1 M barrels. However, gasoline (-2.2M) and distillates (-1.7M) both contracted in the week.

Today’s economic data includes Durable Goods Orders for January, Jobless Claims for the week ending 2/20 and the FHFA House Price Index for December of 2015.

flickr photo: Kalexanderson