US equity markets rallied sharply on Friday furthering the reversal that took shape in mid-month. Volume on the NYSE (+13.47%) and NASDAQ (+12.66%) rose as did the major market indices. The Dow Industrials and S&P 500 both gained 2.3% while the NASDAQ jumped 2.38%.
Clearly the news of the move to negative interest rates by the BOJ was an unexpected bonus for bulls, but there were other forces playing a hand in the day’s strong month end performance.
Earnings from the likes of Facebook and Microsoft lifted both the Technology sector as well as the broader market. Earnings will continue to dominate our equity trade this week. We hear from Google, TTWO and others.
Friday’s uneven economic narrative proved no match for the negative interest rate landscape that the BOJ announced in the overnight. For example, the International Trade in Goods for November was $-61.5B versus expectations of $-60.1B. Real GDP – Q/Q change SAAR was 0.7%, weaker than the 0.9% expected. The Employment Cost Index hit consensus at 0.6%. Consumer Sentiment, as measured by the University of Michigan’s Consumer Survey ticked to 92.0 versus expectations of 93.0. Finally, all sectors of the Baker-Hughes Rig count data fell. The North American top-line fell to 850 from 887. US counts fell from 637 to 619. Gulf rigs slipped to 28 from 29 and Canada’s rig count fell to 231 from 250. Net/net, away from Rig Counts, the economic data was slightly negative but largely in line.
Today’s Economic Calendar will be dominated by ISM Manufacturing at 10:00 AM EST, Personal Income and Outlays at 8:30 AM EST and PMI Mfg. at 9:45 AM EST.