Markets registered a third consecutive day of gains Wednesday on mixed volume.
The Dow Industrials (+1.06%), S&P 500 (+1.24%) and NASDAQ (+0.90%) all moved smartly higher, closing once again at session highs. Volume on the NYSE (-1.84%) slipped modestly while volume on the NASDAQ (+2.56%) rose modestly. The US 10-year yield rose by 1.12% or 0.03 to close at 2.26. All three majors managed to close either above or at their respective 50 and 200 DMA – a very a rare occurrence. Additionally, all three major indices are now positive on the year – barely in the case of the S&P 500 (+2.35%) and Dow Industrials (+1.23%).
Yesterday’s broad based equity market rally was led by a seemingly unlike group, commodities – specifically energy. Interestingly, much of the day’s gains came after the EIA Petroleum Status Report was issued at 10:30 AM EST. In yesterday morning’s note I suggested that the EIA report was the day’s wild card. That did in fact prove to be the case as investors were pleasantly surprised to see crude inventories shrink by 5.9 million barrels in the week versus the previous week’s gain of 4.8 million barrels. Gasoline inventories rose by 1.1 million barrels – less than last week’s 1.7 million barrels and distillates shrank by 0.7 million barrels versus last week’s gain of 2.6 million barrels. That tightening of the weekly EIA Petroleum supply data not only gave further lift to crude in the session. It also provided lift to the entire energy complex and the broader market. It is no coincidence that crude has rallied now for three straight sessions and that equities have as well. The dominance of the crude narrative over equities was underscored in the session. To my point… Last Friday Crude WTI closed at $34.73/bbl while yesterday it closed at $37.83/bbl. That is a gain of 8.926% in crude in three trading sessions. Last Friday the S&P 500 closed at 2005.55. Yesterday it closed at 2064.29 for a gain of 2.928% thus far this week.
Other economic data released yesterday played a lesser role in dominating the narrative for equities. The Durable Goods Order data for New Orders, Ex-Transportation and Core Capital Goods were also slightly stronger than expected. Personal Income and Outlays were also slightly stronger than consensus expectations. New Home Sales came in at 490k modestly missing consensus of 503k.
Today’s Economic Calendar is limited in scope and in potential impact. Weekly Jobless Claims will take top billing and are expected to come in at 270k.
Nota Bene:
I want to wish each and everyone of you a very Merry Christmas, Happy New Year and Joyous Holiday Season. It has been a complete pleasure and honor writing this note for you this year. It has also been humbling to have the opportunity to engage in our conversations through the Water Cooler. The readership of Kenny’s Commentary has grown dramatically, the media appearances and opportunities to collaborate have multiplied many times over and I have you to thank. It has been a blessing.