Stock Market Update

[BRIEFING.COM] The stock market trades lower with major indices showing losses ranging from 0.3% to 0.6%. Selling activity hasn't been overly pronounced, but many stocks have participated in the broad retreat. Decliners lead advancers by a better than 3-to-1 margin at the NYSE and by a better than 2-to-1 ratio at the Nasdaq.

The deterioration is related to profit-taking interest following big gains this year in the major indices. The downside bias also reflects a cautious mentality in front of the FOMC policy announcement tomorrow. The fed funds futures market is still pricing in a nearly 100% probability of a 25 basis points rate cut, little changed after this morning's economic data. 

The headline report was November Retail Sales, which was stronger than expected for total retail sales but weaker than expected when auto sales were excluded. Treasury yields exhibited choppy action in response. The 10-yr note yield, at 4.44% in front of the report, is at 4.39% now, down one basis point from yesterday's settlement.

Some names have outperformed the broader equity market on specific catalysts. eBay (BAY 64.61, +0.97, +1.5%), which authorized an incremental $3.0 billion under its current stock repurchase program in addition to the remaining amounts previously authorized, and Pfizer (PFE 26.34, +1.09, +4.3%), which reaffirmed FY24 EPS and revenue guidance and issuing in-line FY25 EPS/rev guidance, are standouts in that respect.

Netflix (NFLX 919.72, -1.36, -0.1%) is another story stock after news that Co-CEO Ted Sarandos will visit President-elect Trump, according to Variety.

Reviewing today's economic data:

• November Retail Sales 0.7% (Briefing.com consensus 0.5%); Prior was revised to 0.5% from 0.4%, November Retail Sales ex-auto 0.2% (Briefing.com consensus 0.4%); Prior was revised to 0.2% from 0.1%
  • The key takeaway from the report is in the ex-auto number, which was up modestly and a reflection of some softening spending activity given that it is not adjusted for price changes. In other words, the overall sales increase, excluding autos, appears to be more price driven than volume driven.
• November Industrial Production -0.1% (Briefing.com consensus 0.3%); Prior was revised to -0.4% from -0.3%, November Capacity Utilization 76.8% (Briefing.com consensus 77.3%); Prior was revised to 77.0% from 77.1%
  • The key takeaway from the report is that industrial production didn't show any strong rebound from the prior two months that were adversely impacted by the hurricanes. There was some modest strength in manufacturing output, but total industrial production is still lagging.
• October Business Inventories 0.1% (Briefing.com consensus 0.2%); Prior was revised to 0.0% from 0.1%
• December NAHB Housing Market Index 46 (Briefing.com consensus 47); Prior 46