Stock Market Update

[BRIEFING.COM] The stock market has exhibited choppy action at the index level on the first session of the year. The S&P 500, which traded up as much as 0.9%, sports a 0.6% decline in recent trading. The Nasdaq Composite shows a 0.7% decline after trading up as much as 1.1% at its intraday high.

Initial upside moves were related to buy-the-dip interest after a soft finish to the year. Some rebalancing activity and new inflows to start the month, quarter, and year also contributed to the positive bias. Market breadth is still positive despite index deterioration. Advancers lead decliners by a 4-to-3 margin at the NYSE and at the Nasdaq. 

The major indices declined as mega caps turned lower and Treasury yields turned higher. The 10-yr yield, which hit 4.51% earlier, sits at 4.8%. The 2-yr yield, which hit 4.20% earlier, sits at 4.25%. 

Microsoft (MSFT 415.92, -5.58, -1.3%), Amazon.com (AMZN 219.25, -0.15, -0.1%), and Alphabet (GOOG 189.73, -0.72, -0.4%) moved into negative territory, and Apple (AAPL 242.74, -7.65, -3.1%) and Tesla (TSLA 376.09, -27.73, -6.7%) extended initial declines, as the major equity indices fell. 

The ongoing strength in the dollar, which can be a drag on earnings for multinational companies, has also contributed to downside moves in stocks. The U.S. Dollar Index is up 0.8% to 109.30 as the euro keeps sinking (EUR/USD -0.9% to 1.0264) on growth and policy rate divergences.

Reviewing today's economic data:

• Initial jobless claims for the week ending December 28 decreased by 9,000 to 211,000 (Briefing.com consensus 224,000) while continuing jobless claims for the week ending December 21 decreased by 52,000 to 1.844 million.
  • The key takeaway from the report is the low level of initial claims -- a leading indicator -- as that connotes a situation where employers are reluctant to let employees go, which goes hand-in-hand with an optimistic view of business prospects.
• Total construction spending was unchanged month-over-month in November (Briefing.com consensus 0.2%) following an upwardly revised 0.5% increase (from 0.4%) in October. Total private construction was up 0.1% month-over-month while total public construction declined 0.1% month-over-month. On a year-over-year basis, total construction spending was up 3.0%.
  • The key takeaway from the report is that there wasn't much impulse for construction spending in November, particularly on the nonresidential side of things.
• December S&P Global US Manufacturing PMI - Final checked in at 49.4 versus the preliminary reading of 48.3 and the final November reading of 49.7. The dividing line between expansion and contraction is 50.0, so the December PMI represents activity contracting at a slightly faster pace than the prior month.
• The MBA Mortgage Applications Index was down 21.9% from two weeks before with refinance applications down 36% and purchase applications down 13% (note: this data is usually released on a weekly basis, so the actuals, which aren't necessarily good, also aren't as bad as they appear at first blush)