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After the excitement of yesterday’s post-FOMC rally, today has been a bit of an anti-climax, with a small retreat in stock prices in general after a batch of below par economic releases.
The compositional quirks of the Dow means that solid rises in highly-weighted Visa and Chevron has been enough to prop the index into positive territory, while the broader (and consequently more-representative of the stock market as whole) S&P 500 index was still in negative territory. By early afternoon in New York, the S&P was down 0.04% at 1809.8, while the Dow was up 0.15% at 16,192.
These aren’t big moves by any measure, and now that we have moved beyond the FOMC meeting, we may well see volatility ebbing until the other side of Christmas.
Jobless claims rose 10,000 last week to 379,000, the second increase in a row. While the four-week moving average remains respectable at 434,500, December may be struggling to see any improvement in the labour market.
Existing home sales also disappointed, showing a 4.3% decline month-on-month, as higher mortgage rates and home prices continue to weigh on demand. The year-on-year change fell into negative territory for the first time in close to two and half years, with sales dropping 1.2% from where they were a year ago.
On the other hand, the Conference Board’s index of leading indicators jumped 0.8% in November, with strength in manufacturing orders and the stock market. The index of leading indicators has historically shown a correlation between major changes in its trend and turning points in the economy, with peaks and troughs in the index often preceding similar moves in real GDP.