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Industrial Production Beats Expectations in November

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Pre-market activity is once again trying to boost index levels on Covid-19 vaccine realities. Yesterday, we saw the momentous occasion of the first Americans vaccinated with the Pfizer (PFE - Free Report) -BioNTech (BNTX - Free Report) shot, but it wasn’t enough to hold the Dow and S&P 500 out of the red. Questions over whether Congress will come through on behalf of the U.S. citizenry and small businesses by way of passing a relief bill eclipsed positive sentiment regarding the vaccine.

Currently, the Dow is up 170 points, the S&P 500 +26 and the Nasdaq, which closed higher Monday, is +90 points. This comes after a couple key economic metrics which, while in positive territory, came in slightly below expectations.

The Import Price Index for November reached a headline of +0.1%, swinging from the -0.1% originally reported for October. Stripping out volatile petrol prices, this number buoys up to +0.3%. Exports tell a different story: +0.6% from the +0.3% expected, implying a strengthening global market. This would bear out when we check Chinese economic data of late.

The Empire State Index for December also came in a little light: 4.9 on the headline, below the 5.4 expected and the November read of 6.3. This is the weakest monthly print for monthly productivity in New York State since August, and has lost lots of steam from September’s 17. These regional data points actually do a good job representing economic growth, and exist as future indicators for many other economic metrics that report a month (or more) in arrears.

Industrial Production for November performed better than expected this morning, +0.4% from a +0.2% expected, though down a few ticks from October’s +1.1%. This is the best single-month read we’ve seen since August. Capacity Utilization also outperformed expectations: 73.3% beat the consensus by 30 basis points, and half a point higher than the previous month’s 72.8%. This is also the best print for Capacity Utilization — the level at which U.S. factories are operating on line — since March’s 73.5%, basically pre-pandemic levels.

The U.S. Food & Drug Administration (FDA) says it has found a favorable safety profile for the Moderna (MRNA - Free Report) Covid-19 vaccine, which had initially reported 95% efficacy in phase-3 trials. This vaccine, similar in makeup in that it is an mRNA — a newer type of inoculation that teaches bodies to generate their own proteins which serve to block a virus like Covid-19. As an added bonus, findings that following the first shot of Moderna’s vaccine two-thirds of patients were tested asymptomatic of the coronavirus. This suggests that shedding of the virus may begin after the first of two Moderna vaccine doses.


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