Still basking beneath the mid-week rays that interest rate cuts are coming in 2024 — perhaps even in the first three months of the new year — pre-market futures are up yet again this morning. The data is pretty undeniable: melting inflation with relatively steady employment and increasing productivity have provided a recipe for a “soft landing” that a plurality of experts thought impossible a year ago.
Actually, scratch that — it only took one paragraph of writing to see fortunes change this pre-market: futures are now down, likely the result of some valuation switches being thrown at new Dow all-time highs and a seventh-straight up-week for the S&P 500. Whereas we were seeing the Dow +100 points only a few minutes ago, it’s now down -10 points. The S&P was +10 points and is now -1. The Nasdaq, as ever leading the way in 2023, has thus far remained in the green, coming down from +50 points to +22 currently.
Perhaps the lone economic report on productivity out this morning has cooled the heels of market participants? Empire State manufacturing came in at -14.5 for December, much lower than the +4.0 anticipated. This is the lowest print since August, and now concludes 2023 with seven down-months and five up, averaged out to -8.6 per month. It’s also a regional survey — albeit a highly populous one — in that it only deals with productivity in New York State.
Industrial Production for November was slightly below expectations, 10 basis points (bps) lower, to be exact: +0.2%. Still, this is an improvement from the unrevised -0.6% the previous month, and continues the narrative that productivity keeps improving in our current (one month in arrears) economy.
Capacity Utilization for November, however, speaks to continued sluggishness in overall goods production: 78.8% is slightly below the 79.1% expected and the 78.9% reported for October. Goods producing, of course, plays a far smaller role in the grand scheme of things in this country, but it’s still worth paying attention to.
In any case, a little profit-taking on the second-to-last trading Friday ahead of Christmas is nothing to lose sleep over. The dynamic shift in trading levels happened Wednesday afternoon, after Fed Chair Powell talked up interest rate cuts in the 2024 forecast. The Dow, despite its recent slip in today’s pre-market, is still comfortably above 37K with only 11 trading days left in the year, including today.
The biggest index beneficiary of this new dovish Fed outlook is not the blue-chip Dow, however — it is the small-cap Russell 2000. Where it was assumed draconian levels of interest rates through most of next year was going to keep downward pressure on small regional banks, biotech firms and other small publicly traded businesses, this forthcoming relief vastly improves the specter of these smaller companies’ ability to function going forward.
Questions or comments about this article and/or author? Click here>>
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Pre-Markets Take Profits to Conclude Momentous Trading Week
Still basking beneath the mid-week rays that interest rate cuts are coming in 2024 — perhaps even in the first three months of the new year — pre-market futures are up yet again this morning. The data is pretty undeniable: melting inflation with relatively steady employment and increasing productivity have provided a recipe for a “soft landing” that a plurality of experts thought impossible a year ago.
Actually, scratch that — it only took one paragraph of writing to see fortunes change this pre-market: futures are now down, likely the result of some valuation switches being thrown at new Dow all-time highs and a seventh-straight up-week for the S&P 500. Whereas we were seeing the Dow +100 points only a few minutes ago, it’s now down -10 points. The S&P was +10 points and is now -1. The Nasdaq, as ever leading the way in 2023, has thus far remained in the green, coming down from +50 points to +22 currently.
Perhaps the lone economic report on productivity out this morning has cooled the heels of market participants? Empire State manufacturing came in at -14.5 for December, much lower than the +4.0 anticipated. This is the lowest print since August, and now concludes 2023 with seven down-months and five up, averaged out to -8.6 per month. It’s also a regional survey — albeit a highly populous one — in that it only deals with productivity in New York State.
Industrial Production for November was slightly below expectations, 10 basis points (bps) lower, to be exact: +0.2%. Still, this is an improvement from the unrevised -0.6% the previous month, and continues the narrative that productivity keeps improving in our current (one month in arrears) economy.
Capacity Utilization for November, however, speaks to continued sluggishness in overall goods production: 78.8% is slightly below the 79.1% expected and the 78.9% reported for October. Goods producing, of course, plays a far smaller role in the grand scheme of things in this country, but it’s still worth paying attention to.
In any case, a little profit-taking on the second-to-last trading Friday ahead of Christmas is nothing to lose sleep over. The dynamic shift in trading levels happened Wednesday afternoon, after Fed Chair Powell talked up interest rate cuts in the 2024 forecast. The Dow, despite its recent slip in today’s pre-market, is still comfortably above 37K with only 11 trading days left in the year, including today.
The biggest index beneficiary of this new dovish Fed outlook is not the blue-chip Dow, however — it is the small-cap Russell 2000. Where it was assumed draconian levels of interest rates through most of next year was going to keep downward pressure on small regional banks, biotech firms and other small publicly traded businesses, this forthcoming relief vastly improves the specter of these smaller companies’ ability to function going forward.
Questions or comments about this article and/or author? Click here>>