Markets closed lower today, but way off session lows. Fresh analysis following better-than-expected jobless claims and Q3 GDP this morning showed market participants musing joylessly about interest rate hikes continuing past February’s Fed meeting. The Dow, which dropped -803 points at the intra-day low today, hit the closing bell -348 points, -1.04%. The S&P 500 lost -1.44% in the session, the Nasdaq -233 points or -2.18% and the small-cap Russell 2000 -1.29%.
Thus far in December, the Nasdaq remains down -9%. All 11 sectors in the S&P are negative, month to date. Market indices are on track for their third-straight week lower, even with the nice bounce-back we saw over the previous two sessions. The Nasdaq continues to take the brunt of the sell-off, with Tech among the worst-performing sectors in the month.
Earlier today, we saw Leading Economic Indicators down for the ninth-straight month, and this followed lighter new jobless claims last week and basically in-line longer-term claims. Q3 GDP rose 30 bps in its final print to +3.2%; we opined this morning here in Ahead of Wall Street that we may see part of expected GDP growth in Q4 pulled forward, which would account for this latest boost to Q3 numbers.
What it all adds up to is an economy continuing to establish its resilience in a rapidly rising interest-rate environment. Normally, this would constitute relative confidence in market activity, but as we’ve said repeatedly, “We Are Not In Normal Times.” Currently, employment rollbacks pretty much everywhere in Big Tech is showing some foundations crumbling. But weekly claims data isn’t yet picking this up; we may have to wait til December jobs reports come out next month.
The good news is — and by “good news” I mean actual good news, not… well, you get it — we don’t have a new Fed meeting scheduled until the start of February, and by then, if we are truly to see repercussions in the economy based on the 425 bps of rate hikes over the past 10 months, we may see yet another shift in Fed policy — one that is less draconian than the one put forth last week, which has fueled this latest trajectory downward.
However, believing too strongly in such a favorable scenario is how we’ve gotten in trouble before this year. Just look at the market trading graph for 2022 as a whole: subsequent highs — starting with the first sessions in the first week of January — were lower each time a rally got stoked; lower lows were always the following result. Assuming this doesn’t change simply based on a new calendar, we may expect more of the same in early 2023.
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Apparently, "Good News" Is Still "Bad News"
Markets closed lower today, but way off session lows. Fresh analysis following better-than-expected jobless claims and Q3 GDP this morning showed market participants musing joylessly about interest rate hikes continuing past February’s Fed meeting. The Dow, which dropped -803 points at the intra-day low today, hit the closing bell -348 points, -1.04%. The S&P 500 lost -1.44% in the session, the Nasdaq -233 points or -2.18% and the small-cap Russell 2000 -1.29%.
Thus far in December, the Nasdaq remains down -9%. All 11 sectors in the S&P are negative, month to date. Market indices are on track for their third-straight week lower, even with the nice bounce-back we saw over the previous two sessions. The Nasdaq continues to take the brunt of the sell-off, with Tech among the worst-performing sectors in the month.
Earlier today, we saw Leading Economic Indicators down for the ninth-straight month, and this followed lighter new jobless claims last week and basically in-line longer-term claims. Q3 GDP rose 30 bps in its final print to +3.2%; we opined this morning here in Ahead of Wall Street that we may see part of expected GDP growth in Q4 pulled forward, which would account for this latest boost to Q3 numbers.
What it all adds up to is an economy continuing to establish its resilience in a rapidly rising interest-rate environment. Normally, this would constitute relative confidence in market activity, but as we’ve said repeatedly, “We Are Not In Normal Times.” Currently, employment rollbacks pretty much everywhere in Big Tech is showing some foundations crumbling. But weekly claims data isn’t yet picking this up; we may have to wait til December jobs reports come out next month.
The good news is — and by “good news” I mean actual good news, not… well, you get it — we don’t have a new Fed meeting scheduled until the start of February, and by then, if we are truly to see repercussions in the economy based on the 425 bps of rate hikes over the past 10 months, we may see yet another shift in Fed policy — one that is less draconian than the one put forth last week, which has fueled this latest trajectory downward.
However, believing too strongly in such a favorable scenario is how we’ve gotten in trouble before this year. Just look at the market trading graph for 2022 as a whole: subsequent highs — starting with the first sessions in the first week of January — were lower each time a rally got stoked; lower lows were always the following result. Assuming this doesn’t change simply based on a new calendar, we may expect more of the same in early 2023.
Questions or comments about this article and/or its author? Click here>>