The Global Update

• The broader market sold off as many investors took profits from 2020 winners and shed exposures ahead of Tuesday’s Georgia runoff elections.
• The December flash PMI manufacturing final came in at 57.1, ahead of consensus expectations of 56.5.
• November construction spending showed growth of 0.9%, just shy of the anticipated 1.0% but lower than October’s 1.3% jump.

Tuesday – January 5

• Investors bought Monday’s dip as positive manufacturing data and a surge in commodity prices served as tailwinds for today’s rally.
• December ISM manufacturing data came in strong at 60.7, far above the expected 56.5 consensus.
• Traders await the results of the Georgia runoffs which will determine the direction in which the Senate may turn in light of the incoming Biden administration’s spending propositions.

• Pro-Trump rioters stormed the capitol building in what would end up a violent confrontation resulting in 5 deaths.
• Markets wavered yet proved resilient as it advanced across the board with the Dow reaching new all-time highs.
• December’s ADP employment report showed a stunning negative surprise, a drop of -123,000 when 130,000 was expected.
• November factory order rose 1.0%, slightly above the expected 0.6%.

• Despite the chaos surrounding the capitol, stocks managed to rally to record highs again.
• Strangely, many investors are looking at the breach at the capitol as an isolated event rather than a symptom of a larger trend.
• Investors also look forward to a new government and to more stimulus.
• Jobless claims for the week ending January 2 came in at 787,000, lower than the expected 803,000.

• Despite all of the turmoil this week, the broader market was able to race higher to reach record highs.
• Stocks advanced despite data showing the U.S. economy unexpectedly lost jobs last month.
• The gains put the market benchmark on track to end the first trading week of 2021 on a high note.

• Stocks eased back following a blistering first week of the year with some of the more overheated parts of the market coming off the fire.
• Markets rose despite no major economic reports released today.

• The major averages put on a “flattish” performance today holding steady despite the many cross-currents at play.
• Investors are keeping a close eye on Washington where a Wednesday vote for a second impeachment is about to take place.
• The JOLTS report came in at 6.527 million, under the 6.632 million most economists had expected.
• The Federal Reserve’s Esther George commented that inflation may rise faster than expected once the vaccine rollout picks up steam.
• Most of the sectors in the Fed’s inflation gauge were significantly affected by the pandemic lockdowns.

• A volatile market performance ending with tepid results took place as investors kept an eye on the House’s vote to impeach President Trump.
• Soon enough, investors’ attention will focus on Biden’s economic plan and the possibility of another stimulus.
• Consumer prices remained relatively flat as a month-over-month 0.4% rise came in at consensus, and year-over-year increase of 1.4% came in slightly higher than the expected figure of 1.3%. Overall, the results with and without food and energy costs matched what economists had anticipated.

• The broader market continued to churn below record highs against the backdrop of political drama and a disappointing jobless claims report.
• Investors are looking for clues as to yet another fiscal relief package.
• Last week, the US lost 965,000 jobs, far greater than the expected 790,000 jobs analysts had estimated.
• President-elect Biden is expected to unveil his pandemic stimulus package later today.

• Following what started as a harrowing drop, stocks recovered but remained well below their opening levels after President-elect Joe Biden announced details of a $1.9 trillion stimulus plan and major banks released their quarterly results, kicking off the earnings reporting season.
• Reporting mid-day. the Dow Jones Industrial Average traded 130 points lower, or 0.4%. The S&P 500 dipped 0.5%, along with the Nasdaq Composite.
• Retail sales in December dropped -0.7%, more than the expected decline of -0.1%.
• The December producer price index came in near consensus, rising 0.3% month over month and 0.8% year over year.
• Industrial production for December increased 1.6% since the previous month, topping expectations of a 0.5% rise; output shows a rise of 0.9%, higher than the expected 0.5%; and capacity utilization at 74.5% is slightly above consensus estimates of 73.6%.
• Consumer sentiment came in at 79.2, slightly missing expectations of 80.0–the consensus figure accounting for optimism regarding the vaccine rollouts.

• Martin Luther King Jr Day – Markets Closed

• The broader market recovered after its first down week in more than a month with confidence in vaccine rollouts and economic recovery unshaken as appetite for tech stocks remains unsatisfied.
• Incoming Treasury Secretary Janet Yellen made the case to Congress for a more aggressive fiscal approach toward pandemic recovery.
• No major economic reports today.

• Stock rose to record highs, crowning an uneventful yet historic inauguration in America, as all four US indexes (including the Russell 2000) got catapulted into unseen territory.
• Mortgage applications for the week ending January 15 are down significantly from the previous week–composite index came in at -1.9% from the prior week’s 16.7%; the purchase index is down to 3.0% from the prior week’s 8.0%; and refinancing is down -5.0% as compared with the prior week’s 20.0%.
• The January housing market index eased back a bit, coming in at 83 when analysts had expected 86.
• The housing market index, produced by the National Association of Home Builders, is based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions.

• Stocks to a breather, regrouping near their record highs.
• Jobless claims eased up a bit as 900,000 new claims were filed in the week ending January 16, in contrast to expectations of 926,000 new claims.
• The Philadelphia manufacturing index, coming in at 26.5 following a run of exceptional growth, topping economist expectations of 11.0.
• Housing starts and permits for December bumped up a bit, coming in at 1.669 million starts and permits, beating consensus of 1.558 million.

• Stocks are lower, posting fractional losses on all three US indexes.
• Reporting mid-day, the Dow dipped 113 points, or 0.36%, after starting the day lower by as much as 267 points. The S&P 500 slipped 0.2%, while the Nasdaq Composite fell just 0.1%, supported by gains in Microsoft and Facebook.
• The tech-heavy benchmark and the S&P 500 ascended to record closing highs yesterday, while the Dow hit an intraday high before closing lower.
• Existing home sales for December were expected to fall to 6.550 million from November’s figure of 6.690 million but instead showed an increase of 6.760 million.