Yahoo Finance Markets Slide from Mid-Morning Highs
Market indices couldn’t hold onto that bullish feeling they had during today’s pre-market, as the the majors were all more than -1% off yesterday’s closing numbers. The Dow lost -614 points in the session, -1.81%, while the S&P 500 shed -1.56%, with all 11 sectors closing lower. The Nasdaq outperformed the field for the second-straight day, -1.24%, while the small-cap Russell 2000 reached -1.59%.
We saw a lot of economic data and heard plenty of informed opinions throughout the course of the day, starting with weaker-than-expected PPI and Retail Sales numbers for December, which seemed to pitch market participants toward a rally, as the “bad news is good news” formula appeared to be in full swing. And most of the other figures released to day seemed to back up this narrative.
The National Association of Homebuilders (NAHB) Index for January bounced off the lowest level since June 2012 to 35 — still miles behind the 84 high we saw back in December of 2021. Business Inventories were revised in-line at +0.4%, while Industrial Production sank a bit last month. The Beige Book expects future price growth to moderate further, but then stay down for an extended period.
Perhaps there is where we see some disheartenment: once inflation melts down to appropriate levels, the general thinking had been that a bounce-back would be underway. That looks less likely the closer we move toward the end of our inflation crisis; it’s now more likely, according to experts, that we’ll remain subdued for some time after +2% inflation is once again in sight.
According to Philly Fed President Patrick Harker, don’t expect +2% inflation until 2025. This from a monetary policy official who does not expect the U.S. to slide into recession — he’s still relatively bullish among Fed members. He points to the labor market continuing to be in “excellent shape” as a main reason for the longer period of beyond-optimum inflation.
Perhaps things like Microsoft’s MSFT announcement today that it plans to lay off 10K employees will begin to have an affect on the labor market, but so far, these layoffs in broader tech are not registering in overall employment data. Part of this is due to a labor shortage: a programmer who gets laid off from Microsoft tomorrow might well be picked up by a small, growing tech firm the next day. In short, there’s still lots to iron out in our current labor market.
And the market does appear a bit gun-shy at this juncture; after all, we saw half a dozen head-fake rallies that weren’t throughout 2022. Investors at this stage, following a decent start to the trading year thus far, woulds appear determined not to let exuberance get out of control. We still have the rest of Q4 earnings season — and likely another two or three Fed hikes — to digest first.
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