• The main indices cancel their gains to close lower
  • The weakest technology and energy sectors of the S&P 500; real estate leads the winners
  • Dollar, bitcoin, rising gold; gross ~ flat
  • 10-year U.S. Treasury yield drops to ~ 1.51%

December 30 – Welcome home for real-time market coverage presented by Reuters reporters. You can share your thoughts with us at market.research@thomsonreuters.com

DOW INDUSTRIAL RECOVER A SERIES OF SIX DAY WINS (1605 EST / 2105 GMT)

The S&P 500 (.SPX) and Dow (.DJI) hit intraday highs on Thursday as new claims for unemployment benefits in the United States fell, showing the Omicron variant of the virus that causes COVID-19 has not yet slowed down the US economy.

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However, in the middle of another day of moderate volume, both indexes pulled back and closed slightly lower that day. With that, DJI ended a six-day streak of consecutive wins, which was their longest streak of higher consecutive daily closings since a seven-day streak in March of this year.

The technology (.SPLRCT), and more particularly the chips (.SOX), were among the poorest performance of the day.

That said, there were a few bright spots. For example, the NYSE FANG + TM (.NYFANG) index rose 1.4%, the VanEck Gold Miners ETF (GDX.P) rose 1.7%, and the Invesco Solar ETF (TAN.P ) grew by around 3%.

Here’s Thursday’s closing snapshot:

Closer12302021

(Terence Gabriel)

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SMALL CAPITALS VS LARGE CAPITALS IN 2022: DRUM ROLL PLEASE … (1305 EST / 1805 GMT)

Nicholas Colas, co-founder of DataTrek Research, came out with some predictions on how he thinks the small-cap vs. large-cap duel might play out over the coming year.

It should be noted that the S&P 500 (.SPX) is up around 28% so far this year. This is its biggest annual gain since rising nearly 29% in 2019. Meanwhile, the Russell 2000 Small Cap (.RUT) has grown by around 15% so far in 2021, which is its smallest increase in the past three years.

Colas believes that 2022 will “NOT” be a bad year for US large-cap stocks. In fact, he says there is only an 18% chance that the strong comeback of the S&P 500 in 2021 will end in tears in 2022.

Next year, “the S&P could be down 5%, up 5%, or up more than 10%. We think the latter outcome is more likely, but that’s a less important observation than the limited risk of a serious decline. “

On the other hand, Colas believes small cap stocks have their problems and that the Russell 2000 will underperform the S&P 500 next year. He notes that about a third of the Russell is unprofitable, and the asset class needs lower US corporate yield spreads over Treasuries to outperform large caps. However, he cautions that spreads are already at or near their historic lows.

“There will be some good trades in US small caps next year (there always are…), but it’s hard to like the Russell versus the S&P 500 without the catalyst for lower corporate spreads. high yield. “

(Terence Gabriel)

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UNEMPLOYED CLAIMS, CHICAGO PMI: ECONOMY LANGUAGE JUMPS TOWARDS FINISH LINE 2021 (1045 EST / 1545 GMT)

Investors launched on Thursday the penultimate trading day of a volatile year with a pair of insignificant and slightly better-than-expected indicators.

The number of American workers filing for the first time unemployment benefits (USJOB = ECI) unexpectedly fell to 198,000 in the week leading up to Christmas, dropping below 200,000 for the third time in two months. Read more

The surprise drop – analysts expected the Labor Ministry report to show a nominal increase to 208,000 – provides further evidence of a drought among workers as a new wave of COVID infections maintains even more homeworkers and convince employers to delay the distribution of the pink leaflets.

The data has now drifted below the level typically associated with a healthy churn in the labor market.

Job vacancies hit an all-time high of 11 million in October, prompting companies to sweeten the pot by raising wages, which in turn supported consumer spending.

But how much is the data affected by vacation noise?

“Claims data could be more volatile in the coming weeks due to the seasonal adjustment process,” writes Nancy Vanden Houten, chief US economist at Oxford Economics. “But beyond this noise, we expect claims will remain around 200,000, as layoffs remain low amid a tight labor market.”

Ongoing claims (USJOBN = ECI), reported with a one-week lag, also defied consensus by falling to 1.716 million, bringing the number back to pre-pandemic levels after climbing to 23.128 million when the measures to contain the coronavirus have shut down businesses and prompted the fastest and shortest recession in history.

Unemployment benefit claims

A separate report showed that Midwestern factory activity picked up a bit of speed this month.

The Chicago Purchasing Managers Index (PMI) (USCPMI = ECI), courtesy of MNI Indicators, posted an impression of 63.1, a monthly increase of 1.3 points and 1.1 points au- above consensus.

A PMI number greater than 50 means increased activity compared to the previous month.

The increase was driven by gains in production, new orders and inventories, employment and shipments weighing on the number of headlines.

Perhaps the most promising elements of the report were the 4.2 and 5.2 point declines in prices paid and backlog subcomponents, respectively, offering a silver lining that the supply chain could fail. slowly unravel.

But what do the survey participants say?

“This month, we asked companies what they predict will be ‘the biggest challenge in executing plans for the holiday season?’” Says The Commons and Lucy Hager of MNI. “The largest share (36.4%) said global shortages, followed by logistics (25.0%) and staff shortages (22.7%).”

On Tuesday, the more comprehensive national PMI from the Institute for Supply Management (ISM) shows a slight deceleration of 0.9 points to 60.2.

The manufacturing sector, which contributes around 11% of U.S. GDP, had to contend with soaring input prices in 2021 due to hampered supply chains even as demand shifted from goods to services with the reopening of the economy.

Yet despite these headwinds, goods makers have done remarkably well throughout the crisis. Chicago’s PMI trendline has now enjoyed a year and a half of expansion.

Chicago PMI

Wall Street’s timid pink matched the data, with all three major stock indexes looking slightly green.

All three remain on track to post weekly, monthly, quarterly and annual gains, with the benchmark S&P 500 (.SPX) currently showing a 28% increase in 2021.

(Stephen Culp)

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DOW INDUSTRIAL TIRE FOR SEVENTH RIGHT GAIN (0953 EST / 1453 GMT)

The Dow Jones Industrial Average (.DJI) and S&P 500 (.SPX) are both on track for new record closes early Thursday, as a drop in weekly jobless claims has yet to show any impact on the market. employment of the outbreak of coronavirus infections in the United States.

With this, the Dow blue chip is on track for a seventh straight day of gains. The DJI last increased seven days in a row in March of this year. He won eight consecutive days for the last time in late July / early August 2020.

Small caps (.RUT) and banks (.SPXBK) are among the top outperformers. Meanwhile, given the smoothness of the technology (.SPLRCT) and especially the chips (.SOX), the Nasdaq Composite (.IXIC) hovers just above flat. The IXIC is still around 2% from its record close on November 8.

Here’s where the markets are at the start of trading:

earlytrade12302021

(Terence Gabriel)

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THE APPLE OF THE EYE OF THE NASDAQ 100 (0859 EST / 1359 GMT)

Apple (AAPL.O) has moved closer to the $ 3 trillion market cap mark.

With this, the AAPL’s relative strength line to the Nasdaq 100 (.NDX) is approaching its own significant hurdle in the form of a 30+ resistance line:

AAPLNDX12302021

It should be noted that the AAPL / NDX ratio briefly broke this barrier in late August / early September 2020. However, it failed to maintain several one-day breaks above the line. The stock then peaked and suffered a significant drop. AAPL lost around 20% at the close in just 12 trading days (tds) to its low in late September 2020.

Then again, at the end of December of last year and the end of January of this year, the ratio again flirted with the resistance line. After peaking, essentially just at the barrier on January 27, AAPL slipped around 18% over the next 27 tds to its early March low.

The ratio hit a low in early June, then with its November 8 low it used the support line from early 2019 as a launching pad. AAPL has climbed around 20% to 35 tds since then.

With a line around 1.106% in mid-December, the ratio hit a record high of 1.101% on December 15 and has since deflated. Over the next few weeks, the line will rise to the 1.108% / 1.109% area.

The ratio may need to overcome this hurdle for Apple to maintain its leadership position over NDX. Otherwise, the stock may be close to another episode of instability.

(Terence Gabriel)

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Terence Gabriel is a market analyst at Reuters. The opinions expressed are his

Our Standards: Thomson Reuters Trust Principles.


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