All good things must come to an end, and the run in the US stock market has been a ride that was going to come to an end sooner rather than later. It did take 9 days to snap the Dow and the Nasdaq streak. For the Dow it made 5 consecutive new all time highs once it cleared the high from early January 2022 last Wednesday. The Nasdaq moved above it’s 2023 high on Tuesday, December 12 and closed at new 2023 highs for 6 consecutive days.
The S&P had one down day of the -0.01% along the 9 day run making its streak 8 of 9 days higher. It’s run to the upside got within 18 points of an all-time high close today before rotating back to the downside.
For the day, the final numbers showed:
- Dow Industrial Average -475.92 points or -1.27% at 37082.01
- S&P fell -70.02 points or -1.47% at 4698.34
- Nasdaq fell -225.29 points or -1.50% at 14777.93
The Russell 2000 which has seen a gain of 9.60% this month, fell -38.11 points or -1.89% at 1982.83.
The declines in the stocks were not on the back of higher yields. Indeed rates today moved lower despite a so-so 20 year note auction (tail of 1.5 basis points). A snapshot of the market shows:
- 2 year yield, 4.343%, -9.3 basis points
- 5-year yield, 3.854%, -7.9 basis points
- 10-year yield, 3.854%, -6.7 basis points
- 30-year yield 3.989%, -4.6 basis points
Looking at the USD, the greenback closed the day mostly higher with the biggest gain vs the GBP.
The strongest to the weakest of the major currencies
The pound fell sharply after better-than-expected inflation data with CPI falling to 3.9% from 4.6% last month (and 4.3% estimate). The core-CPI also was better than expected with a fall to 5.1% vs 5.6% estimate.
In the US, existing home sales were stronger than expectations (3.82M vs 3.77M est), and consumer confidence was also better than expected (110.7 vs 104.00 estimate). Other details showed:
- Present situation index 148.5 vs 138.2 prior (revised to 136.5)
- Expectations 85.6vs 77.8 prior (revised to 77.4)
- 1 year Inflation 5.6% vs 5.7% prior
ECB’s Knot, Lane and Kazaks all said in different ways to “hold on with the rate cut” ideas. Fed’s Harker said that the job of controlling inflation is not done, but did acknowledge that trends in inflation were favorable and the Fed was done tightening.