U.S. markets opened higher and showed some momentum throughout Thursday’s session while holding onto slight gains into the closing bell.
The Russell 2000 showed the most strength after rising 0.3% to remain with 1% of its record high. The Dow fell shy of its all-time high by 37 points but notched its 71st record close of the year after gaining 0.2%.
The S&P 500 also added 0.2% and came within 7 points of a fresh lifetime high. Meanwhile, the Nasdaq showed some morning weakness after the open but managed to clear near-term resistance after rising 0.2%.
Real Estate and Utilities led sector strength after advancing 0.6% and 0.5%, respectively. Consumer Staples was the only sector that closed in the red after slipping 0.3%.
Global Economy-European markets traded mostly lower aside from UK’s FTSE 100 which was up slightly after climbing 2 points, or 0.03%, to finish at a record close.
Germany’s DAX 30 gave back 0.7% while France’s CAC 40 stumbled 0.6%. The Stoxx Europe 600 and the Belgium20 fell 0.3%.
The ECB said the Eurozone economic expansion continues to be solid and broad-based across countries and sectors with underlying inflation are expected to rise gradually over the medium-term.
Asian markets were mostly higher with Japan’s Nikkei sitting on the sidelines after dropping 0.6%. The index continues to struggle with the 23,000 level that was topped during intraday trade last month.
South Korea’s Kospi surged 1.3% while Hong Kong’s Hang Seng jumped 0.9%. China’s Shanghai rallied 0.7% and Australia’s S&P/ASX 200 added 0.3%.
Japan November industrial production rose 0.6% month-over-month, stronger than expectations for a rise of 0.5%.
Japan November retail sales were up 1.9% month-over-month, topping forecasts of 0.7% and the biggest monthly increase in 13 months.
Bloomberg Consumer Comfort Index rose 1.6 points to 52.4. This is the first increase in three weeks and was the highest reading since September 3rd when it was 52.6.
The International Trade in Goods deficit gapped out to $69.7 billion in November, leaving it at the widest since March 2015, after a surprise 6.5% jump in October. Exports rose 3% to $133.7 billion, while imports were up 2.7% to $203.4 billion.
Initial Jobless Claims were unchanged at 245,000 for the week of December 23rd.
The Chicago PMI rose 3.7 points to a reading of 67.6 for December, topping expectations of 62.5.
Crude oil inventories were at a 4.61 million draw versus consensus of 3.84 million. Gasoline inventories 591,000 build versus forecasts of 1.29 million. Distillates 1.09 million build versus expectations of 86,000.
Market Sentiment- Fed funds futures continue to show a strong probability for a March rate hike and another after mid-2018, with some chance for a third tightening.
That’s in contrast to the FOMC’s dot plot that showed three rate increases. How this modest discrepancy is resolved will be a major directional key for Treasuries as inflation will be a major factor behind the Fed’s path.
Growth is likely to remain solid in 2018, especially with the tax reform package in place, and that could help boost price pressures. While that would favor the FOMC’s outlook for three hikes, analysts still believe policymakers will remain cautious and patient for now.
The curve might have more of a tendency to steepen if price pressures start to accelerate and if the FOMC maintains its gradualist posture.
The iShares 20+ Year Treasury Bond ETF (TLT) snapped its four-session win streak after closing lower while tapping an intraday of 126.37.
Support at $126-$125.75 held with backup help at $125.50-$125.25 and the 50-day moving average. Lower resistance at $126.75-$127.
Market Analysis- The Spider Small-Cap 600 ETF (SLY) has been mirrored at the top of its trading range at $134-$134.50 over the past 8-sessions with today’s high reaching $133.98.
A close above the latter would be a bullish development for another run at fresh all-time highs up to $136.50-$137.50.
There is risk to $132.25-$132 and the bottom of the trading range on a move below $133.50. RSI continues to struggle with near-term resistance at 65-70 following the slide below the latter at the beginning of the month.
The Real Estate Select Sector Spider (XLRE) traded higher for the fourth-straight session following today’s run to $32.92.
Near-term and lower resistance at $32.75 and the 50-day moving average was cleared with fresh hurdles at $33-$33.25. Fresh support is at $32.50-$32.25 with the monthly lows at $32.15 and $32.20 from last week.
RSI cleared 50 and remains in an uptrend with the next major hurdle at 60 and mid-month resistance.
All the best,