(As of 7:15 am PST)
US
markets have given back all of yesterday’s gains and then some in just a few
short minutes this morning. Stocks opened down 2% Friday, after rallying in the
afternoon yesterday on dovish comments made by St. Louis Fed President James
Bullard. The “Bullard rally” as some are calling yesterday’s random bid up,
appears to be short-lived as downside pressure swooped back in today on
disappointing economic data, weak earnings forecasts, and tumbling oil prices.
Let’s start with the economic data. US Retail Sales for December fell short of
expectations, falling -0.1% as declines spread across most retail categories. Separately,
data on manufacturing activity as measured by the Empire State index fell in
January much more than expected. A report on industrial production also showed
declines in December but at a rate less than expected. Inflation seems to
remain relatively subdued as the PPI report for December showed a 0.2% decline.
On a positive note, a reading on consumer sentiment showed sentiment rising in
January better than expected. Turning to earnings, weak reports from Citigroup and
Wells Fargo caused shares of both banks to slide, while a disappointing
forecast from Intel sent the chipmaker tumbling. Oil prices are being pressured
again today after taking a breather yesterday as WTI crude fell below $30 per
barrel early Friday. Asian markets skidded into the weekend, with the Shanghai
index wrapping up the week with losses of 9% putting it in bear-market
territory. European stocks are also lower headed into the final hour of trade.
Gold is providing some safe haven today as are treasuries with yields on the 10
yr. falling back to near 2%. It’s certainly a risk-off start to trading and
presumably will remain this way for the remainder of the session.
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