Page One
The stock market's approach to the Christmas Day holiday was filled with good cheer. The major indices all moved up nicely on Christmas Eve, following the lead of the mega-cap stocks. The return from the Christmas Day holiday has been less cheerful.
Currently, the S&P 500 futures are down 21 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 75 points and are trading 0.5% below fair value, and the Dow Jones Industrial Average futures are down 178 points and are trading 0.5% below fair value.
This negative disposition stems in part from some weakness in the mega-cap space, but we would also draw readers' attention to the Treasury market where yields continue to rise.
The 2-yr note yield is up two basis points to 4.36%, but the 10-yr note yield is up another five basis points to 4.64% in front of today's $44 billion 7-yr note auction. Results will be out at 1:00 p.m. ET.
This bump in rates is a source of agitation for the stock market, which is trying to divine if it is mostly a reflection of an encouraging growth outlook or if it is more of a statement of concern about sticky inflation and/or the deficit.
It just might be all of the above. In any case, higher interest rates don't always play well with higher equity valuations, as they pose a headwind for multiple expansion.
The uptick in rates today occurred in front of the 8:30 a.m. ET release of the weekly Initial and Continuing Jobless Claims Report, which itself didn't force any dramatic shift after its release.
Initial jobless claims for the week ending December 21 decreased by 1,000 to 219,000 (Briefing.com consensus 232,000) and continuing jobless claims for the week ending December 14 increased by 46,000 to 1.910 million -- the highest level since November 13, 2021.
The key takeaway from the report is that layoff activity is low; however, if one loses their job, it is becoming more challenging to find a new position.
There isn't any meaningful corporate news of note. That's no surprise for the day after Christmas, which for many will be a day of Christmas gift returns. On a related note, Mastercard SpendingPulse reports U.S. retail sales, excluding automotive, increased 3.8% from November 1 through December 24 with apparel, jewelry, and electronics among the more notable sectors for gift-giving.
Hopefully, the people returning gifts will be of good cheer when dealing with employees working the return counters. Maybe the stock market will find more cheer as today's session progresses, but it looks as if it will be returning some of the gains it rang up on Christmas Eve when the opening bell rings.
