Stock Market Update

[BRIEFING.COM] The stock market is facing some selling pressure today. The three major indices show losses ranging from 0.3% to 0.4% while the Russell 2000 underperforms, trading 0.9% lower. 

Downside moves are related to normal consolidation activity after a huge run following the election. The Russell 2000 is still 4% higher than its close on Tuesday, November 5, ahead of the election results. The Dow Jones Industrial Average is 3.8% higher since the election.

The market has been in profit-taking mode over the last few session, but stock futures indicated a higher open for the major indices today before this morning's economic releases sparked more selling interest in equities. 

The October Producer Price Index reflected rising inflation at the wholesale level while weekly jobless claims remained below recession-like levels, reflecting ongoing strength in the labor market that may translate to higher consumer spending, piling on more pressure on inflation.

Treasury yields initially jumped in response, sending the 10-yr yield toward 4.50%, but buyers stepped in around that level. The 10-yr yield sits at 4.40% now.

Losses in the equity market have been fairly broad based. Nine of the S&P 500 sectors are lower and three of them trade down more than 1%. 

Dow component Walt Disney (DIS 109.90, +7.22, +7.0%) has gone against the grain, trading sharply higher after reporting earnings results. 

Reviewing today's economic data:

• Weekly Initial Claims 217K (Briefing.com consensus 220K); Prior 221K, Weekly Continuing Claims 1.873 mln; Prior was revised to 1.884 mln from 1.892 mln
  • The key takeaway from the report is rooted in the low level of initial jobless claims -- a leading indicator -- which suggests employers are feeling reasonably good about the economic outlook, as they appear reluctant to layoff employees.
• October PPI 0.2% (Briefing.com consensus 0.2%); Prior was revised to 0.1% from 0.0%, October Core PPI 0.3% (Briefing.com consensus 0.3%); Prior 0.2%
  • The key takeaway from the report is that there was inflation in this report -- not disinflation -- at the wholesale level. That will stir concerns about PCE inflation sticking at higher levels and the Fed not cutting rates as much as previously envisioned.