What you need to know…
The S&P 500 Index ($SPX) (SPY) today is down -1.1%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -1%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.3%.
Stocks today are trading lower today as concerns over an increase in China's Covid cases grow.
Tesla is up more than +2% today on dip-buying after a seven-day losing streak. Tesla sank -11% Tuesday to a new 2-year low on news it would slow vehicle productions at its Shanghai factory next month. Also, Generac is up more than +4% after Janey Montgomery Scott LLC initiated coverage of the stock with a buy recommendation.
Higher bond yields are another reason stocks are moving lower today, with the 10-year T-note yield up +0.13bp at 3.838%. Also, the yield on the Japanese 10-year JGB bond fell -1.4 bp to 0.462% after the BOJ boosted QE with additional bond purchases. In addition, the 10-year German bund yield is down -2.1 bp at 2.502. Thin holiday volume may lead to volatile price movements as data from Trace shows trading in U.S Treasury securities fell to $2.27 trillion in the week ended Dec 23, the lowest since July 8.
Today’s U.S. economic news was mixed for stocks. On the positive side, the Dec Richmond Fed manufacturing index unexpectedly rose +10 points to an 8-month high of 1, stronger than expectations of a decline to -10. Conversely, Nov pending home sales fell -4.0% m/m, weaker than expectations of -1.0% m/m.
Today’s stock movers…
Tesla (TSLA) is up more than +2% today on some short-covering and dip-buying after the seven-day losing streak.
Generac Holdings (GNRC) is up more than +4% to lead gainers in the S&P 500 after Janey Montgomery Scott LLC initiated coverage of the stock with a buy recommendation and a price target of $160.
Rivian Automotive (RIVN) is up more than +1% after Cantor Fitzgerald named the stock one of their top technology picks for 2023.
Energy stocks and energy service providers are under pressure today, with WTI crude oil down more than -1%. Marathon Oil (MRO), APA Corp (APA), and Occidental Petroleum (OXY) are down more than -3%. Also, ConocoPhillips (COP), Devon Energy (DVN), Diamondback Energy (FANG), Exxon Mobil (XOM), Haliburton (HAL), Marathon Petroleum (MPC), Phillips 66 (PSX), Baker Hughes (BKR), and Valero Energy (VLO) are down more than -2%. In addition, Chevron (CVX) is down more than -1% to lead losers in the Dow Jones Industrials.
Southwest Airlines (LUV) is down more than -2% at a 2-month low after CEO Jordan said it plans to fly at a reduced schedule for the next few days and hopes to be back on track before next week.
U.S.-listed Chinese stocks are falling today on some profit-taking from Tuesday’s rally when China took steps to reopen its economy and end Covid Zero policies. Pinduoduo (PDD) is down more than -3% to lead losers in the Nasdaq 100. Baidu (BIDU) is down more than -3%. JD.com (JD), Alibaba Group Holding (BABA), and NetEase (NTES) are down more than -1%.
Across the markets…
March 10-year T-notes (ZNH23) today are up +3 ticks, and the 10-year T-note yield is down -0.3 bp at 3.838%. A rally in global government bond markets today has sparked some short-covering in T-notes. The yield on the Japanese 10-year JGB bond fell -1.4 bp to 0.462% after the BOJ boosted QE with additional bond purchases. Supply pressures are limiting gains in T-note prices as the Treasury will auction $43 billion of 5-year T-notes and $22 billion of 2-year floating-rate notes this afternoon.
The dollar index (DXY00) today is down by -0.14%. Lower T-note yields this morning are weighing on the dollar. Also, strength in stocks today has curbed liquidity demand for the dollar.
EUR/USD (^EURUSD) today is up by +0.17%. The euro rose to a fresh 1-1/2 week high today and is moderately higher on hawkish comments from ECG Governing Council member Simkus who said the inflation peak in the Eurozone is still to come. Also, dollar weakness today has sparked some short-covering in EUR/USD.
USD/JPY (^USDJPY) today is up by +0.16%. The yen fell to a 1-week low against the dollar today after the BOJ boosted QE when it unexpectedly announced additional bond purchases. Also, the minutes of the BOJ's Dec 19-20 policy meeting released today signaled support for the BOJ to continue with monetary easing.
Japan Nov industrial production fell -0.1% m/m, stronger than expectations of -0.2% m/m.
The BOJ boosted QE after it unexpectedly announced it would buy unlimited amounts of 2-year notes at a fixed yield of 0.03% and 5-year notes at 0.24%, among other purchases of 1-to-10 year securities for a total of 500 billion yen.
The summary of opinions from the BOJ's Dec 19-20 policy meeting said the BOJ's view that the decision to widen the trading band for the 10-year bond yield wasn't aimed at changing the trajectory of monetary policy.
February gold (GCG3) this morning is down -10.2 (-0.56%), and March silver (SIH23) is down -0.197 (-0.81%). Precious metals prices this morning are moderately lower on concern that the reopening of China’s economy will spark demand for commodities that boost inflation, which could lead to even tighter monetary policies from the world’s central banks. Also, strength in stocks today has reduced safe-haven demand for precious metals.
More Stock Market News from Barchart
- Unusual Options Activity Points to Turbulence for Southwest Airlines (LUV)
- Markets Today: Stocks Slightly Higher as Tesla Rebounds and Bond Yields Fall
- 10 Stocks Currently Showing Low Implied Volatility
- Pre-Market Brief: Stocks Mixed As Investors Assess China Reopening
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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