Thursday, January 8, 2015
This is Mark Vickery covering for Sheraz Mian, who will be out of the office until a week from next Tuesday.
The first positive trading day in the stock market finally happened yesterday, on plenty of value-buying following 5 straight sessions in the red to start 2015 as well as oil prices leveling off, at least temporarily. Thursday begins with futures and the 10-year reacting positively to comments made yesterday by the head of the Chicago Fed suggesting pushing out the Federal Reserve’s inevitable interest rate hike.
Weekly jobless claims were also released this morning, down 4K from a week ago to 294K. This looks to be solidifying closer to the 300K range per week than 275K, which it looked to be heading a short while back. Continuing claims were up a smidge to 2.45 million from 2.35 million. We’re obviously in the post-holiday season, so the lack of a spike in jobless claims might be seen as a positive, even though 290K was the expected number this week. The 4-week moving average dipped slightly to 290,500.
Federal Reserve Bank of Chicago President Charles Evans said yesterday that because he now feels the U.S. may not hit its target inflation rate until 2018, he does not advise a rate hike until 2016. Speculation had been that the Fed would raise interest rates in mid-to-late 2015, so pushing this timeline out a bit spelled relief for the 10-year, which is up this morning, along with trading futures.
Oil prices firmed up on Wednesday from its precipitous fall in recent weeks/months. Sweet crude futures rose 1%, and the West Texas Intermediate (WTI) benchmark saw some support in U.S. inventories dropping, and Brent crude futures pushed about the $50 mark to $51 and change. Experts on the commodity expect further volatility going forward, however.
Nonfarm payroll data will come out tomorrow, so we shall see if there is indeed a rebound in the market after a rocky start to the year. Family Dollar (FDO) reported a disappointing quarter, but this company is not necessarily representative of the entire retail sector.
Also, earnings season will hit full throttle over the next couple of weeks, which will most certainly help illuminate the way forward. Finally, frigid temperatures reminiscent of a year ago — which eventually manifested in negative GDP for Q1 2014 — may be a reason for investors to be cautious in the near term.
Mark Vickery
Senior Editor
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