U.S. Indexes Down for Third Week In a Row

Barry Adams
23 Dec, 2022
New York City

Benchmark indexes clawed back morning losses in volatile trading and closed higher. 

Investors ahead of holiday weekend reviewed the increase in personal consumption expenditure price index, new home sales data and durable goods orders. 

In the last one month, market sentiment has wavered between a soft landing scenario and recessionary slowdown and investors are worried that stock prices may not reflect the earnings downfall in 2023.   

In overseas trading, markets in Asia closed lower after Japan's core inflation accelerated in November and China's Covid flare-up raised the prospects of prolonged supply chain disruptions. 

 

Indexes In Review 

Stock market indexes wavered in morning trading but bond yields rose after core PCE Index rose more-than-expected. 

The S&P 500 index increased 0.6% to  3,844.92 and the Nasdaq Composite index increased 0.2% to 10,497.82. 

For the week, the S&P 500 index declined 0.23% and the Nasdaq Composite fell 2.4%. 

Crude oil prices rose $2.01 to $79.44 a barrel and natural gas prices advanced 12 cents to $5.12 a thermal unit. 

The yield on 2-year Treasury notes increased to 4.33%, 10-year Treasury notes edged up to $3.75 and 30-year U.S. bonds advanced to 3.83%. 

 

Personal Income Rises 0.4%, Spending Increased 0.1%

Personal income rose $80.1 billion, or 0.4% at a monthly rate, while consumer spending increased $19.8 billion, or 0.1% in November. 

The rise in personal income primarily reflected increases in compensation and personal income receipts on assets. 

The personal saving rate, personal saving as a percentage of disposable personal income, was 2.4% in November, compared to 2.2% in October.

Real disposable personal income increased 0.3% in November and real consumer spending grew less than 0.1%.

Goods decreased 0.6% reflecting lower spending on new motor vehicles and services increased 0.3% Within services driven by the largest increase in food services and accommodations.

 

The PCE Price Index Growth Slows 

The personal consumption expenditure price index rose 5.5% in November slower than 6.1% in October, the slowest pace of increase since Oct 2021. 

Food prices increased 11.2% and energy cost rose 13.6%, according to report released by the U.S. Bureau of Economic Analysis 

The core PCE price index, which excludes food and energy costs, rose 4.7% in November, 

On a monthly basis, the PCE price index increased 0.1% in November from October.  

Energy prices decreased 1.5% and food prices increased 0.3% and excluding food and energy, the core PCE price index increased 0.2 percent from October to November. 

 

November Home Sales Jumped 5.8% 

New home sales in November Jumped 5.8% to a seasonally adjusted rate of 640,000 from the downwardly revised October sales rate of 605,000. 

The median sales price of new houses sold in November 2022 was $471,200 and the average sales price was $543,600.

The seasonally?adjusted estimate of new homes for sale at the end of November was 461,000, a  supply of 8.6 months at the current sales rate.

Home sales in the West jumped 27.6% to 171,000 and the Midwest increased 21.3% to 57,000 but fell in the Northeast 8.5% to 43,000 and in the South fell 2.1% to 369,000.

 

Transportation Impacted New Orders and Shipments In November 

Durable goods orders fell in November after rising for three months in a row, the U.S. Census Bureau reported Friday. 

New orders rose 0.7% in October.

The weakness in transportation orders dragged the overall orders in the month. 

Excluding transportation, new orders increased 0.2% and excluding defense, new orders decreased 2.6%.

Durable goods Shipments increased in the month and advanced eighteen of the last nineteen months after transportation equipment increased 0.8%. 

Shipments increased 0.2% to $275.9 billion following a 0.4% increase in October. 

 

US Stock Movers  

Parcel delivery companies were in focus after FedEx and UPS warned that holiday deliveries could arrive late because of severe and inclement weather coast-to-coast. 

FedEx increased 1.7% to $177.12 and United Parcel Service rose 0.5% to $176.40. 

Moreover, a total of 6,000 flights have been canceled and about 20,000 flights have been delayed this week after bitter cold and arctic blast swept through northern states. 

Meta Platforms Inc was nearly unchanged at $117.15 after the company agreed to pay $725 million to settle a class action lawsuit over the data breach. 

The class action lawsuit filed in 2018 alleged that the company gave unauthorized access to 87 million users' data to Cambridge Analytica. 

Cambridge Analytica used and shared data to advise political campaigns.  

Tesla Inc dropped as much as 2% but recovered to flat-line and traded at $125.01 after chief executive Elon Musk said he will hold off selling his stake in the company for the next 18 to 24 months. 

In the last twelve months, Musk has sold $3.9 billion of shares to finance his purchase of Twitter Inc. 

Alphabet Inc  rose 1.8% to $89.33 after the National Football League confirmed its plan to make "Sunday Ticket" available on the company's video platform YouTube. 

Carnival Corp declined 2.7% to $7.60 and Norwegian Cruise fell 0.9% to $12.96 on the worries of looming economic slowdown and elevated inflation may impact discretionary consumer spending. 

 

European Markets Lacked Direction

European markets closed mixed in thin trading ahead of the Christmas Break. 

Investors reacted to fast spreading coronavirus infections in China and hoped that infection rates will peak soon and social mobility and regular business activities will resume in weeks and not in months. 

Market sentiment was on the defensive after core inflation index in the U.S. eased in November but stayed elevated indicating that the U.S. Federal Reserve may continue its aggressive rate hike stance. 

The DAX index increased 0.2% to 13,940.93, the CAC-40 index decreased 0.2% to 6,504.90 and the FTSE 100 index edged up 3.73 points to 7,473.01. 

The yield on 10-year German Bunds rose to 2.401%, French bonds increased to 2.91%, the UK Gilts to 3.63% and Italian bonds to 4.5%. 

The euro held near $1.06 and the British pound closed at $1.205.

 

France Wholesale Price Inflation Eased In November 

France's producer price inflation eased in November after a slight decline in energy prices. 

Industrial goods wholesale prices in the domestic market declined to 21.5% from 24.7% in October, the latest data from the statistical agency Insee showed today. 

The wholesale prices remained elevated after refined petroleum products prices dropped to 50.6% from 67.0 %in October. 

Wholesale prices of industrial goods in foreign markets rose to 11.1%. 

Total wholesale prices declined to 18.5% in November from 21.4% in October. 

 

UK Automobile Production Increases In November 

UK automobile production expands for the second month in a row in November, data from Society of Motor Manufacturers and Traders showed Friday. 

Automobile production increased 5.7% from a year ago to 80,091 in November.  

Of the total production, electrified vehicles accounted for about a third with production increasing 18.3% to 29,318 units. 

About 74.8% of total manufacturing was for exports with 57% vehicles heading to the European Union, 22% to the United States and 6% to China. 

Despite the easing of supply chain bottlenecks, production was still 25.7% lower than 107,744 in 2019.  

 

Europe Stock Movers 

European stocks were little changed ahead of the Christmas break next week and financial markets in London closed early.

Resource stocks led the gainers in London trading and Antofagasta, BHP Group and Anglo America gained between 0.5% and 1.2% following higher commodities prices. 

Tech stocks were among the decliners and Infineon, Aixtron and ASM Holding fell around 0.5%. 

Luxury stocks in Paris eased after the coronavirus infection flared-up in major cities and people avoided social gathering and public transport. 

Kering SA dropped 0.5% to