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Weakness Continues
15-Nov-17 16:30 ET
Dow -138.19 at 23271.28, Nasdaq -31.66 at 6706.22, S&P -14.25 at 2564.62

https://www.briefing.com/investor/markets/stock-market-update/2017/11/15/weakness-continues.htm

[BRIEFING.COM] Stocks slid for the fourth time in five sessions on Wednesday as investors continued to weigh the prospect of tax reform.

The Dow and the S&P 500 lost 0.6% apiece, while the Nasdaq finished lower by 0.5%. Losses were more substantial at the opening bell, but a relatively positive performance from the heavily-weighted financial sector (+0.2%) proved useful in defusing the bearish sentiment. A late bout of selling pulled the major averages from their best marks of the day.

Senate Republicans announced on Tuesday evening that they've added a provision to their tax reform bill that would repeal the Affordable Care Act's individual mandate, which requires all Americans to have health insurance. The individual mandate is a hotly debated topic among lawmakers and an attempt to repeal it may face resistance--potentially delaying the GOP's tax overhaul effort.

Uncertainty surrounding tax reform has been a stumbling block for the market as of late, although it's tough to gauge the true level of concern among investors, who may just see the pause as an opportunity to cash in on recently minted record highs.

Energy shares extended weekly losses on Wednesday as the price of crude oil continued retreating from the two-year high it touched last week; West Texas Intermediate crude futures slid 0.7% to $55.29 per barrel, while the S&P 500's energy sector lost 1.2%. The energy group now trades lower by 3.2% for the week.

On a related note, the Energy Information Administration reported that U.S. crude stockpiles unexpectedly rose by 1.9 million barrels last week.

The top-weighted technology sector (-0.9%) also underperformed on Wednesday, as did the consumer staples (-1.1%), utilities (-1.0%), and real estate (-0.8%) groups. Within the tech space, Apple (AAPL 169.08, -2.26) showed particular weakness, finishing lower by 1.3%. The tech giant has now settled in the red for five sessions in a row.

In earnings news, Target (TGT 54.16, -5.93) tumbled 9.9% after issuing a disappointing earnings forecast for the holiday season.

U.S. Treasuries rallied in a curve-flattening trade, reducing the 2yr-10yr spread to 65 basis points--its lowest level since 2007. The yield on the benchmark 10-yr Treasury note dropped five basis points to 2.33%, while the 2-yr yield finished flat at 1.68%.

Elsewhere, stock indices in both Europe and the Asia-Pacific region settled the midweek session broadly lower, with Japan's Nikkei (-1.6%) showing notable weakness.

Reviewing Wednesday's economic data, which included the Consumer Price Index for October, Retail Sales for October, September Business Inventories, November Empire Manufacturing, and the weekly MBA Mortgage Applications Index:

Total CPI increased 0.1% (Briefing.com consensus +0.1%) in October while core CPI, which excludes food and energy, rose 0.2% (Briefing.com consensus +0.2%). On a year-over-year basis, total CPI and core CPI are up 2.0% and 1.8%, respectively.
The key takeaway from the report is that inflation pressures are still not acute, yet they are likely not weak enough to persuade the Federal Reserve from raising the fed funds rate again at its December meeting.
October retail sales increased 0.2% (Briefing.com consensus +0.1%). The prior month's increase was revised to 1.9% from 1.6%. Excluding autos, retail sales increased 0.1% in October while the Briefing.com consensus expected an increase of 0.2%. The prior month's increase was revised to 1.2% from 1.0%.
The key takeaway from the report is that it isn't as soft as it appears at first blush, as there was an unwinding of some of the hurricane-related sales strength that led to the remarkably strong sales activity in September.
Business Inventories were unchanged (0.0%) in September, as expected. The August reading was revised to 0.6% from 0.7%.
The key takeaway from the report is that sales growth is outpacing inventory growth, which is a step toward regaining some pricing power.
The Empire Manufacturing Survey for November declined to 19.4 from the prior month's reading of 30.2. The Briefing.com consensus estimate was pegged at 26.0.
The weekly MBA Mortgage Applications Index increased 3.1%.

On Thursday, investors will receive the weekly Initial Claims Report (Briefing.com consensus 234K), the November Philadelphia Index (Briefing.com consensus 24.6), and October Import/Export Prices at 8:30 ET, followed by October Industrial Production (Briefing.com consensus +0.5%) and Capacity Utilization (Briefing.com consensus 76.3%) at 10:00 ET.

Also of note, Wal-Mart (WMT 89.83, -1.26) will report earnings on Thursday morning.

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