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Struggling For Direction
25-Jan-18 16:30 ET
Dow +140.67 at 26392.79, Nasdaq -3.89 at 7411.16, S&P +1.71 at 2839.25

https://www.briefing.com/investor/markets/stock-market-update/2018/1/25/struggling-for-direction.htm

[BRIEFING.COM] Stocks struggled for direction on Thursday as investors cautiously tried to extend the new year rally. The S&P 500 (+0.1%) and the Nasdaq Composite (-0.1%) drifted near their flat lines for much of the session, while the Dow Jones Industrial Average (+0.5%) outperformed, closing at a new record high. The S&P 500 also finished at a new record.

The latest batch of fourth quarter earnings featured a couple of Dow components--Caterpillar (CAT 169.37, +1.03) and 3M (MMM 252.36, +4.67)--and a host of airlines--Southwest Air (LUV 60.19, -2.02), American Airlines (AAL 53.05, -1.74), Alaska Air (ALK 62.07, -2.62), and JetBlue Airways (JBLU 20.69, -1.36).

Caterpillar and 3M advanced 0.6% and 1.9%, respectively, after both industrial giants beat earnings and revenue estimates and issued upbeat profit guidance for fiscal year 2018. Meanwhile, the airlines lost between 3.2% and 6.2% after reporting mixed results: American and Alaska beat profit estimates, JetBlue missed, and Southwest's results were in-line.

Ford Motor (F 11.57, -0.48) also reported quarterly results, hitting earnings estimates on better-than-expected revenues, but tumbled 4.0% nonetheless.

In general, countercyclical sectors outperformed the cyclical groups on Thursday, although the cyclical materials space (+0.7%) bucked that trend. The health care (+0.9%), utilities (+1.5%), and telecom services (+0.7%) sectors finished at the top of the sector standings, while the energy (-0.8%) sector was by far the weakest group.

Energy shares declined with the price of crude oil, which tumbled 0.7% to $65.18 per barrel in electronic trading. A sharp upward move in the U.S. dollar hurt crude oil, which is priced in U.S. dollars, as it made the commodity more expensive to holders of foreign currencies.

The U.S. Dollar Index, which measures the dollar's value relative to a basket of other currencies, was down as much as 0.8% following the release of the European Central Bank's latest policy directive, which kept rates unchanged and reiterated the desire to leave net asset purchases at the new pace of EUR30 billion per month until the end of September, or beyond, if necessary.

However, the greenback strengthened after CNBC released a clip of an interview with President Trump, during which he said Wednesday's comments from Treasury Secretary Steven Mnuchin--who said he welcomes a weakening of the dollar--were taken out of context. Mr. Trump clarified that his administration ultimately wants to see a stronger dollar.

The U.S. Dollar Index rallied following the release of the video clip, and was up 0.1% at 89.06 at the closing bell.

In the bond market, U.S. Treasuries ended Thursday on a mostly higher note. The yield on the benchmark 10-yr Treasury note dropped three basis points to 2.62%, while the 2-yr yield finished flat at 2.08%. Yields move inversely to prices.

Reviewing Thursday's economic data, which included New Home Sales for December, Leading Indicators for December, and weekly Initial Claims:

New Home Sales in December hit an annualized rate of 625,000, which is below the revised November rate of 689,000 (from 733,000), and lower than the Briefing.com consensus of 679,000.
The key takeaway from the report is that new home sales were still up 14.1% year-over-year in December, underscoring the improved demand; however, with mortgage rates moving up and the mortgage interest deduction cap kicking in for mortgages over $750,000, the monthly decline is apt to trigger some investor concerns about 2018 earnings prospects for homebuilders.
The Conference Board Leading Economic Index increased 0.6% in December, while economists polled by Briefing.com expected an increase of 0.5%. The prior month's reading was revised to +0.5% from +0.4%.
The key takeaway from the report is that the strength among the leading indicators remained very widespread. The index increased 3.1% in the second half of 2017, versus 2.6% for the first half of the year.
The latest weekly initial jobless claims count totaled 233,000, while the Briefing.com consensus expected a reading of 240,000. Today's tally was above the revised prior week count of 216,000 (from 220,000). As for continuing claims, they declined to 1.937 million from a revised count of 1.965 million (from 1.952 million).
Weekly initial claims were below 300,000 for the 151st consecutive week

On Friday, investors will receive the advance estimate of fourth quarter GDP (Briefing.com consensus +2.9%), Durable Orders for December (Briefing.com consensus +0.9%), Advance International Trade in Goods for December (Briefing.com consensus -$68.5 billion), and Advance Wholesale Inventories for December (Briefing.com consensus +0.3%).

All four pieces of data will be released at 8:30 AM ET.

Nasdaq Composite: +7.4% YTD
Dow Jones Industrial Average: +6.8% YTD
S&P 500: +6.2% YTD
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