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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 36290.32 +38.30 (0.11%)
Nasdaq 15188.39 +34.94 (0.23%)
SP 500 4726.35 +13.28 (0.28%)
10-yr Note +1/32 1.733
NYSE Adv 1654 Dec 1570 Vol 854.0 mln
Nasdaq Adv 1850 Dec 2609 Vol 4.3 bln

Industry Watch
Strong: Materials, Consumer Discretionary
Weak: Health Care

Moving the Market

-- Large-cap indices eke out gains following hot CPI report for December

-- Total CPI increased 0.5% m/m (Briefing.com consensus 0.4%), leaving it up 7.0% yr/yr

-- Tame response in the Treasury market

Large-caps eke out gains following hot CPI data
12-Jan-22 16:15 ET
Dow +38.30 at 36290.32, Nasdaq +34.94 at 15188.39, S&P +13.28 at 4726.35

[BRIEFING.COM] The large-cap indices eked out gains on Wednesday, as investors lacked conviction following another hot Consumer Price Index (CPI) report for December. The S&P 500 (+0.3%), Nasdaq Composite (+0.2%), and Dow Jones Industrial Average (+0.1%) rose between 0.1-0.3% while the Russell 2000 fell 0.8%.

Ten of the 11 S&P 500 sectors did close in positive territory, but the lightly-weighted materials sector (+1.0%) was the only sector that rose at least 1.0%. The health care sector (-0.3%) was the lone holdout with a modest decline. Declining issues outpaced advancing issues at the Nasdaq.

Specifying the data, total CPI rose 0.5% m/m in December (Briefing.com consensus 0.4%) and was up 7.0% yr/yr, which was the sharpest 12-month increase since June 1982. Core CPI, which excludes food and energy, rose 0.6% m/m (Briefing.com consensus 0.5%) and was up 5.5% yr/yr.

The 10-yr yield went from 1.74% to 1.71% in the wake of the report, signaling that inflation-rate expectations could be peaking with the Fed planning to tighten policy this year. This immediate decline in long-term rates was cited as early boost for the stock market, particularly the growth stocks.

The S&P 500 was up 0.8% shortly after the open, but as the 10-yr yield stabilized, so did the rebound bias in growth stocks. The Russell 3000 Growth Index, for example, increased just 0.2% after being up 1.2% intraday.

Fortunately for the large-cap indices, the mega-caps did okay. The Vanguard Mega Cap Growth ETF (MGK 252.32, +1.53, +0.6%) advanced 0.6%, which was better than the 0.1% gain in the Invesco S&P 500 Equal Weight ETF (RSP 162.61, +0.13, +0.1%).

In the afternoon, the Fed's Beige Book for January noted that economic activity in the U.S. expanded at a modest pace in the last weeks of 2021 and that some districts observed a deceleration in the robust price increases from the previous months. The report was a nonevent for the market.

The 10-yr yield settled the session down two basis points to 1.73%, and the 2-yr yield decreased one basis point to 0.89%. The U.S. Dollar Index fell 0.7% to 94.95. WTI crude futures rose 1.7%, or $1.38, to $82.52/bbl amid bullish inventory data.

Separately, shares of Biogen (BIIB 225.34, -16.18, -6.7%) dropped nearly 7.0% after Medicare officials proposed to limit coverage of the company's Alzheimer's treatment to only those patients that participated in approved clinical trials.

Reviewing Wednesday's economic data:

Total CPI rose 0.5% month-over-month in December (Briefing.com consensus 0.4%) and was up 7.0% year-over-year. This represented the sharpest 12-month increase since June 1982. Core CPI, which excludes food and energy, rose 0.6% month-over-month (Briefing.com consensus 0.5%) and was up 5.5% year-over-year. This was the sharpest 12-month increase since February 1991.
The key takeaway from the report is that while some categories, like the energy index, showed a decrease in December, the continuation of the overall trend resulted in another acceleration of the year-over-year inflation rate at the headline and core levels.
The Treasury Budget showed a $21.3 bln deficit in December versus a $143.6 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the December deficit cannot be compared to the November deficit of $191.3 bln. December marked the 27th consecutive month that the Treasury has seen a budget deficit.
The budget deficit over the last 12 months is $2.58 trln versus a deficit of $2.70 trln in November.
The weekly MBA Mortgage Applications Index increased 1.4% following a 5.6% decline in the prior week.
Weekly EIA crude oil inventories decreased by 4.55 mln barrels after decreasing by 2.14 mln barrels during the previous week.

Looking ahead, investors will receive the Producer Price Index for December and the weekly MBA Mortgage Applications Index on Thursday.

Dow Jones Industrial Average -0.1% YTD
S&P 500 -0.8% YTD
Nasdaq Composite -2.9% YTD
Russell 2000 -3.1% YTD

Crude futures settle higher (again)
12-Jan-22 15:30 ET
Dow -13.98 at 36238.04, Nasdaq +22.20 at 15175.65, S&P +7.48 at 4720.55

[BRIEFING.COM] The S&P 500 is up 0.2%, as is the Nasdaq (+0.2%) heading into the close.

One last look at the sectors shows materials (+0.7%) overtaking the information technology (+0.3%) and consumer discretionary (+0.5%) sectors for the top spot. The health care (-0.4%) and consumers staples (-0.2%) sectors trade slightly lower.

WTI crude futures settled higher by 1.7%, or $1.38, to $82.52/bbl amid bullish inventory data. The EIA reported its seventh straight week of an inventory draw.