Stocks fell and crude oil crumbled to start the week as the US market gave up all of its early session gains to continue the slide seen last week.
First, the scoreboard:
- Dow: 17,180.8, -99.99, (-0.6%)
- S&P 500: 1,989.6, -12.7, (-0.6%)
- Nasdaq: 4,605.1, -48.4, (-1%)
And now, the top stories on Monday:
1. It was oil. Again. West Texas Intermediate crude oil futures fell to within a dime of $US55 on Monday, falling more than 4% over the last 24 hours after crude staged a brief rally overnight. On Sunday, oil futures opened lower and rallied to as high as $US58.50 a barrel overnight, but forfeited these gains during the day and made fresh lows throughout the afternoon. US stocks also opened the day higher, with the Dow up as much as 122 points early in the session, before giving back all of these gains and then some. As the decline in oil continues, the equity market is starting to take notice, and in an afternoon email, the NYSE’s Rich Barry wrote, “if you want to know where stocks are going to close today, ask the smartest oil trader you know.”
2. The financial situation in Russia keeps getting worse. On Monday, the ruble fell to another all-time low, falling to less than 64 against the US dollar. Earlier this year, one dollar bought about 35 rubles. On Monday alone, the ruble lost more than 10% of its value against the dollar, and Russia’s Micex stock index also took a beating, falling 10%. Meanwhile, former White House press secretary Jay Carney’s recommendation that investors short Russian stocks back in March keeps looking better.
3. It was a mixed morning for manufacturing data, as the Empire State manufacturing report from the New York Fed was a big disappointment, while the Federal Reserve’s latest report on industrial production topped estimates. The Empire State report came in at -3.6, widely missing expectations for a reading of 12, and marking the first negative reading for the measure in almost two years. Ian Shepherdson at Pantheon Macro, however, was quick to discount the report, writing in a note that the negative print, “flies in the face of almost all other macro data.”
4. The Federal Reserve’s latest industrial production report showed production rose by 1.3% in November, better than the 0.7% that was expected by economists and up from 0.1% in October. Capacity utilization also rose to 80.1%, the highest since March 2008. In a note to clients following the report, economists at Capital Economics wrote, “November’s industrial production figures build on the message from the recent retail sales data, with both showing that economic activity is unambiguously strong. This may well set the tone for the Fed’s policy meeting, which starts tomorrow.”
5. Apple shares fell more than 1% on Monday, and as Business Insider’s Jay Yarow noted, it’s been a stealth decline for the iPhone maker over the last month, as its stock has fallen more than 8% since the end of November.
6. It’s been a terrible year for mutual funds. In a note to clients over the weekend, Goldman Sachs’ David Kostin noted that in 2014, only 12% of large-cap mutual funds have outperformed the S&P 500, the lowest share since 1997.
7. We also got data on homebuilder sentiment on Monday, which declined slightly in December to 57 from 58 in November. “After a sluggish start to 2014, the HMI has stabilised in the mid-to-high 50s index level trend for the past six months, which is consistent with our assessment that we are in a slow march back to normal,” NAHB Chief Economist David Crowe said. “As we head into 2015, the housing market should continue to recover at a steady, gradual pace.”
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