Stocks fell for the third day this week and the fourth straight trading session as an overnight collapse in the price of copper and a further drop in US Treasury yields pushed futures lower this morning, with stocks never able to gain meaningful momentum during the day.
First, the scoreboard:
- Dow: 17,427.1, -186.6, (-1%)
- S&P 500: 2,011.3, -11.8, (-0.6%)
- Nasdaq: 4,639.3, -22.2, (-0.5%)
And now, the top stories on Wednesday:
1. It’s been all about oil and now copper is in focus. Overnight on Tuesday, the price of copper fell by more than 6%, the biggest drop in six years as weakness in commodity space becomes more widespread. The drop in copper prices was attributed to supply concerns by analysts at Morgan Stanley in Australia, while a report from Bloomberg attributed the drop to reduced global demand. But any discussion of the drop in copper must include China, as Business Insider’s Linette Lopez noted on Wednesday.
2. Meanwhile, the price of oil spiked higher late in the day on Wednesday, with West Texas Intermediate crude prices quickly rising more than 4% to above $US48 a barrel, the highest price since last week. And while oil has been the big story in markets over the last several months, the tremendous rally in the 30-year US Treasury bond is now the story. On Wednesday, the yield on the 30-year fell to a record low, cracking 2.4% on Wednesday morning while the latest Treasury auction saw $US13 billion of 30-year bonds sold at 2.43%, more than 0.4% below the last auction.
3. Lacy Hunt, a long-time bond bull, told Bloomberg News that the 30-year note can fall to 2%. “We’re in the money-management business, we’re not in the mind-changing business,” Hunt told Bloomberg’s Daniel Kruger. “We’ve thought for a very, very long time that the bond yield could go to 2 per cent, or slightly lower, and that remains our view.”
4. On Wednesday morning, the December report on retail sales showed that sales fell 0.9% in the final month of 2014, missing expectations for a decline of 0.1%. Excluding autos and gas sales in December fell 0.5%. Following this report, Ian Shepherdson said that, “Falling gas prices and noise, not signal, explain the drop,” and Shepherdson added that a reading on December’s report that consumers are choosing not to spend their gas savings would be “deeply myopic.”
5. Among the big stock losers on Wednesday was Tesla, which fell 6% after last night the company’s CEO Elon Musk said that Tesla’s sales in China were disappointing in the fourth quarter.
6. Earnings season for big US banks kicked off this morning with reports out of JP Morgan and Wells Fargo. JP Morgan’s report missed expectations as the company took a $US990 million legal charge in the fourth quarter, while Wells Fargo’s report was in-line with expectations as revenue topped expectations.
7. The Federal Reserve released its latest Beige Book report which showed that most Fed districts see the economy expanding at a modest to moderate pace, though concerns over the declining price of oil are widespread. Fed officials in Dallas, Cleveland, Atlanta, Kansas City, Minneapolis, and San Francisco saw impacts from the price of energy, and Business Insider’s Shane Ferro has the full rundown here.
Business Insider Emails & Alerts
Site highlights each day to your inbox.