Monday’s high level of volatility has continued into Tuesday’s trading, with the range of the day for the Dow Jones exceeding 300 points as prices whipped around.
By Peter Martin
Wednesday, December 17, 2014
By early afternoon in New York stocks had made moderate gains but were well off the day’s highs: the Dow Jones was up 0.37% or 64 points at 17,245 and the S&P 500 Index gained the same percentage, a rise of 7.5 points to 1997.2. The Dow Jones had climbed as high as 17.427 earlier in the session.
As with Monday, the day’s domestic economic news was mixed. Housing starts in November came in at 1.028 million units (seasonally-adjusted and annualized), trailing estimates and down 1.6% from the 1.045 million construction starts made in October. If there is a consolation, it is that October’s numbers were revised up quite sharply from the 1.009 million that was originally reported. Building permits also declined, falling 5.2% from October to 1.035 million, though once again October was subject to an upward revision. All in all, there’s nothing particularly negative in today’s housing data, nor is there anything too encouraging.
The Empire State Manufacturing survey, released yesterday, hinted at an end of year slowdown in the manufacturing survey, and that indication was reinforced with today’s release of Markit’s flash manufacturing PMI for December. The index slipped to a reading of 53.7, from 54.7 at mid-month November and 54.8 final. Though still comfortably at expansionary levels, it is the slowest growth recorded by this indicator since the beginning of the year. Manufacturing was ticking along very nicely in November, but the early indications are that things have hit a bump in December. New orders sinking to an 11-month low in today’s report suggests the loss of momentum may extend into the New Year, though it’s worth noting that November’s PMI from Markit suggested slowing, while the hard data contained in yesterday’s Industrial Production report showed the reality was a jump in manufacturing output.
Dollar drops ahead of Fed announcement
In the forex markets, the dollar has broadly weakened as the two-day December FOMC meeting begins, with an announcement from the Fed due tomorrow afternoon. A further slide in the price of oil this morning sparked a flight to safety, pushing USD/JPY all the way down to 115.57, a four-week low, before oil’s recovery pared some of the yen’s gains later in the day. By mid-afternoon in New York, USD/JPY was down 0.45% at 117.32. Huge declines in the Russian ruble, which today fell to a record low against the dollar despite Russia’s central bank hiking its benchmark interest rate from 10.5% to 17% late yesterday, have also contributed to a sense of turmoil in the market, eroding risk appetite and boosting assets that are perceived to be more safe.
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