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On First Trading Day of 2014, US Equities Suffer Losses


Today's financial recap and tomorrow's financial outlook.

Fiat (OTCMKTS:FIATY) acquired the rest of Chrysler today for $4.35 billion. Before today, Fiat owned 58.5% of the company. The remaining stake was purchased from the retiree health-care trust of the United Auto Workers, who will receive special dividends from both companies. Fiat was up 16.4% in Italian trading today.

Manufacturing activity in the UK fell from its highest reading in two and a half years in December, down to a reading of 57.3 from 58.1 in the prior month. Manufacturing growth in China and the eurozone also moderated.

US equities suffered losses on the first trading day of the year for the first time since 2008. Over the prior five years, the S&P 500 (INDEXSP:.INX) gained more than 1% on the first trading day, according to Jason Goepfert of The large-cap S&P 500 lost 0.89% and the small-cap Russell 2000 (INDEXRUSSELL:RUT) lost 1.11%. Utility- and industrial-sector stocks were the worst performers despite continued growth in manufacturing and falling interest rates. Telecom stocks outperformed on a relative basis. Of the 10 basic sectors in the S&P 500, all declined today.

The national ISM manufacturing index fell marginally to 57.0 in December 2013 from 57.3 in the month prior. Economists had been expecting a reading of 56.8. The production, new orders, and employment components continued to show strong growth, which suggests further gains in industrial production over the coming months. November 2013 construction spending rose 1% from the prior month, beating the 0.6% economists' estimate. Jobless claims for the week ending December 28, 2013 fell to 339,000 from 341,000 in the week prior.

Gold futures rose 1.76% today. In 2013, gold declined 28.26%, its second year of annual declines. Miners also rallied strongly today, gaining 4.26%. US Treasuries gained today as well. The 10-year Treasury yield fell 4.5 basis points to 2.98%.

Tomorrow's Financial Outlook

December 2013 US auto sales data will be released tomorrow afternoon. Economists estimate that sales will decline to an annual rate of 16 million from 16.31 million in the month prior.

On the global calendar, China services PMI will be released in addition to Swiss manufacturing PMI and UK construction PMI. UK net consumer credit growth figures for November 2013 will also be released.

There are no major earnings reports scheduled in the US.

Twitter: @Minyanville

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