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US Markets Digest Yesterday's Outsized Gains


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

Last night, the People's Bank of China decided to perform short-term liquidity operations to alleviate a cash crunch in money markets. The seven-day repurchase rate reached 9.8% intraday, the highest since June when markets had been disrupted by a funding seizure. Stocks around the world rallied thanks to the strong performance yesterday afternoon in the US.

US markets digested yesterday's outsized gains today. The S&P 500 (INDEXSP:.INX) sold off early in the session, but stabilized as the day went on. The high-beta Nasdaq-100 (INDEXNASDAQ:NDX) and small-cap Russell 2000 (INDEXRUSSELL:RUT) indices lagged. Interest rate-sensitive REITs and utility stocks were the worst off in the major indices. Materials and energy stocks led, thanks to strong gains in natural gas and crude oil.

November existing-home sales fell to an annualized rate of 4.9 million from 5.12 million in the month prior. Economists had been forecasting a decline to 5.02 million. November's leading economic indicators rose 0.8% from the month prior, the second strongest single-month gain in the last three years.

US Treasuries came under pressure today following yesterday's Fed meeting. The 10-year yield rose three basis points, but shorter duration notes came under more pressure. The Treasury sold $16 billion of inflation-protected treasuries and $29 billion in seven-year notes that were met with tepid investor demand.

While social media stocks were green on the day, Facebook (NASDAQ:FB) sold off, as the company announced a 70 million secondary offering, with 41 million shares coming from CEO Mark Zuckerberg. Facebook's shares will primarily be offered to index funds tracking the S&P 500, to which the stock is being added.

Tomorrow's Financial Outlook

Tomorrow morning the US will release the third and final estimate of third-quarter GDP. Economists expect no change from the prior estimate of 3.6% annualized. The Kansas City regional manufacturing survey results will be released late in the morning.

Global market-moving releases will be more plentiful. The two-day Bank of Japan meeting will wrap up in the morning, with the central bank announcing its planned expansion of its monetary base for 2014. Market participants are expecting the BoJ to increase its bond-buying program. The UK will release the final estimate of its third-quarter GDP and November eurozone consumer confidence will also be released.

CarMax (NYSE:CMX) and Walgreen Company (NYSE:WAG) will report earnings tomorrow.

Twitter: @Minyanville

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