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Stocks Drop on New Years Eve

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

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It was a rough day for US markets on New Years Eve. After opening up a few points, the S&P 500 (SPX) began its slow selloff lower that accelerated after the 2 o'clock hour. The benchmark index left a sour taste in investors mouth's to wrap up the year with a 1.03% decline after yesterday's -0.49% performance. Utilities was the worst performing sector for a second straight day, losing 1.84% and extending the losses to 3.85% over the two-day period. Most European markets were closed for the holiday and US bond markets closed early.

Chinese stocks were up strongly overnight. The People's Bank of China (PBoC) said in a report that it will conduct "appropriately elastic" monetary policy in the next year and it would continue be prudent. Investors took this to mean that it would continue to pursue very accommodative policies in an effort to help transition the Chinese economy to one that is driven by consumption. The Shanghai Composite
(SHCOMP) gained 2.18% overnight.

Crude oil was lower in early trading. Brent crude oil futures were down as much as 3.5% in the early morning. Yesterday's API oil inventory data showed another substantial increase in supply for the past week. However, the Department of Energy's report showed a draw on oil inventories, which caused a reversal. Crude oil ended up 2014 down 45.35% and had its worst annual performance since 2008. 

The first major regional manufacturing index for December showed a moderation of growth. The Chicago purchasing manager index fell to 58.3 from 60.8 in the prior month, below the 60 expected. November pending home sales rose 0.8% compared to the 0.5% expected by economists with gains in the Southern region the driver of strength.

Tomorrow's Financial Outlook

Most global markets, including in the US, will be closed for the New Years Day holiday tomorrow. When markets re-open on Friday there is a spate of US economic data on the schedule. The national ISM manufacturing index for December will be released with a moderating of growth expected down to 57.5 from 58.7 in the month prior. Tonight, China will release its official manufacturing PMI. The private HSBC survey, which has already been reported, saw a small decline to 49.6 from 50.0 in the prior month.

There will be no earnings reports on Friday in the US.

Twitter: @Minyanville

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No positions in stocks mentioned.

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