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S&P 500 Starts 2015 as Flat as an Ironing Board


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

US equities finished flat on the first trading day of 2015.

S&P 500 (SPX) futures were flashing green pre-market and the index hit an early high of 2072.36, up 0.7% from the December 31 close.

However, sellers came in and knocked the market down, with weak economic data serving as a catalyst.

The December ISM Manufacturing Index fell to 55.2, missing the 57.5 consensus. Markit's manufacturing PMI was 53.9, basically in-line with the 54.0 expected.

November Construction spending fell 0.3%. Economists had forecast a 0.4% gain.

The S&P hit an intraday low of 2046.04 in the afternoon, after which the market went powered higher by 12 points, led by real estate, biotech, and utilities stocks.

The index finished at 2058.20, down 0.03%.

The Dow Jones Industrial Average (DJI) did slightly better with a fractional gain, while the small-cap Russell 2000 (RUT) was notably weak with its 0.5% decline.

There was no obvious catalyst for the spike.

However, US Treasuries and the VIX rose sharply in early trade, and the ISEE Index indicated significant demand for put options relative to call options.

So it's possible that sentiment following Wednesday's sharp afternoon selloff became far too negative in the short-term, setting the stage for a rally into the close. Additionally, given that it's a holiday week, it doesn't take much volume to push the market around.

In international markets, the German 5-year Bund yield went negative for the first time in history on growing hopes that the ECB's QE program will include eurozone goverment bonds. Italan and Spanish rates also fell.

Tomorrow's Financial Outlook

The economics calendar is fairly light for Monday, with December US auto sales being the only important domestic report. Overseas, Germany will release its preliminary December CPI report.

Micron (MU) reports earnings after the close.

With no obvious catalyst on the horizon, the near-term direction remains uncertain as the market digests the impressive gains seen since the October bottom.

Twitter: @Minyanville

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No positions in stocks mentioned.

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