The market the day before
At the auction on January 20, the decline of the main indices on American stock exchanges continued. The S&P 500 dropped 1.10% to 4,483 points, the Nasdaq adjusted 1.30%, and the Dow Jones lost 0.89%. In the green zone, only utility providers were closed (+0.14%). Other sectors showed negative dynamics. The outsiders were producers of cyclical consumer goods (-1.94%), raw materials companies (-1.43%) and the IT sector (-1.33%).
- The shareholders of Casper Sleep (CSPR: +9.8%) voted for the privatization of the company.
- Insurance company Travelers Cos. (TRV: +3.2%) presented a strong quarterly report with record profit. Management emphasized the high underwriting revenues.
- Peloton Interactive (PTON: -23.9%) ceases production of Connected Fitness products amid a significant reduction in demand.
The day before, President Joe Biden announced the possibility of breaking the Build Back Better program with a total volume of about $1.7 trillion into its component parts. At the moment, the White House is considering alternatives after initial efforts to coordinate were thwarted by the opposition led by Senator Joe Manchin. A preliminary consensus was reached only on the climate part of the package (just over $500 million). At the same time, provisions on maternity leave may be excluded from the updated draft law, and the expansion of tax benefits for children may be limited.
The number of initial applications for unemployment benefits for the week increased by 55 thousand, to 286 thousand, reaching a three-month high amid the active spread of the strain "omicron", negatively affecting the labor market. At the same time, due to problems with hiring, employers are taking measures to retain employees, so the observed surge in applications for benefits is likely to be short-term.
The December index of manufacturing activity published by the Philadelphia Federal Reserve increased by 8 points compared to November, reaching 23.2 points, which indicates optimistic assessments of business prospects on the part of entrepreneurs, despite the next wave of COVID-19 and the persistence of labor shortages, as well as logistical problems.
- Stock markets in Southeast Asia showed mostly negative dynamics during the last trading session. The Tokyo Stock Exchange Nikkei index lost 0.90%, the Chinese CSI 300 fell by 0.92%, the Hong Kong Hang Seng rose by 0.05%. EuroStoxx 50 has been losing more than 1.1% since the opening of trading.
- Brent crude futures are trading at $88.38 per barrel. The price of gold is around $1842.5 per troy ounce.
In our opinion, the S&P 500 will hold the upcoming session in the range of 4440-4490 points.
No significant macro statistics are expected to be published today.
The S&P 500 has broken down support in the area of 4,500 points and continues to move towards the lower border of the ascending channel. The RSI is in the oversold zone. The MACD indicator is still showing a downward trend, indicating the probability of a continuation of the correction. However, the passing reporting season can provide the broad market index with growth drivers.