Daily Market Notes: 1-13-2023

Yesterday’s higher close ended after a very strange beginning, as the various stock index futures were up ahead of the important December C.P.I. report which was released at 8:30am.

When the numbers were reported, they basically came in right on consensus with a decline of 0.1% in the overall number which reduced the year over year figure to a gain of 6.5%. This was its sixth consecutive decline from the July high of 9.1% and showed that inflation is certainly easing back somewhat. The core rate which excludes food and energy rose by 0.3% and came in at a 5.7% year over year advance.

The drop was attributed to the decline in used car prices and in fuel oil costs, especially natural gas and energy. On the other hand, items driven by consumer demand remained high, such as rent, clothing, liquor and hotel costs.

Since this was no surprise, what was strange was the negative initial violent reaction in the various stock futures markets. This selling was finally met by some buying which basically got these futures back to where they were before the selling began as the market opened at 9:30am.

But after a nominally higher start, the various indices plunged to where those lower futures were indicating on their initial negative reaction as mentioned above. And this resulted in the Dow plunging by 181 points, the S&P did even worse with a 32 point decline and the Nasdaq fell by 134.

Then lo and behold, things turned around to the upside, similar to what had taken place in the pre-market and for the remainder of the regular session, they chopped around irregularly higher before ending with a Dow gain of 207 to 34,190 led by advances once again in BA and CAT, this one at a new all-time high, in addition to CRM, GS and HON.

The S&P sort of lagged a bit and finished 13 points up to 3983 while the Nasdaq picked up some steam and finished with a 69 point gain up to 11,001 led by the ongoing comebacks in META and MSFT.

The Russell 2000 Index of small stocks has been the star this week and it finished with a 32 point advance up to 1876 while the VIX really got clocked to the downside to make up for its strange upward behavior the past couple of days as the market was going higher. It certainly made up for those gains with a thumping down to 18.83 and this is right on support and sure enough we are going to have a lower opening in order to probably get the VIX back to above its support level of 19.

On the anticipation of perhaps the Fed raising by only 25 basis points at the February 1st meeting, bond yields eased back again with the 2-year Note at 4.12% and this one got as high as 4.72% in November, while the 10-year is down to 3.47% after being around 4.25% at that time as well. And as rates came back down, the dollar continued to weaken to its lowest level since last June and gold keeps rising, now up to around $1,900 an ounce, the highest since last April, from $1,650 a few months ago when the Euro was down to around .96 last September as well.

And that low level of the VIX is what is causing the market to start out the day on the downside in order to get it above the 19 support level and it is also interesting to note that most of the companies that reported this morning are trading lower. This proves once again that the worst scenario that one wants to see heading into a major event is a strong market ahead of that event because the bar for further success is higher as the “good” news is already in the price which has already advanced.

Earnings this week will see: yesterday – TSM, AAL and CTSH higher and KBH lower; today – Dow components JPM plus BAC, DAL, BNY and WFC lower while BLK , Dow component and C are higher.

Economic reports will have: yesterday – weekly jobless claims fell by 1K to 205K, and the all-important December C.P.I. which has now declined for the sixth consecutive month with the overall rate down by 0.1% and year over year now at up 6.5% while the core rate excluding food and energy rose by 0.3% to a year over year advance of 5.7% and these numbers were right on consensus; today – December import prices rose by 0.4%.

Donald M. Selkin

Chief Market Strategist


Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our current or potential customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analysis concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: {Bloomberg Financial, Reuters, and Associated Press}. It is possible that at any given point in time, the author, Newbridge Securities, or one or more of its employees or registered individuals associated with Newbridge Securities, may hold a position, either long, or short, as well as options, bonds or other instruments in the companies mentioned in this report.