The markets are heading in the wrong direction after Jay Powell soured the holiday mood.  At today’s low of 6,484 the Nasdaq was down 20.27% from the high it made of 8,133 on August 30, 2018. 

The decline in equites is weighing on crude oil prices as energy demand comes into question.  Global growth forecasts have been declining and an oversupply of crude oil is adding additional pressure.  West Texas Intermediate (WTI) crude is trading lower by 4.28%, $2.06, $46.11.  The Energy Select Sector SPDR, XLE, is trading down 2.0%   

WTI Crude (Feb’19)

Philly Fed

The Philadelphia Fed manufacturing index for December declined to 9.4 from 12.9 in the prior month.  This is the lowest reading since August 2016.  A reading above 0.0 indicates economic conditions are improving.  Industrial output rose 3.9% year-over-year.     

• Over 26% of manufacturers reported increases in activity vs. 17% reporting decreases
• New orders index rose 5 points to 14.5
• Shipments index decreased 12 points to 10.0
• Firms reported overall higher employment
• Wages are expected to increase by average of 2.8%
• Prices paid index fell slightly
• Prices received rose to 26.2 from 22.2

Initial jobless claims rose 8k to 214,000, while the four-week moving average fell 2,750 to 222,000.  Continuing claims were not reported this week.   

Utilities and metals and mining are the only two sector that are positive on the day.  Financials and transportations are outperforming, down less than most sectors.  The U.S. dollar is weak, giving strength to precious metals.  The Gold Trust, GLD, is higher by 1.70%.

The government is set to shut down tomorrow if a budget cannot be approved.  President Trump has refused to sign the proposed short-term budget the Senate passed last night to keep the government open till February 8, 2019.  He said he will not sign any bill if there is not new money for the border wall.  Democrats insists he will not get the money for the “wall” that Trump said Mexico will pay for. This showdown is adding to the market’s anxiety.