Major indices are reversing early morning’s lows, which was spurred by a stronger than anticipated Q3 GDP report that lowered rate cut expectations. The S&P 500 is nearing record territory, just in time for Santa Claus.

The Santa Claus Rally (officially starts tomorrow, 12/24) historically has tended to lift all sectors aside from the “safe haven” sector of Consumer Staples (XLP). Energy (XLE), Financials (XLF), and Consumer Discretionary (XLY) have tended to perform the best, on average.

Seven sectors are moving higher, with the growth sectors of Communication Services (XLC) and Technology (XLK) in the lead. Meanwhile, the “risk off” sectors of Real Estate (XLRE) and Consumer Staples (XLP) are lagging.

Following this morning’s economic data, the Ten-Year Treasury Yield (TNX) initially popped higher, but is now just up a marginal 0.2 basis points.

Economic Data

The Conference Board Consumer Confidence for December fell to 89.1 from 92.9, missing expectations of 91. Notably, November's reading of 92.9 was revised up from 88.7, as responses following the end of the government shutdown improved compared to those collected prior.

The Present Situation Index fell 9.5 points to 116.8 while the Expectations Index remained steady at 70.7.

Industrial Production fell by 0.1% M/M in October and rose 0.2% in November, followed by a 0.1% increase in September.

Overall, Industrial production from May to September was revised higher, with June and July seeing upward revisions, while May saw a slightly lower revision.

Meanwhile, Manufacturing output fell 0.4% M/M in October and was flat in November. The index for durable goods dropped 0.5% M/M in October and then edged 0.1% lower in November. Non-durables fell by 0.2% in October and then ticked up 0.1% in November.

Motor vehicles and parts were a big contributor to the decline in durables, falling 5.1% in October and 1% in November.  On the flip side, computer and electronic products gained 2.3% over the 2-month period.

December’s Richmond Fed Manufacturing Index improved to -7 from -15, in line with expectations.

Notable Points:

• Shipments improved to -11 from -14
• New orders moved to -8 from -22
• The employment index increased to -1 from -7
• Future local business conditions rose to 16 from 1

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