Major indices had a bumpy morning session and are mostly dancing around their baselines. Once again, small caps in the Russell 2000 are in the lead.

Five sectors are in the green, with Real Estate (XLRE) leading the way. The sector is being led higher by data center names Iron Mountain (IRM) and Digital Realty Trust (DLR). Meanwhile, Industrials (XLI) are the runner-up. GE Vernova (GEV), Eaton (ETN), and other power related names are giving the sector a boost, on news that Trump and some governors in the Northeast plan to announce a proposal to encourage power plant construction. Meanwhile, Materials (XLB) are lagging as metal commodity prices take a breather.

The ten-year treasury yield (TNX) is rising 4.1 basis points and edging above the 4.2% level.

Economic Data

The New York Services Activity Index improved to -16.1 in January from -20 in December.

Industrial production rose 0.4% M/M in December, the same as in November, and above expectations of a 0.1% rise. Capacity utilization also improved to 76.3%, from 76.1%, and came in above estimates of 76%.

This came as manufacturing output rose 0.2% M/M in December following a 0.3% increase in November and above forecasts of a 0.2% drop. Non-durables rose 0.3% M/M, mainly due to increases in food, beverage, and tobacco products, petroleum and coal products, and plastics. While durables edged up 0.1%, driven by a 2.4% increase in primary metals, a 1.7% increase in electrical equipment and appliances, and a 1.5% increase in aerospace and miscellaneous transportation equipment.

The NAHB Housing Market Index fell to 37 in January from 39 in December and below estimates of 40. Current conditions fell by 1 point to 41, while expectations for the next 6 months declined 3 points to 49.

As a reminder, the market will be closed on Monday for Martin Luther King Day.