Daily market review

United States

Weak US economic data and disappointing earnings undercut value/cyclicals but a late bid for megacaps helped growth stocks and the NASDAQ recover. The Dow Jones industrial average lost 0.6 percent but the S&P 500 rose 0.1 percent and the NASDAQ gained 0.6 percent.

More hawkish comments from Federal Reserve officials kept upward pressure on US Treasury yields, which hurt momentum and growth shares early, while a surprisingly weak US retail sales report and poor industrial production and consumer sentiment readings hurt cyclicals, including industrials, financials, and materials. Megacaps saw better demand in the afternoon as investors bought them back ahead of the weekend.

Among financials, investors took a dim view of JP Morgan's quarterly results, with JPM down 6.3 percent after a revenues miss and a downgrade at Wells Fargo. Citigroup slipped 1.3 percent after an earnings miss. The weak start to the earnings season was another blow to an already shaky market outlook.

Energy stocks were a bright spot, with oil prices up. Exxon Mobil gained 1.8 percent, and Apache, the driller, rose 3.9 percent.

Growth stocks including megacap internets and technology saw bargain-hunting, with Facebook up 1.7 percent, Apple up 0.6 percent, and Microsoft up 1.8 percent to help trim the day's losses. On the downside, retailers, restaurants, airlines suffered from concern about weakening consumption after the bleak retail sales report.

In economic data, December retail and food service sales fell 1.9 percent from the prior month, an unexpectedly steep decline vs. the median forecast of being unchanged in an Econoday survey. Weakness in sales was broad-based with few exceptions.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil jumped US2.49 to US$86.37 while spot gold declined US$4.35 to US$1,817.43. The US dollar was mixed vs. major currencies. Yields on the US Treasury 30-year bond rose 9 basis points to 2.13 percent, and the 10-year note was up 8 basis points at 1.78 percent.


European equities extended Thursday's selloff on rising US bond yields and hawkish Fed comments. The Europe-wide STOXX 600 fell 1.0 percent, the German DAX lost 0.9 percent, and the French CAC lost 0.8 percent. Strength in energy stocks helped the UK FTSE 100 outperform the region with a decline of 0.3 percent.

Among sectors, tech stocks extended their losses on the week as bond yields continued to rise. Other laggards included utilities, retail, and chemicals, with losses nearly across the board. Rising oil prices helped oil & gas outperform, along with real estate.

Among companies in focus, SAP, the software giant, rose 1.7 percent on a revenues beat in its cloud business. Wacker Chemie rose 2.2 percent on an earnings beat. On the downside, Nordic Semiconductor fell 3.1 percent despite topping revenues expectations. Among utilities, Electricite de France fell 14.7 percent after warnings on government pricing curbs. Currys, the telecom retailer, fell 6.9 percent on a profits warning linked to tech goods shortages.

Asia Pacific

Equities extended their losses from the US session into Asia after more hawkish Federal Reserve comments.

Chinese equities slipped with weakness centered in real estate and energy. China's CSI 300 index was down 0.8 percent and the Shanghai composite was off 1.0 percent.

Hong Kong was mixed with weakness in financials while health care and biotech held up better. The Hang Seng index ended down 0.2 percent. Tech stocks saw selling pressure after the NASDAQ selloff Thursday.

Japanese stocks saw weakness nearly across the board with carryover from US stock weakness. The Nikkei 225 down 1.3 percent and the Topix off 1.4 percent. Growth lagged. Automakers, real estate, machinery, and services led the decliners.

South Korea's KOSPI fell 1.4 percent and the Taiwan Taiex was down 0.2 percent paced by tech stock losses.

Hawkish Fed comments undercut Australian equities with the All Ordinaries down 1.0 percent. Tech stock weakness spilled over to other sectors, including consumer stocks, health care, energy, and financials. Materials suffered too with big miners hit by falling iron ore prices.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward