Morning Minutes

Retail Sales Plunge and Soft US Bank Earnings Send Stocks Sliding




US index futures are in retreat again this morning, falling 0.50%-0.75% and adding to yesterdays losses of 0.5% for the Dow, 1.4% for the S&P 500 and 2.5% for the NASDAQ. Russell 2000 futures have dropped back under 2,150 and are getting close to another test of 2,130 a key support level which so far has held since last March. European markets are also sliding once again with the Dax down 0.9% and the FTSE falling 0.2%.

Commodity markets have also turned back downward this morning with WTI crude oil dipping 0.2%, Natural Gas diving 2.9%, and copper dropping 2.9%. Gold is up slightly today, still trading near $1,825/oz, but cryptocurrencies are in the red again with Bitcoin falling 0.8%.
Declines in US index futures have worsened over the course of the morning as two US banks had some disappointment in their results. JPMorgan is down 4.2% premarket. Although its headline results looked positive, ($3.33 vs street $3.01), if a one-time benefit from loan loss provision reductions was stripped out, EPS would have been $2.86, a significant miss. Citigroup, meanwhile, is down 4.1% premarket on disappointing results ($1.46 vs street $1.38, but net income was down 26% from a year ago due to an 18% increase in costs, and a 6% decline in US consumer banking revenues). Other earnings out today include Blackrock ($10.42 vs street $10.16, down 1.4% premarket), and Wells Fargo ($1.25 vs street $1.13, flat premarket).

US retail sales also disappointed badly, staging an even deeper December downturn than investors had feared (-1.9% vs street flat and previous 0.2%). Retail sales excluding autos were even worse (-2.3% vs street 0.2%), indicating that consumers tightened their belts during the key holiday selling season.

With US markets closed for Martin Luther King Day on Monday it’s also possible that given today’s disappointing developments could be sparking a rush of capital to the sidelines ahead of the long weekend. Earnings season resumes next week headlined by investment banks, regional banks, railroads, airlines and a few selected seniors from other sectors.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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