Stocks Closed Mostly Lower Yesterday, But Small-Caps And Mid-Caps In The Green Again Stocks closed mixed yesterday with only the small-cap Russell 2000 and mid-cap S&P 400 in the green with 0.70% and 0.08% respectively. Yesterday's Producer Price Index (PPI) wholesale inflation report was not as good the previous day's CPI retail inflation report. Although it wasn't bad. And I should note that yesterday's PPI was actually for November, whereas the previous day's CPI was for December. Anyway, the PPI headline numbers showed inflation up 0.2% m/m vs. the last report's 0.3% and views for the same. On a y/y basis it was up 3.0% vs. last report's 2.7% and estimates of 2.7%. The core rate (ex-food & energy) was up 0.2% m/m vs. last report's 0.1% and forecast for 0.2%, while the y/y rate ticked up to 3.0% vs. last report's 2.6%. For additional context, even though the annual core rate was higher vs. the last report, it's still down from last year when it was as high as 3.7%. Tuesday's CPI for December (not November) showed core inflation at 2.6% y/y, in line with last month, and a bit below the consensus for 2.7%. And it too is lower vs. last year's high of 3.3%. We'll get a look at December's PPI in 2½ weeks on 1/30. But that will be 2 days after the Fed's FOMC Announcement on 1/28. So December's CPI and November's PPI are the last reports they have to go on. At the moment, the odds favor a March cut vs. January. In other news, yesterday's MBA Mortgage Applications showed the composite index soar 28.5% w/w with purchases up 15.9%, and refi's up 40.1%. Retail Sales (for November) were up 0.6% m/m vs. last month's -0.1% and estimates for 0.2%. Ex-Vehicles it was up 0.5% vs. last month's 0.2% and outlook for 0.3%. And Existing Home Sales rose to 4.35 million units (annualized), vs. last month's 4.14M and the consensus for 4.23M. The m/m change is up 5.1%. The y/y change is up 1.4%. Today we'll get Weekly Jobless Claims, Retail Sales (for December), the Philadelphia Fed Manufacturing Index, the Empire State Manufacturing Index, Import and Export Prices, and Business Inventories. We got more earnings yesterday. Before the open, Bank of America reported earnings and posted a positive EPS surprise of 2.08%, and a positive sales surprise of 3.19%. That translated to a quarterly EPS growth rate of 19.5% vs. this time last year, and a sales growth of 11.9%. Also, before the open, Citigroup posted a positive EPS surprise of 9.70%, and a negative sales surprise of -5.13%. That equated to a quarterly EPS growth rate of 35.1%, and a sales growth of 1.50%. Today we'll hear from more big banks, including Morgan Stanley, Goldman Sachs, and BlackRock. We'll also hear from the largest contract chip maker Taiwan Semiconductor. One thing that didn't happen yesterday was a Supreme Court decision on President Trump's authority to implement tariffs under the IEEPA (or International Emergency Economic Powers Act). Last Friday, 1/9, was the first 'opinion day,' which is when they begin to release written decisions on argued cases. Yesterday was the subsequent opinion day. But it came and went without a ruling. No word on when the next opinion day will be. Although, it's widely believed a decision will be made sometime in January. Until then, the market will likely focus on earnings. And that's great news since stocks typically go up during earnings season. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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