Market Perspective for December 11, 2017

The Dow Jones Industrial Average and S&P 500 Index opened at new all-time highs on Monday ahead of Wednesday’s Federal Reserve meeting. The Federal Open Market Committee will hike interest rates by a quarter point this week. The market has already discounted this move.

Job openings hit 6.0 million in October, down from 6.2 million in September. Producer prices are due on Tuesday, with forecasts calling for 0.4 percent inflation in November. China reported a slowdown in its PPI, from 0.7 percent in October to 0.5 percent last month. Economists forecast a 0.4 percent increase in consumer prices and 0.2 percent in core CPI.

Weekly jobless claims are expected to remain below 240,000. Analysts see November retail sales rising 0.4 percent and 0.7 percent ex-autos. The flash manufacturing PMIs for December are due this week, along with industrial production and capacity utilization for November.

China reported a surge in November new loans. Analysts expected 800 billion yuan in new lending, but banks lent out more than 1.1 trillion. Fixed-asset investment and industrial production data will be out later this week. The European Central Bank will meet on Thursday. Investors expect it will hold rates steady at zero percent.

West Texas Intermediate crude opened the week at $57 per barrel. SPDR Energy (XLE) opened strong on Monday and is approaching its 2017 high, set in early November. Strong production in the United States is keeping a lid on prices domestically, but Brent oil rose to a 2-year high after a pipeline in the North Sea was shut for leak repair. Repairs could take several weeks.

The U.S. Dollar Index dipped in overnight trading. The greenback has remained in an uptrend since September. Emerging markets bounced on Monday, but as a group, have underperformed the S&P 500 Index since September. Most of the underperformance came in the past two weeks as Chinese shares sold off.

This week will be light on earnings. Oracle (ORCL), Adobe (ADBE), Costco (COST), Pier1 Imports (PIR) and ABM Industries (ABM) will be the largest companies reporting.

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