Why Stocks Are Falling (It’s Not Just the Fed)
What’s in Today’s Report:
- Why Stocks Are Falling (It’s Not Just the Fed)
Futures are sharply lower on momentum from Thursday’s selling as investors further digest the hawkish ECB decision and yesterday’s lackluster economic data.
Despite weaker stock prices this morning, economic data overnight was mildly encouraging. EU and UK December flash PMIs both slightly beat estimates while the EU HICP wasn’t any worse than feared at 10.1% y/y.
Today there are two important economic reports, the Flash Manufacturing PMI (E: 47.7) and Flash Services PMI (E: 46.5) and markets will need to see those data points show 1) Resilient activity and 2) Declining price pressures (more dis-inflation) if they are going to help stocks stabilize. We also get one Fed speaker, Daly (12:00 p.m. ET), but she shouldn’t move markets.
Finally, today is a Quadruple Witching options expiration and it could cause some intense volatility as many traders had been positioned for a year-end rally, and as those hopes are being dashed, some book-squaring is likely in order. Point being, don’t be surprised by an uptick in volatility this afternoon and into the close.
