Yesterday reminded us that bears still exist with the sharp drop at the end of the day that cascaded into traders running for the door to protect profits.  Perhaps the quick selling also indicated an acknowledgment of the very overextended condition of the indexes as well as buyer exhaustion. Today as we run through a handful of notable earnings reports along with GDP, Jobless Claims, and the Philly Fed Mfg. numbers plan for an extra dose of price volatility due to the added uncertainty. Big point swings are possible and remember volumes could quickly decline as folks head out for holiday plans.

Asian markets closed the day mixed but mostly lower with the HSI and Shanghai recovering just slightly from the earlier selloff.  However, European markets traded red across the board perhaps also recognizing the extended condition of the indexes.  U.S. futures work to shake off yesterday’s selling indicating another gap up open trying to keep the exuberant buying spree going ahead of market-moving data.  Buckle up it could be a wild morning of emotional price action.

Economic Calendar

Earnings Calendar

Notable reports for Thursday AIR, APOG, AVO, CCL, CTAS, NKE, & PAYX.

News & Technicals’

Citigroup, one of the largest banks in the world, is shutting down its global distressed-debt unit, according to CNBC. The unit, which traded bonds and loans of companies in financial trouble, was part of the bank’s markets division. The move is part of a broader restructuring plan by Citigroup’s CEO Jane Fraser, who took over in February. Fraser is aiming to improve the bank’s profitability and efficiency by exiting low-performing businesses and focusing on its core strengths.

Toyota, the world’s largest automaker, saw its shares drop sharply on Thursday after it announced a massive recall of about a million vehicles in the U.S. The recall affected certain 2020-2022 models of Toyota and Lexus, its luxury brand, due to a potential defect in the fuel pump that could cause the engine to stall. The recall was the latest in a series of quality issues that have plagued Toyota in recent years, denting its reputation for reliability and safety.

China has announced that it will impose tariffs on 12 chemical compounds imported from Taiwan, starting from Jan. 1, 2024. The move is seen as a punitive measure against Taiwan, which Beijing accuses of breaching a trade agreement. The affected chemical compounds include vinyl chloride, dodecyl benzene, and ethylene-propylene copolymer, which are used in…

The U.S. military said it intercepted 14 drones that were launched by the Houthi rebels from Yemen in the Red Sea over the weekend. The drones were part of a coordinated attack on shipping lanes in the strategic waterway, which connects the Mediterranean Sea and the Indian Ocean. The attack prompted many tankers and cargo ships to avoid the Suez Canal, which is the shortest route between Europe and Asia, and take the longer and more costly route around Africa. The Houthi rebels, who are backed by Iran, have threatened to target Israeli ships and any ships that are linked to Israel, in response to Israel’s war with Hamas in Gaza.

U.S. stocks ended Wednesday with a sharp drop as traders ran for the door in unison to protect profits in this very extended market condition. The S&P lost 1.5% and the Dow fell 476 points. The decline began with no trigger other than perhaps some exhaustion after the strong rally in the past few weeks. As a result, traders should plan for an extra dose of price volatility that could create some big point whips due to the uncertainty. Expect the GDP, Jobless Claims, and Philly Fed data to add to this morning’s emotional price sensitivity as well as the handful of notable earnings.  Keep in mind after the reaction to data volume could decline into a choppy afternoon as traders extend holiday plans.

Trade Wisely,

Doug