Mortgage Applications Down to 26-year Low

Mortgage applications dropped 13.2% from two weeks earlier in the week ending in December according to the latest survey released by the Mortgage Bankers Association. 

The Market Composite Index, a measure of mortgage loan application volume, decreased 13.2% on a seasonally adjusted basis from two weeks earlier.  

On an unadjusted basis, the Index decreased 39.4 percent compared with the two weeks ago

Job Openings Eased In November

Job openings in the U.S. fell slightly in November, indicating the job market strength, according to the latest data released by the Bureau of Labor Statistics.

Job openings in November declined 54,000 to 10.5 million and have slowly eased after hitting 11.9million peak in March.

Over the month, the number of hires and total separations changed little at 6.1 million and 5.9 million, respectively.

Lumber prices traded near the low last seen in June 2020 as home builder's sentiment remained weak and mortgage rates jumped to 6.58% from 3.3% a year ago.

Crude oil prices dropped 4% and fell near one-year low of $70.30 a gallon as demand growth worries grip market sentiment.

Mortgage application in the final week of 2022 dropped 13% from the previous two weeks and fell to the lowest level since 1996 amid rising mortgage rate and elevated home prices.

Salesforce said it plans to take as much as $2 billion in restructuring charges and trim about 10% of its 79,000 strong workforce as business conditions remain challenging.

Tesla Inc extended its recent discount of $1,400 in China till the end of February. Despite the recent sales weakness, Tesla unit sales in China are up 22% in the first 11 months to November.

Movers: Carnival Corp, General Electric, GE Healthcare, Microsoft, Rivian, Salesforce, Tesla

China-linked stocks were in focus again today on the ongoing speculation on the rebound in business and travel activities after the abrupt ending of zero-covid restrictions. 

Tesla Inc rose 3.3% to $111.49 on the hopes that China sales will revive soon. The company also extended 10,000 yuan ($1,388) offered in the last two weeks for vehicles made in Shanghai till the end of January. 

China's economic growth has dropped to its lowest pace in decades after the flare-up of Covid-infections and steep job losses in the tech sector. 

In the first 11 months to November, Tesla delivered 390,000 Model 3 and model Y vehicles, a 22% jump from full-year 2021 sales of 321,000 vehicles.  

China also ended its cash subsidy from the beginning of 2023 as electric vehicle sales jumped to 6.4 million in 2022 from 2.99 million in 2021 according to the China Passenger Car Association. 

Rivian Automotive fell 0.2% to $17.37 after the electric vehicle maker missed its production target. 

Casino operators Las Vegas Sands Corp, MGM Resorts and Wynn Resorts Limited soared between 5% and 6% on the hopes of a rebound in travel in China.   

Salesforce Inc increased 3.4% to $139.46 after the software company said it plans to eliminate 10% of its staff and also reduce office space as part of its restructuring plan. 

The company plans to take a charge between $1.0 billion and $1.4 billion related to staff trimming and an additional charge between $450 million and $650 million related to office space reduction. 

The cloud-based software developer employed about 79,000 people and let go of less than 1,000 people in November. 

Carnival Cruise Corp increased 8.6% to $8.99 after the company said it plans to raise prices from April 1 following the price increase by Norwegian Cruise from Jan 1. 

Microsoft Corp fell 4.9% to $227.21 after UBS lowered its stock rating to "neutral" from "buy" citing potential slowdown concerns in its Office and Azure business units. 

General Electric gained 3.6% to $68.71 after the company spun off its healthcare unit today. 

GE Healthcare Technologies jumped 3.4% to $58.10 on the first day of trading. 

In 2021, General Electric announced its plan to spin off its energy unit in 2024 and healthcare unit in 2022 and focus on its aviation business. 

Coinbase Global jumped 13.7% to $38.22 after the company entered into a settlement with the New York Department of Financial Services and agreed to pay a penalty of $50 million for prior compliance violations. 

The cryptocurrency exchange also agreed to invest additional $50 million in additional compliance measures and improvements. 

American Airlines, Delta Air and United Airlines increased between 5% and 6% after crude oil prices fell near one-year low.   

Rate Anxieties and Recession Worries Dominate Market Sentiment

Stocks struggled on the second day of trading this week and investors weighed the labor market strength against the Fed-induced economic slowdown worries.  

Tech stocks continued to drift lower on the worries that the rising rates will negatively impact future earnings and energy stocks traded lower after crude oil prices slumped towards a one-year low. 

Investors lowered goods inflation expectations after the crude oil and natural gas prices eased for the second week in a row but the labor market strength also raised concerns that inflation in wages and salaries may not subside soon. 

Indexes In Review 

Two popular benchmark indexes struggled to get traction after latest job data indicated strong labor market conditions but mortgage applications dropped to the lowest level since 1996. 

The S&P 500 index rose 0.45% to  3,841.49 and the Nasdaq Composite index increased 0.3% to 10,420.01. 

Crude Oil and Natural Gas Fall 

Crude oil prices fell for the second week in a row amid the rising supply and falling demand growth. 

Brent crude dropped near the one-year of $75.60 a barrel low last seen on December 9th on warmer than expected weather in Europe. 

WTI crude future for the immediate month delivery also fell near the one-year low $70.30 a barrel reached on December 9. 

WTI crude oil declined 4% or $3.08 to $73.88 a barrel and natural gas rose 1.8% or 6 cents to $4.05 a thermal unit. 

Treasury Yields Eased Again  

The yields on U.S. treasury bonds continued to drift lower as investors piled into government securities on the expectations that the Federal Reserve Bank will gradually slow its future rate hikes. 

The yield on 2-year Treasury notes decreased to 4.37% and 10-year Treasury notes fell to 3.70% and 30-year Treasury bonds dropped to 3.81%. 

U.S. Stock Movers 

China-linked stocks were in focus again today on the ongoing speculation on the rebound in business and travel activities after the abrupt ending of zero-covid restrictions. 

Tesla rose 3.3% to $111.49 on the hopes that China sales will revive soon. The company also extended 10,000 yuan ($1,388) offered in the last two weeks for vehicles made in Shanghai till the end of January. 

China's economic growth has dropped to its lowest pace in decades after the flare-up of Covid-infections and steep job losses in the tech sector. 

Rivian Automotive fell 0.2% to $17.37 after the electric vehicle maker missed its production target. 

Job Opening Eased In November 

Job openings in the U.S. fell slightly in November, indicating the job market strength, according to the latest data released by the Bureau of Labor Statistics. 

Job openings in November declined 54,000 to 10.5 million and have slowly eased after hitting 11.9million peak in March. 

 Over the month, the number of hires and total separations changed little at 6.1 million and 5.9 million, respectively. 

Mortgage Applications Down to 26-year Low

Mortgage applications dropped 13.2% from two weeks earlier in the week ending in December according to the latest survey released by the Mortgage Bankers Association. 

The Market Composite Index, a measure of mortgage loan application volume, decreased 13.2% on a seasonally adjusted basis from two weeks earlier.  

On an unadjusted basis, the Index decreased 39.4 percent compared with the two weeks ago

Nikkei In Japan Drops, China Indexes Rise On Peak Virus Hopes

The Nikkei index in Tokyo plunged 1.45% to 25,716.86 after investors returned from a long holiday weekend and reacted cautiously to the upcoming release of the U.S. Federal Reserve's minutes of meeting later in the day. 

Oil exploration companies led the decliners after crude oil continued its slide towards the one-year low. Shipping companies also were among the leading losers on the worries of falling international trade. 

Nippon Yusen dropped 6.5% to

European Markets Advance for Second Day, German Inflation Eased

European markets opened higher and extended previous session's gains on the earnings optimism. 

Investors welcomed the easing of inflation in Germany and the expectations of inflation peaking in France and a steady job market in Germany. 

German Inflation Edged Lower, Jobless Rate Held Steady 

Germany's Consumer Price Index increase slowed to an annual pace of 8.6% in December from 10.0% in November, the Federal Statistics Office said Tuesday.

November's seasonally adjusted jobless rate held steady at 3.0% in Germany according to the official data released by the agency. 

The number of people out of work fell by 6,500 from the previous month to 1.32 million. 

The seasonally adjusted number of persons in employment rose 45,000 in November from October when the labor market expanded by 32,000. 

From a year ago, the seasonally adjusted jobs increased 1.0% or 472,000, matching the 1.1% rate or the gain of 476,000 in October. 

French Inflation Expected to Peak In Early 2023 

Inflation in France is expected to peak in the early 2023 before retreating, said  French Prime Minister Elisabeth Borne to a local radio station. 

China Worries Persist 

Despite the positive mood in trading, investors were cautious on the rapidly spreading Covid-virus in China. 

Moreover, investors took note of the falling manufacturing activities in China. 

The Chinese economy continues to struggle with the rapid spread of a highly infectious and deadly variant of coronavirus. 

The Chinese manufacturing activities growth contracted for the fourth month in a row according to the data released by the National Bureau of Statistics. 

A private survey showed China's manufacturing output growth contracted for the fifth month in a row, a second report confirming the weakening trend in China.

Moreover, the IMF also said that China's economic growth is likely to be near or below the average global growth for the first time in four decades. 

U.S. Coronavirus Infections Rise 

The number of hospitalized patients with Covid continues to rise in the United States. 

The latest survey data released by the New York Times showed that 15% of patients subjected to Covid tests are diagnosed with coronavirus in the last two week and the highest in several months. 

U.S. hospitals reported an 8% increase in the number of patients with Covid and 11% rise in the number patients admitted to intensive care units.   

U.S. Construction Activities Expand 

U.S. construction spending rose 0.2% in November from the downwardly revised 0.2% fall in October, the U.S. Census Bureau reported Wednesday. 

Indexes In Review 

The DAX index increased 0.8% to 14,181.67, the CAC-40 index rose 0.4% to 6,623.89 and the FTSE 100 index advanced 1.4% to 7,554.09. 

Brent crude oil prices declined $3.53 to $82.47 a barrel and Dutch TTF natural gas futures dropped 6.1% to $72.31 a thermal unit. 

The yield on 10-year German Bunds edged lower to 2.37%, French bonds dropped to 2.92%, UK Gilts to 3.65% and Italian bonds fell to 4.50%. 

European Stock Movers 

Energy companies were in focus after crude oil jumped higher in the early trading. 

BP Plc gained 4.4% and Shell advanced 4.1% despite the ongoing global demand worries and slow rebound in activities in China. 

Brenntag SE increased 6.4% to

Movers: Apple, Las Vegas Sands, Lucid Group, MGM, Rivian, Tesla, Traeger, Wynn Resorts

Apple Inc declined 3.3% to $125.03 on the worries that iPhone sales may fall more than 20% in the latest quarter on the ongoing demand weakness in China and at home in the U.S. 

Apple stock declined 18% in 2022 and investors worried that a slowing global economy may dampen the appetite for expensive electronic gadgets. 

China-linked casino operators traded higher on the hopes of a rebound in social mobility. 

MGM Resorts International declined 0.5% to $33.36, Las Vegas Sands Corp advanced 2.2% to $49.27 and Wynn Resorts increased 3.1% to $85.08. 

Newmont Mining jumped 4.9% to $49.52 after gold jumped 1% to $1,837.93 an ounce. 

Barrick Gold added 3.70% to $17.82 and Agnico Eagle Mines jumped 3.1% to $53.60. 

Tesla Inc plunged 13.1% to $106.93 after the automobile maker's fourth quarter deliveries disappointed investors. 

In the fourth quarter, Tesla produced 439,701 vehicles and delivered 405,278 vehicles. 

In 2022, the company sold 1.31 million vehicles, 40% higher than a year ago. 

In the 2021 fourth quarter Tesla delivered 308,600 vehicles and in full-year delivered 936,172 vehicles.  

The company has been struggling to sell luxury vehicles in China after zero-Covid policy restricted mobility in the first ten weeks of the last quarter. 

The weakness in Tesla deliveries spilled over to other electric vehicles stocks. 

Rivian Automotive Inc dropped 6.3% to $17.27 and Lucid Group dropped 9.3% to $6.20. 

Both luxury automotive companies are struggling with weak cash flows. 

Traeger Inc declined 7.6% to $2.61 after RBC downgraded the stock to "sector perform" from sector outperform."

Stocks, Bond Yields and Commodities Fall On Global Slowdown Worries

Stocks drifted lower, commodities eased and bond yields rose as three markets reacted differently to the ongoing rate path and economic slowdown worries. 

Stock market focused on the Federal Reserve's aggressive rate hike stance, commodities focused on the slowing worldwide demand and the bond market drew liquidity from investors looking for safe haven.  

Ongoing concerns of rate path worries and economic slowdown were compounded by the worries of slowdown in China and in the European Union. 

The Chinese economy continues to struggle with the rapid spread of a highly infectious and deadly variant of coronavirus. 

The Chinese manufacturing activities growth contracted for the fourth month in a row according to the data released by the National Bureau of Statistics. 

A private survey showed China's manufacturing output growth contracted for the fifth month in a row, a second report confirming the weakening trend in China.

Moreover, the IMF also said that China's economic growth is likely to be near or below the average global growth for the first time in four decades. 

Investors were also cautious ahead of a slew of economic reports in the U.S. this week. Minutes of the Federal Reserve's latest minutes of meeting are scheduled on Wednesday and December jobs report on Friday.  

Germany's Consumer Price Index increase slowed to an annual pace of 8.6% in December from 10.0% in November, the Federal Statistics Office said Tuesday. 

Construction spending rose 0.2% in November from the downwardly revised 0.2% fall in October, the U.S. Census Bureau reported Wednesday. 

Indexes In Review 

Benchmark indexes opened higher but failed to hold onto early gains. 

Popular indexes accelerated the decline after crude oil prices dropped more than 4% on weak demand outlook and natural gas prices plunged 12% on rising supply. 

The S&P 500 index declined 0.8% to 3,809.37 and the Nasdaq Composite index dropped 1.1% to 10,356.85. 

Crude oil prices dropped $3.04 to $77.97 a barrel and natural gas fell 11.3% to $3.96 a thermal unit.

The bond yields eased on speculation that the Federal Reserve will slow its aggressive rate hike stance to avoid dipping the economy into a recession. 

The yield on 2-year Treasury notes inched higher to 4.41%, 10-year notes fell to 3.78% and 30-year Treasury bonds declined to 3.87%.   

U.S. Stock Movers 

Tesla Inc plunged 13.1% to $106.93 after the automobile maker's fourth quarter deliveries disappointed investors. 

In the fourth quarter, Tesla produced 439,701 vehicles and delivered 405,278 vehicles. 

In 2022, the company sold 1.31 million vehicles, 40% higher than a year ago. 

In the 2021 fourth quarter Tesla delivered 308,600 vehicles and in full-year delivered 936,172 vehicles.  

The company has been struggling to sell luxury vehicles in China after zero-Covid policy restricted mobility in the first ten weeks of the last quarter. 

Apple Inc declined 3.3% to $125.03 on the worries that iPhone sales may fall more than 20% in the latest quarter on the ongoing demand weakness in China and at home in the U.S. 

Apple stock declined 18% in 2022 and investors worried that a slowing global economy may dampen the appetite for expensive electronic gadgets. 

The S&P 500 declined 20% and the Nasdaq Composite dropped 33.9% in 2022 after the Federal Reserve raised rates seven times to combat 4-decade high inflation.

The FTSE 100 index eased 0.7% in 2022 and avoided the larger declines in other markets. Mining and energy companies accounting for 24% of index weight benefited from the rise in commodities prices.