Market Update:
The major indices are all trading slightly lower at midday following a volatile and active morning session on Wall Street. The ongoing post-election rally seems to be taking a breather in the wake of yesterday's push to new all-time highs. Cyclical stocks and the Dow have been showing relative weakness this morning, with stocks exposed to the manufacturing sector and commodities weighing on the broader market. Moreover, the past week's leader, Tesla (TSLA), gave back some of its recent lofty gains as well. Small-caps also pulled back after approaching their all-time highs from 2021, indicating a potential shift in investor sentiment towards a more cautious approach.
Turning to economic news, the RCM/TIPP sentiment number and the NFIB Small Business both exceeded expectations by wide margins. The former measure surged to its highest level in over three years, signaling a positive outlook for the consumer economy for the remainder of the year. However, on a negative note, the German ZEW Sentiment Index missed the consensus estimate by a significant margin, leading to renewed pressure on growth-sensitive commodities overnight. Treasury yields and the dollar continued to rise in early trading, despite the mixed global catalysts, with the Dollar Index (DXY) poised to close at a fresh seven-month high. These diverging trends in economic indicators and market performance highlight the complex interplay of factors influencing investor behavior and market dynamics.
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