Friday’s Mid-Day Movers: 3 Stories Driving Markets
Strong trade data helped pull the markets out of an early-morning malaise and into green territory by afternoon trading on Friday. Also bolstering optimism is a surge in Chinese imports and exports, which both rose over 25 percent. Rounding out the trade news are high hopes that the White House will address a European initiative to begin discussion on a cross-Atlantic free-trade agreement.
At 2:30 p.m.: DJIA: +0.30%, S&P 500: +0.52%, NASDAQ: +0.96%.
1) Consumer borrowing in the United States increased for the fifth consecutive month in December, according to the Federal Reserve. Recently-released data shows that overall consumer credit ex-mortgages rose to $14.6 billion for the month, to a total of nearly $2.8 trillion (still smaller than the Fed’s balance sheet). The surge was primarily due to increases in student debt and auto loans. Economists were expecting an increase of about $14.0 billion.
However, revolving credit, which includes credit cards, declined by about $3.6 billion, its largest drop since July of 2012… (Read more.)
2) The U.S. trade deficit shrank more than expected in December to just -$38.5 billion, well below November’s -$48.6 billion, and beating consensus estimates of -$46.0 billion. Led by exports in industrial supplies and civilian aircraft, the narrowing of the deficit suggests several things. First, it means that the prices of U.S. goods and services are relatively low compared to international competitors, which increases demand. U.S. services actually run a surplus, which increased $0.7 billion to $17.7 billion for the month. Meanwhile, the goods deficit — the different between what the U.S. imports and exports — decreased by $9.4 billion to $56.2 billion.
The strong results also mean that the preliminary estimate for fourth-quarter GDP could be upwardly revised to show growth instead of contraction… (Read more.)
3) An enormous blizzard barreling down on the Northeast is capturing everybody’s attention on Friday afternoon. Over 3,000 flights have been cancelled so far and observers are already trying to quantify the possible effects on retailers who may lose out on a weekend of business. Public transportation in major cities is being shut down early, forcing the early closure of many businesses in order to allow employees to get home safely before the storm makes travel too dangerous.
One upside, at least, is that grocery stores could see a small bump to their February numbers as consumers traditionally stock up on supplies ahead of major storms. Reports also indicate that gasoline sales may see a spike, as consumers preempted any possible infrastructure damage and filled extra tanks. Non-essential government works were ordered to stay at home.