Directional Bias for the Day:

• S&P Futures are lower at 9:00 AM. They have been trading between 6086.00 and 6071.75.
• Odds are for a sideways to a down day. Watch for a break above 6086.00 and 6098.50 for clarity.
• The notable economic data due during the day:
  • ECB Main Financing Rate (3.15% vs. 3.15% est.; prev. 3.40%) at 8:15 AM
  • ECB Monetary Policy Statement at 8:15 AM.
  • PPI (0.4% vs. 0.3% est.; prev. 0.2%) at 8:30 AM.
  • Core PPI (0.2% vs. 0.2% est.; prev. 0.3%) at 8:30 AM.
  • ECB Press Conference at 8:45 AM.

Key Levels:

• Critical support levels for the S&P 500 are 6060.15, 6029.89 and 6003.98.
• Critical resistance levels for the S&P 500 are 6082.16, 6092.59, and 6099.978.
• The key levels for E-mini futures are 6086.00, the high at 8:30 AM and 6071.75, the low at 8:30 AM.

Pre-Open

• On Wednesday at 4:00 PM, S&P futures (December 2024) closed at 6092.25, and the index closed at 6084.19 – a spread of about +8.00 points; the futures closed at 6092.75; the fair value is -0.50
• Pre-NYSE session open, futures were lower – at 8:45AM, the S&P 500 futures were down by -15.75, Dow by -44, and NASDAQ by -117.50.

Markets Around the World

• Markets in the East closed mostly higher – Sydney and Mumbai closed down.
• European markets are higher.
• Currencies (Compared to two weeks ago):

• Commodities (Compared to two weeks ago):
  • Energy futures are higher.
  • Precious metals are higher.
  • Industrial metals are higher.
  • Soft commodities are mixed.
• Treasuries (Compared to two weeks ago)
  • The 10-year yield closed at 4.275, up +1.1 basis points from two weeks ago.
  • The 30-year is at 4.484%, up +5.1 basis points.
  • The 2-year yield is at 4.157%, down -8.0 basis points.
  • The 10-Year-&-2-Year spread is at 0.118, up from 0.027.
  • The 30-Year-&-10-Year spread is at 0.209, down from 0.169.
• VIX
  • At 13.69 @ 8:45 AM; up from the last close; at/above the 5-day SMA
  • Recent high = 18.79 on November 20; low = 12.89 on December 4; Sentiment: Risk-Neutral-Off

The trend and patterns in various time frames for the S&P 500:

Previous Session

Most major U.S. indices closed mostly higher on Wednesday, December 11 in mostly higher volume. Dow Jones Industrial Average and Dow Jones Transportation Average closed lower. S&P 500 traded in lower volume.

The dollar index, energy futures, and precious metals closed higher. So did most industrial metals and the soft commodities closed higher. The US Treasury yields were up and bonds down. S&P sectors closed mixed – five up and six down.

From Briefing.com

The S&P 500 (+0.8%) and Nasdaq Composite (+1.8%), which closed above 20,000 for the first time, settled near their session highs. The Russell 2000 (+0.6%) also logged a gain while the Dow Jones Industrial Average fluctuated around its previous close, settling 0.2% lower. Market breadth was broadly positive, reflecting a fairly broad advance, but gains in mega-cap stocks had a disproportionate impact on the S&P 500 and Nasdaq Composite.

Treasury yields initially dropped after the CPI release, but the decline moderated. The 2-year yield fell to 4.12% from 4.17%, and settled the session at 4.16%. The 10-year yield dipped to 4.23% from 4.25%, but settled the cash session at 4.27%.

• Nasdaq Composite: +33.5% YTD
• S&P 500: +27.6% YTD
• S&P Midcap 400: +19.1% YTD
• Russell 2000: +18.1% YTD
• Dow Jones Industrial Average: +17.1% YTD

Reviewing today’s economic data:

• Weekly MBA Mortgage Applications Index 5.4%; Prior 2.8%
• November CPI 0.3% (Briefing.com consensus 0.3%); Prior 0.2%, November Core CPI 0.3% (Briefing.com consensus 0.3%); Prior 0.3%
  • There are two key takeaways from the report. The first is that the report wasn’t worse than feared. It was right in-line with expectations; therefore, it did not upset the market’s view that the Fed will cut rates another 25-basis points at next week’s FOMC meeting. The second key takeaway is in the breakdown of the shelter index (+0.3%), which included the smallest increases for owners’ equivalent rent (+0.2%) and the index for rent (+0.2%) since April 2021 and July 2021, respectively. With the lag effect of shelter costs on CPI computations, assumptions are being made that this variable will continue to factor favorably in future CPI reports and help temper future inflation readings.
• Weekly EIA crude oil inventories had a draw of 1.43 million barrels; prior draw of 5.07 million barrels
• The Treasury Budget for November showed a deficit of $366.8 billion compared to a deficit of $314.0 billion in the same period a year ago. The November deficit resulted from outlays ($668.5 billion) exceeding receipts ($301.8 billion). The Treasury Budget data are not seasonally adjusted so the November deficit cannot be compared to the October deficit of $257.5 billion.
  • The key takeaway from the report is its worsening condition, which was driven in part by a large outlay for net interest that exceeded the outlay for national defense.