Thursday, December 5, 2013 -
U.S. stocks fell for a fifth straight day after a round of mixed economic data left traders guessing as to when the Federal Reserve would begin to slow its stimulus program.
Though selling pressure continues to be moderate, stocks still continue to sell on any kind of good economic news. Today it was an improved GDP reading – obviously leading to persistent concerns that the Fed may actually begin to consider discussing when to taper their overweight QE stimulus programs. The obsession has become so great that any kind of improved economic data or hint of the Fed discussing a taper rattles traders.
The major averages ended in the red today, with the Dow and the S&P 500 closing lower for five back to back sessions now. The Dow fell 68 points (-0.4%) to 15,822, the Nasdaq edged down 5 points (-0.1%) to 4,033 and the S&P 500 slid 8 points (-0.4%) to 1,785.
Along with the steady trend of unexpected good economic releases, ahead of today’s trading, the Labor Department reported that initial jobless claims unexpectedly dropped by 23,000 this week. Combined with an upward revision to the GDP was just too much good news for buyers to “buy this dip”.
At present investors only care whether or not the Federal Reserve is going to slow their stimulus program. And today’s set of economic reports gave the impression that the economy is progressing enough that the Fed may have enough positive data to consider tapering, even in their December meeting.
Unexpected Improvement in GDP
I think the key word is “impression”. In any case, with the jobs report due out tomorrow and given the stronger than expected ADP report on Wednesday along with today’s GDP report investors were are in no mood to be caught ahead of any surprisingly strong jobs report due out tomorrow. While stocks sold off today, they did not take out yesterday’s lows. Thus, if the jobs report is weaker than expected we could see . . . . . .
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