Economist's Insights

Today’s Trading Activity – Stocks Climb to New Records Despite Another Falter for Financials

Nov 8, 2017

U.S. stocks moved to new records Wednesday despite a continued drag from the energy and financials sectors. Crude prices edged lower for a second day after the EIA’s weekly inventory report showed a surprise build in crude inventories, the largest since September 15, and a 0.7% increase in weekly U.S. production to the highest level on record. Those price-bearish points offset the effect of a larger-than-expected draw of gasoline stocks. U.S. crude prices, however, were still up 2.1% for the week due to the Monday rally following weekend political turmoil in Saudi Arabia. Financial companies within the S&P faltered for a fourth consecutive session with banks leading that decline. Over that four-day stretch, the KBW bank index has dropped nearly 3.5%. Investors are keeping an eye on developments on the tax reform front as the House Committee continues to mark-up their tax plan and the Senate gets ready to release its version. The Treasury curve finally, but unremarkably, broke its eight-day streak of flattening between the 2-year and 10-year notes. The 2-year yield rose 1.6 bps to 1.65% while the 10-year yield added 2.0 bps to 2.33%. Other parts of the curve, however, continued their flattening trends. The spread between the 5-year and 30-year notes hit a new 10-year low.