Economist's Insights

Today’s Trading Activity – Stocks Surge to New Records but Treasury Yields Remain Stuck in a Day Packed with Economic and Political Headlines

Nov 28, 2017

U.S. stocks rose Tuesday with all three indices recovering from roughly an hour of midday weakness to close at new all-time highs. The Dow led with a 1.1% gain, the index’s fourth strongest day of 2017, and became the second of the majors to gain more than 20% for the year. The Nasdaq crossed the 20% mark back in September while the S&P remained just under 3%-points shy of the milestone. Financial companies within the S&P rose 2.6% to lead the broader index to a 0.98% daily gain; its sixth strongest session of the year. Investors had much to contemplate on Tuesday. After early morning economic data disappointed, the later reports showed consumer confidence rose unexpectedly to its highest level in 17 years (more below) and the YoY change in the S&P Case-Shiller Home Price Index notched its fastest reading since July 2014 (more below). In addition, Fed Chair nominee Jay Powell told members of the Senate Banking Committee that “the case for raising rates at [the December meeting] is coming together” during his confirmation hearing (more below). Tax reform remained a topic du jour as the Senate Banking Committee advanced the GOP’s tax plan to a full Senate vote that could occur as soon as this week. The march towards the debt ceiling and expiration of the current authority on December 8th received renewed focus as well after top Democrats declined to attend a meeting at the White House to discuss keeping the government open because of a morning tweet from the President. Oh, and North Korea fired another ballistic missile (the reason for the midday weakness), the first since September. Even with all of the activity, Treasury yields remained lifeless; the 2-year yield rose just 0.6 bps to 1.75% while the 10-year yield was unchanged at 2.33%.