A strengthening dollar and a higher-than-expected number for unemployment claims pushed stocks and exchange traded funds (ETFs) lower this morning. This was despite positive data from the Philly Fed survey and the LEI or leading economic indicators rising for the eighth month in a row.
Initial jobless claims for the week ended Dec. 12 rose by 7,000 to 480,000, which surprised economists who were expecting a decline. This data served as a reminder that the labor market will take time to strengthen and may weigh on the economic recovery, reported Timothy R. Homan for Bloomberg. Concerns over the lack of jobs prompted the Federal Reserve yesterday to reiterate a pledge to keep interest rates low for an “extended period.”
The Conference Board’s gauge of future economic conditions rose for the eighth month a row with the LEI increasing by 0.9% in November. The index was boosted by improving financial conditions, housing and employment, reported Lisa Lambert for Reuters. The Philadelphia Federal Reserve’s Index of manufacturing improved more than expected to 20.4 this month from 16.7, reported Deborah Levine for Marketwatch.
The U.S. dollar surged this morning, hitting a three-month high on the back of continued worries about the European economy, report Deborah Levine and Steve Goldstein for MarketWatch. The euro tumbled as Standard & Poor’s downgraded Greece’s sovereign debt rating, following a similar move by Fitch last week. Worries continue that Greece will struggle to rein in a deficit that stands at more than 12% of the GDP. The British pound fell to a two-month low after weak retail sales were reported. [For more stories about the US dollar, please visit our U.S. dollar category.]
The PowerShares DB U.S. Dollar Index Bullish ETF (NYSEArca: UUP) is up nearly 1% this morning. The Rydex CurrencyShares Euro Currency Trust (NYSEArca: FXE) and the Rydex CurrencyShares British Pound Sterling Trust (NYSEArca: FXB) are both lower by more than 1.25% this morning. [For more information on currency ETFs, please visit our currency ETFs category.]
Meredith Whitney, the analyst who became famous for her spot-on calls during the financial crisis, has cut her earnings estimates for both Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS). Whitney has a neutral rating on both stocks, reports Michael Baron for TheStreet. The Financial Select Sector SPDR (NYSEArca: XLF) is down by more than 1% this morning. [For more stories on the financial sector, please visit our financial category.]
Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.
Tony D’Altorio contributed to this article.