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SIMMER DOWN, NOW: TRADE GAP, BUSINESS SENTIMENT SAY ECONOMY ISN'T THERE YET (1038 EST/1538 GMT)
On the heels of Friday's blow-out jobs report, which suggested the labor market is roaring back to robust health - and dragging the economy with it - data released on Tuesday provided a reminder that the crash of the pandemic recession continues to echo.
The gap between the value of goods and services imported to the United States and domestically produced goods and services exported abroad (USTBAL=ECI) grew in the last weeks of 2021 to $80.7 billion, according to the Commerce Department. read more
While not quite as wide as the $83 billion trade deficit analysts expected, it capped a year of the largest annual trade gap on record, which jumped 27% to $859.1 billion in 2021.
Imports and exports both grew, by 1.6% and 1.5%, respectively, and while the services surplus grew 9.3% to $20.7 billion, this gain was handily offset by the growing goods deficit, which widened by 3.2% to $101.4 billion.
The record 2021 trade gap is widely perceived to be attributable to the uneven global recovery from the COVID crisis, and is seen easing in the months ahead.
"We expect imports to continue outpacing export growth early in 2022 before trade flows shift towards stronger export demand," says Mahir Rasheed, U.S. economist at Oxford Economics.
The closely watched U.S.-China goods gap yawned wider to $36.2 billion.
Small business sentiment dimmed in January as inflation prompted the percentage of owners that intend to pass the pain along to their customers by hiking selling prices reached the highest level since 1974.
The National Federation of Independent Business' (NFIB) Business Optimism index (USOPIN=ECI) shed 1.8 points to a reading of 97.1, the lowest reading in nearly a year. read more
The strongest headwinds held steady, with survey 23% of respondents citing labor quality, and 22% pointing to rising prices as their most vexing problem.
"More small business owners started the New Year raising prices in an attempt to pass on higher inventory, supplies, and labor costs," writes Bill Dunkelberg, NFIB's chief economist. "In addition to inflation issues, owners are also raising compensation at record high rates to attract qualified employees to their open positions."
But it wasn't all doom and gloom, with more companies reporting plans for capital outlays and improved inventories.
"Inventory rebuilding was a big driver of economic growth in the fourth quarter of 2021, adding nearly 5 percentage points to the quarter's 6.9% annualized increase in real GDP, and inventory rebuilding will stay a tailwind to growth in early 2022 as well," notes Bill Adams, chief economist at Comerica Bank.
It should be noted that the NFIB is a politically active membership organization.
Wall Street was mixed in morning trade, with cyclicals and economically sensitive smallcaps (.RUT) and transports (.DJT) having a better day than most.
The Dow was held aloft by healthcare (.SPXHC) and financials (.SPSY), while tech (.SPLRCT) and consumer discretionary (.SPLRCD) were the biggest respective drags on the S&P 500 and the Nasdaq, both of which were moderately red.
S&P 500 EASES EARLY, WITH PFIZER A DRAG (0955 EST/1455 GMT)
The S&P 500 (.SPX) is down slightly in early choppy trading Tuesday, with Pfizer Inc (PFE.N) down about 5% and putting the most pressure on the benchmark index.
The Nasdaq (.IXIC) is also edging down early and Amazon.com , down 0.8%, is weighing on both the Nasdaq and S&P 500 (.SPX).
The Dow (.DJI) is holding onto slight gains.
Pfizer's shares are off after the drugmaker's full-year sales forecast for its COVID-19 vaccine and antiviral pills fell short of Wall Street estimates.
Here is the early market snapshot:
NASDAQ COMPOSITE: SMOOTH SAILING OR ICEBERG AHEAD? (0900 EST/1400 GMT)
Since hitting lows in late January, a number of Nasdaq internal measures have shown marked improvement. With this, the Nasdaq Composite (.IXIC) has cruised to a 5%-gain from its Jan. 27 closing low.
Indeed, if the Composite has left its worst behind, broad Nasdaq strength is likely to be a key aspect of any rally.
Of note, the Nasdaq McClellan Summation, which is derived data on advancing and declining issues, plunged to a low of -7,229 on Jan. 31. This was this measure's weakest reading since October 1998 read more :
With that low, the Summation slipped just below its late-2008 trough (-6,896), and a support line from late-2012 (~7,100). The line contained weakness in late 2018 and early 2020, essentially coinciding with major lows in the Composite.
Since its Jan. 31 low, the Summation has improved to -6,901 and in so doing has reclaimed both the support line, and its 10-day moving average (DMA) (-6,943). read more
One characteristic of the Summation's bullish turns off the support line in both late 2018 and early 2020 was that it did not look back. The measure improved 40-straight trading days (tds) off its late-December 2018 low and 35-straight tds off its late-March 2020 trough. This as the IXIC embarked on major advances.
The Summation has now risen four of the past five tds, including two-straight gains into Monday's close.
Therefore, it may be critical for the Summation to now mount a sustained rise. Breaking its recent low at -7,229 can see its bear-trend resume. In which case, the IXIC will be at risk of sinking again.
The measure's record low occurred in September 1998 at -8,905.
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Swiss prices increased in May by their highest level in nearly 14 years, the government said on Thursday, as Switzerland became the latest country to be hit by more expensive fuel and food costs plaguing economies around the world.
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