Following another large drop on Monday, and after being closed for the Christmas holiday Tuesday, markets staged a massive rebound Wednesday. The DJIA put up its largest single-day point gain in history, gaining 1,086 points, or 4.98%. The Nasdaq, which is down the most of the major averages this quarter, posted a 5.84% gain. And, the S&P 500 stormed to a 4.96% one day advance. Volatility is often high in the final week of the year, but this week has mirrored the final quarter of the year only with amplified ups and downs. Investors are struggling with conflicting economic news, as housing numbers and the recent Richmond Fed manufacturing data looked horrific, but retail sales are setting records. At the same time, the Federal Reserve is trying to get back to a “normal” stance on interest rates, and political tensions, both domestic and international, seem to whipsaw markets daily with headlines of government shutdowns, slowing global economic growth and trade tariffs. Even attempts to reassure the markets, such as Treasury Secretary Mnuchin’s calls to major banks on Monday to ensure “ample liquidity is available,” raise new concerns around issues that haven’t been on analyst’s radar to this point.

Richmond Fed manufacturing data released Wednesday showed unexpectedly sharp decreases in several key areas. Analyst had predicted the index would come in at 14, unchanged from November, but the index fell 22 points to -8. Both shipments and new orders fell precipitously to levels not seen since 2009. Capacity utilization numbers also dropped 25 points to -16. Conversely, Redbook retail data showed some of the strongest retail growth in almost 13 years. The weekly growth jumped .7%, coming in at a red hot 7.8% year-over-year increase in same store sales. Amazon (AMZN) reported record sales as holiday shopping wound down.

Thursday, investors will pour through weekly jobless claims, the FHFA house price index, and new home sales. The consensus view has new home sales increasing in November to 560K from October’s 544K report. The house price index, which fell sharply in March, and then remained tepid for the rest of the year, is expected to increase just .2% month-over-month. Consumer confidence numbers will also be released Thursday. The number is expected to drop slightly to 134 from near all-time highs of 144.7. It would not be surprising, given the historic declines in the final quarter of the year, to see the number come in below consensus.

International trade in goods, retail and wholesale inventories, Chicago PMI and pending home sales data will all be released Friday. Analysts will be paying close attention to November export numbers, which dropped .6% in October. Advanced retail inventory numbers are expected to rise .9% for November. This early number is the precursor to final numbers which will be released in a few weeks. The EIA Petroleum Status Report will also be released Friday as well. Given the steep declines in oil prices the past few months, analysts are watching closely to determine where the bottom may be in oil. Crude inventories dipped slightly last week, but gasoline supply jumped upward by 1.8 million barrels.

There are no major earnings reports on tap this week. Earnings season will pick back up after the new year arrives early next week.    

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