Market Insider

Dow could go over the top if economic data strong enough

Good data could get Dow to 20K milestone: Pro
VIDEO1:4901:49
Good data could get Dow to 20K milestone: Pro

Some of the year's final economic reports could help turn the tide for stocks Thursday, after a lackluster session Wednesday.

The Dow lost ground, falling 32 points Wednesday to 19,941, after coming within 13 points of 20,000 Tuesday. Thewas 5 points lower at 2,265.

"[The Dow] just can't seem to get enough inertia … to go over the top. I don't think it's something we won't be able to overcome. It's a reminder that it's a big number," said Mark Luschini, chief investment strategist at Janney Montgomery. "We've come a long way … maybe in an exaggerated way since the election. Perhaps we're borrowing a lot from expectations for what 2017 holds."


Durable goods data is released at 8:30 a.m. ET, along with jobless claims and the final revision to third-quarter GDP. Personal income and spending and PCE prices are released at 10 a.m., as are leading indicators for November.

Durable goods are expected to show a decline of 4.7 percent after showing surprising strength in October. The non-defense capex component, closely related to business spending, is expected to rise 0.3 percent. The PCE price index is one of the more important reports since it is the Fed's favorite measure of inflation. It is expected to rise by 0.1 percent.

Luschini said the data could help boost stocks if it is generally positive.

This pro thinks Santa rally can push Dow to 20K
VIDEO2:5902:59
This pro thinks Santa rally can push Dow to 20K

"We're still data dependent here. We've had terrific economic data points here. The Citigroup economic surprise index turned up on October 20," he said.

Third-quarter GDP is expected to be revised to growth of 3.3 percent from 3.2 percent.

"'Tis the season. It may not take much for the market to get back, hooked on the seasonality factor which has been generally strong this time of year — Santa's rally," said Luschini. He said it's likely investors will take profits in some of the names that have gained the most, and some may be holding off to sell in January, in anticipation of lower taxes next year.

"I wouldn't be surprised to see this sector rotation stay alive into at least the first couple weeks, months of 2017, as perhaps some of that occurs," he said.

Don't expect Dow 20K to happen on Wednesday, Cramer says
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Don't expect Dow 20K to happen on Wednesday, Cramer says

Oil sputtered, losing 1.5 percent Wednesday after a surprise inventory build was reported by the Energy Information Administration. Some traders had seen that report as a possible catalyst to push the Dow over 20,000 if the government data had shown a draw down in supply, just as API data did on Tuesday afternoon.