Fed Pivots, Markets Soar, Rates Plunge – Dec 15 Market Recap

Fed Pivots, Markets Soar, Rates Plunge – Dec 15 Market Recap

Indices 

• Dow 37,305, +1,058 or +2.92%. 
• Nasdaq 14,813, +410 or +2.85%. 
• MSCI EAFE 2192.98, +54.55 or +2.55%. 
• S&P 4,604, +115 or +2.50%. 
• USD10Y 3.928%, -31.7bp or -7.47%. 
• WTI Crude $71.66/bbl, +$0.40 or +0.56%.  

Fed Pivots, Markets Soar, Rates Plunge.  

While it was widely expected that that Fed would keep interest rates unchanged when they met on Wednesday, the conventional wisdom was that the Fed would continue its “higher rates for longer” mantra. Instead, the Fed’s dot plot chart indicated that members expect to cut rates by 25bp at least three times in 2024. With the implicit admission that the Fed’s rate hiking cycle is complete and that rate cuts are on the horizon, markets soared, and interest rates fell precipitously. 

Next Week 

It’s another light week for data and earnings highlighted by Friday’s Personal Consumption Expenditure and earnings reports from FedEx (FDX) and Nike (NKE). 

Economic Calendar  

• Monday – N/A. Earnings: N/A. 
• Tuesday – N/A. Earnings: FedEx (FDX). 
• Wednesday – November Existing Home Sales. Earnings: N/A. 
• Thursday – Initial Jobless Claims. Q3 GDP Revision. December Philadelphia Fed Manufacturing Index. Earnings: Nike (NKE). 
• Friday – November Durable Goods Orders, November Personal Consumption Expenditure (PCE), November New Home Sales, December Final Consumer Sentiment. Earnings: N/A. 

If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review. 

Dec 15 Daily Trading Recap… 

Monday – Dow +157 to 36,404, Nasdaq +28 to 14,432, S&P +18 to 4,622, USD10Y -0.6bp to 4.239%. 

• Ten of eleven S&P sectors traded higher, led by Consumer Staples, Industrials, and Materials. 
• Macy’s (M) received a buyout offer of $21/share valuing the retailer at $5.8 billion. The stock closed on Friday at $17.39/share. 
• A Federal Jury ruled against Alphabet (GOOG) late afternoon Monday, concluding that the company’s android app store benefits from anticompetitive benefits. 

Tuesday – Dow +173 to 36,577, Nasdaq +100 to 14,533, S&P +21 to 4,643, USD10Y +3.5bp to 4.206%. 

• Eight of eleven S&P sectors traded higher today, led by Technology, Financials, and Materials. 
• November Headline Consumer Price Index was slightly higher than expected at +0.1% vs expectations of +0.0% and vs last month’s +0.0% print. Year-over-year CPI fell to +3.1%, in line with expectations and slightly lower than last month’s +3.2% print. 
• November Core CPI was in line with expectations at +0.3% vs last month’s +0.2% print. Year-over-year Core CPI was unchanged at +4.0% and in line with expectations. 

Wednesday – Dow +512 to 37,090, Nasdaq +200 to 14,146, S&P +63 to 4,707, USD10Y -17.3bp to 4.030%. 

• Eight of eleven S&P sectors traded down today, led lower by Energy, Technology, and Materials. 
• November Headline Producer Price Index was unchanged at +0.0% vs expectations of +0.1% and vs last month’s -0.4% print. 
• The FOMC held interest rates steady for the third consecutive meeting and both Fed Powell’s comments and the Fed’s interest rate dot plot chart were more dovish than expected, sending markets soaring. 
• Earnings: Adobe (ADBE) beat quarterly estimates but guided 2024 lower; ADBE traded down -5.47% post-close.

Thursday – Dow +158 to 36,248, Nasdaq +27 to 14,761, S&P +12 to 4,719, USD10Y -10.3bp to 3.93%. 

• Six of eleven S&P sectors traded higher today, led by Energy, Real Estate, and Materials. 
• Jobless claims fell to 202,000, vs 220,000 forecast and vs last week’s slightly revised higher print of 221,000 (originally 220,000). 
• November U.S. Retail Sales bounced back nicely, up +0.3% vs down –0.2% last month and vs expectations of down -0.1%. 
• Earnings: Costco Wholesale (COST) beat their earnings and revenue expectations as groceries drive sales while discretionary and big-ticket sales remain soft; COST traded up +1.17% post-close. 

Friday – Dow +57 to 37,305, Nasdaq +52 to 14,813, S&P +0 to 4,719, USD10Y -0.2bp to 3.928%. 

• Seven of eleven S&P sectors traded down, led lower by Utilities, Real Estate, and Health Care. 
• The December Empire State Manufacturing Index was –14.5 vs expectations of +4 and vs last month’s +9.1 print. 
• December S&P Flash Services PMI was 51.3 vs expectations of 50.7 and vs last month’s 50.8 print. 
• December S&P Flash Manufacturing PMI missed expectations at 48.2 vs 49.5 and vs last month’s 49.4 print. 

 If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review. 

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, GM, RIVN, TOST, and TSLA.